Select Committee on Public Accounts Minutes of Evidence



Examination of Witnesses (Questions 140-159)

MS RACHEL LOMAX, MR JOHN CODLING AND MS ALEXIS CLEVELAND

MONDAY 4 FEBRUARY 2002

  140. I was not asking just about fraud but fraud and error and that means customer error and official error.
  (Ms Lomax) Then we have to begin to make some assumptions about what customer error and official error is in relation to fraud and that is where we do not have robust information. If you want to start applying rough rules of thumb, you can say maybe there is as much again of customer error, but it gets very speculative.

  141. As much again of customer error, so that would take you to 4 billion. What about official error?
  (Ms Lomax) We are beginning to guess on this. There is more; there is more error.

  142. It would be quite interesting to know. You do appreciate that it is a lot of money.
  (Ms Lomax) I am ready to talk in great detail about figures where we have done serious amounts of statistical work. This is very much more speculative and I really do not want to pretend to a knowledge which I do not have.

  143. I certainly would not ask you to pretend to knowledge.
  (Ms Lomax) I cannot improve on the figures that were in that Green Paper and I think it would be wrong of me to try.

  144. I certainly would not want to ask you to pretend to knowledge you do not have. It just strikes me as staggering that when you are dealing with such huge sums of money, there are such huge sums washing around about which you have no control or knowledge.
  (Ms Lomax) May I answer that question because it is a very serious point?

  145. I am right, am I not? You just said it could be the same again. That immediately went from the 2 billion referred to in note 31 to 4 billion and the official error on top. We are talking about thousands of millions of pounds, are we not?
  (Ms Lomax) We take the problem of leakage through fraud and error extremely seriously. We devote an enormous amount of money and time and skilled staff resource into estimating its level in a businesslike way in the areas we know are most vulnerable and constructing strategies and management action, to tackle it. That is the businesslike way to take the problem seriously. I am not aware of any other government department which does this sort of exercise. I am not aware of any Social Security administration anywhere in the world which takes the problem as seriously as we do. I am not defensive about not knowing more. It is an extremely demanding thing to know as much as we do and to take it as seriously as we do. Yes, we could do more, but we are doing a great deal more than anybody else.

  146. Which comes back to an earlier question. Is there something about the nature and complexity of the system that inherently makes it more difficult to get this information accurately than would otherwise be the case?
  (Ms Lomax) It is very demanding to administer a means-tested benefit system, which depends on self-declaration of income and capital; yes.

Geraint Davies

  147. On the issue of the balance between targeting and complexity and hence emergence of errors and fraud, you mentioned in passing the changes to the minimum income guarantee in terms of the complexity of that particular form having reduced errors in that. Can you give me any idea how great a saving we have seen from the rationalisation of that form?
  (Ms Lomax) We do not know what the effect of the form is, but a very dramatic figure comes from the tele claiming which Alexis mentioned. We get a 40 per cent improvement in accuracy as a result of taking people through the form over the phone with skilled staff. Electronic claiming, which is another way of directing people to answer the question and helping them, leads to really quite dramatic improvements in the quality of the information collected.

  148. Do you feel there are opportunities for further improvements in better targeting of people who find themselves unable to fill in the paperwork?
  (Ms Lomax) Yes, in the way in which we are re-designing our services there are several ways in which we shall be giving help to people who find filling in the forms difficult.

  149. Do you feel the forms should have been simpler in the first place or is that just being clever with hindsight?
  (Ms Lomax) When I have tried to help people fill in the forms, I have often felt they should be simpler. One of the first things we shall be doing when we introduce new technology is electronic claiming and giving our staff scripted dialogues to take people through the claims procedures. The old paper forms should be a thing of the past within a few years.

  150. Presumably not for people over 70 years of age.
  (Ms Lomax) Yes.
  (Ms Cleveland) What we plan to do is for elderly pensioners who are either dealing with us over the telephone or using our local service to visit or go through other bodies they deal with like Age Concern, Citizens' Advice Bureaux to help people complete the forms.

  151. Obviously a lot of these people will not have the technology we are talking about.
  (Ms Cleveland) Most of it is the telephone.
  (Ms Lomax) It will be scripted dialogues over the telephone basically. Someone else will be filling in the form.

  152. I am thinking again of elderly people who may not have been that able in any case and find these things intimidating and confusing. They may need to be taken through this and may not be able to understand what is happening anyway. That is true, is it not, even though otherwise they can do normal day to day things?
  (Ms Cleveland) Yes.

  153. I am just wondering what proportion of fraud, mistakes, whatever you call it, is really still made up of people who are genuinely making understandable errors given the complexity of the forms and their own aptitude which may not be great.
  (Ms Lomax) We do not have much fraud from the example you have just given of elderly people. Fraud is basically a working age issue. What it does is delay perhaps the time at which we can clear the claim because the form comes in and it has not been filled in properly and then it goes back. It comes back to the claims clearance issues which we were talking about at the beginning.

  154. How often do they have to re-fill that in for the minimum income guarantee, presuming their circumstances do not change?
  (Ms Lomax) Re-work of forms because of people submitting the wrong information or incomplete information is a major issue in the cost of administering the system.

  155. How often do they have to fill in the minimum income guarantee? Every five years or something?
  (Ms Cleveland) No; it would be if there were a change of circumstances, if they notice a major change of circumstance or not at all.

  156. Is it reasonable to assume then that most of the so-called fraud is amongst younger people with changing circumstances moving in and out of jobs?
  (Ms Lomax) Yes.
  (Ms Cleveland) Yes.
  (Ms Lomax) The key issues on Income Support are living together as husband and wife and undeclared earnings. Sometimes people are not living at the address they said they were but the two big issues are those two.

  157. As you identify people who have committed fraud or have had errors do you track those people and continue not just to look after them but literally help them. Some may be habitually making mistakes because they are absent-minded or may be continuously trying to defraud the exchequer. Do you track these people and keep after them and provide help and assistance?
  (Ms Cleveland) That brings in the risk assessment which we undertake for all new claims. If there is someone where there is a known history of inappropriate claiming, then they would have their claims checked.

  158. You target mainly those of higher amounts of money. Is there a risk of groups of people making serial mistakes but because they are below a certain threshold they are continuous losses to the exchequer because it is not worth looking after them or chasing them?
  (Ms Cleveland) When we are looking to identify them we do not know how much is involved until we identify the case, so we cannot target those which are smaller elements of fraud rather than bigger elements.

  159. I am not trying to make a value judgement here. What I am trying to get at is whether, if you find someone is a few pounds over, then you look at them again and they are a few pounds over again, you think it is costing you more than this to keep on chasing after this bloke and it just does not make economic sense. Do you make those sorts of judgement or not?
  (Ms Cleveland) No.

 


 
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