Wednesday, 11 August 2010

Fraud–if only Government knew what Government knows….

The Government has announced yet another attack aimed at getting fraud out of the benefit system. But like all such pledges made over the past 15 or so years, will it succeed?

The use of external credit checking organisation is a worthwhile step forward – these organisations have the sorts of sophisticated databases and search engines that, despite continual recommendations by the IT industry, Government has consistently failed to put in place over the past two decades. (Within Radius we submitted numerous proposals to central government, and yet not one was picked up – the common reason being given that “there’s no money for fraud detection”).

At the time our strap-line was:

“If only local authorities knew what local authorities know”

It’s still the same today – within local authorities (and some Government departments), data is held in individual departmental silos – inaccessible to their own internal fraud teams, yet alone front-line staff dealing with benefit claims. Then each local authority is an island of information separated from its neighbouring (and all other) authorities – how many housing benefit claimants claim benefit in one local authority area whilst having a taxi driver licence in another (or even working for another authority?).

Meanwhile, central government has numerous lists of relevant names (e.g. the names of tens of thousands of immigration/asylum offenders and absconders who have exhausted the appeals process, and are not entitled to public funds), that, even if they were made available to local authorities and other departments, could not be used because of the lack of investment in counter-fraud computer systems.

The National Fraud Initiative (NFI) operates a data matching service for participating organisations, using data matching across a large number of databases to identify potentially fraudulent activity. In its last report, the NFI claims to have found £215M p.a. of fraud, perhaps a reasonable result in absolute terms, but a very small percentage of the National Fraud Authority’s figure of £7 billion p.a. of public sector fraud estimated to be in the system. The biggest gap in this initiative is that only one government agency took part – not a single central government department participated.

The next gap is within local authorities and other organisations using NFI – in 2008/09 only 269 prosecutions resulted from the NFI – and although 16,535 blue badges and 21,534 concessionary travel passes were cancelled, this is hardly tackling serious benefit fraud. NFI sends authorities lists of ‘potentially fraudulent activity’ – many (most?) authorities lack the funds/staff/time to investigate the people identified by NFI. As one councillor told me “there’s no money in fraud detection” whilst another told me “I don’t want to catch housing benefit fraudsters amongst my electorate – they clearly need the money to live, and if government is prepared to pay them, why should the council seek to stop them?”.

Also, as most Officers will say, it is a lot easier to detect fraud at the point it tries to enter the system, rather than after it is in the system. Carrying out an annual data matching exercise is too little too late – such data checking should be available at the time a claim is submitted – not up to 12 months later. Also, where authorities’ fraud teams are investigating individuals, or have a known fraudster, there are very few ways that the information on that individual can be shared with other authorities or organisations (worthwhile regional initiatives such as LTAF – London Team Against Fraud – have been starved of cash and doomed from the time of their birth).

So how to move forward?

The best way may be to have a unified benefits system under the control of a single body. If this were assisted by each claimant having a unique ‘entitlement’ number or card then so much the better (NINO’s would have helped, had there not been, reputedly, over half a million extra NINOs in existence). This may be the new government's aspiration, but I doubt that it will happen quickly, so in the meantime key initiatives should include:

  • local authorities must be encouraged (via much more generous financial subsidies/payments) to find and stop fraud both entering the system, and once it is in the system
  • the NFI must be expanded to include all government departments, and
  • the NFI’s systems should be re-engineered to allow for much more frequent data checks (to help stop fraud entering the system)
  • a secure, centralised database/network must be created to allow the fraud departments with local authorities and other public sector (and perhaps private sector) organisations to share information on confirmed and suspected fraudsters.

P.S. Many Councillors and Officers try to hide their lack of support for counter-fraud data matching behind the Data Protection and other Acts. I won’t try to examine the detail of the complex legal framework, nor add the caveats about informing citizens, but suffice it to say that data matching exercises are OK provided they are solely ‘for the purpose of assisting in the prevention and detection of fraud’.

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