19.06.15
Cutting the cost of fraud collectively
Source: PSE June/July 15
Dean Langton, strategic director at Pendle Borough Council, explains how a consortium of councils is attempting to tackle fraud collectively.
Last year the DCLG launched a £16m Counter Fraud Fund to support local authorities in reducing council tax reduction (CTR) fraud and error, with a consortium of 12 councils – led by Pendle Borough Council – receiving the largest award: £1.2m.
The consortium decided to use CapacityGrid’s fully managed CTR & FERIS (Fraud and Error Reduction Incentive Scheme) Review Service to undertake a full end-to-end intervention on cases where it identified that fraud may be present after analysing various datasets.
After just 60 days, initial results from the project have indicated that of the scored cases chosen, the strike rate is 75% across both CTR and housing benefit.
Speaking to PSE about the work, Dean Langton, strategic director at Pendle Borough Council, said: “When the project was originally put together, the expectation was that the strike rate would be around 60%. So, from the early work that has been done, then clearly with a strike rate of 75% it is exceeding expectations.”
He added that the 60% estimate came from work that had been done previously by the company the consortium is working with GBGroup’s Transactis, who are partnering with CapacityGrid.
“They had done some work with HMRC looking at losses around tax credits that originally had a strike rate of around 11-12%. But when Transactis got involved that increased to about 65%,” said Langton.
The service being used by the consortium is operated by highly experienced benefits practitioners drawing on best-in-class data processes and insight, PSE was told. CapacityGrid added that it is using GBGroup as its strategic data partner to analyse data relating to housing benefit and CTR claimants, and identifying cases where there is a potential mismatch of data.
By using its in-house technology and software, combined with expert analytical experience, GBGroup brings together data on assets, finance, transactions, household composition, contact information, behaviour and social networks, all linked together in one powerful view of citizen identity.
PSE was told that this provides the consortium of 12 local authorities – the membership of which has not been disclosed – with up-to-date and accurate identity intelligence, allowing them to crackdown on costs associated with fraud or error.
“The government is having a big push on trying to reduce fraud and error across the whole system spectrum of benefit that is given out,” said Langton, adding that because the CTR and FERIS principles are the same Pendle decided to run the two schemes together.
However, he said that as the project progresses over its 18-month lifetime, it is expected that the strike rate will start to come down.
“Achieving the 75% hit rate to start with I don’t think will be maintained because you would hope that the amount of fraud and error would start to reduce in any event,” said Langton.
PSE was told that it is ‘key’ to the consortium that if the members are paying out benefits, that they are paying them out to the people who are entitled.
“We are anxious for that to happen,” explained Langton. “It’s all about making sure that money isn’t being wasted through claimant or clerical error and benefits go to those in genuine need. As well as targeting those cheating the systems, we can now ensure that residents, particularly those who are vulnerable, are not missing out on the discounts they are entitled to.”
He added that the work is being done against the backdrop of local authority funding reductions, but is hopeful that by working collaboratively with other councils the consortium is demonstrating to government that it can deliver a scheme which could pave the way for future grants and potential powers.
“We are actively participating in discussions with other councils in Lancashire on the development of the combined authority,” said Langton. “Part of that is understanding what functions the combined authority would undertake. And a particular area that we are looking at includes whether it is possible for the combined authority to have control of the benefit budget, which the government currently controls.”
Langton told PSE that the project ticks a number of boxes for the government with councils working together alongside the best in private sector as well.
“So long as we can continue to demonstrate that, and deliver value for money, as the potential returns for the government in this area are significant compared to the amount of grant awarded, then it can, hopefully, strengthen the faith to give further funding in the future,” he said.
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