Weekly Benefit Savings Scheme
Part Two – The shattered scheme: Subsidy Order & Circular F17/99
The change that caused the major problem for the councils was an increase in the level of proof required in order to claim WBS. The previous subsidy order had already set in place the key element of the change. It simply said that a WBS could not be claimed unless "a fraudulent overpayment had occurred or would have occurred".
Fortunately the external auditors had missed this link at that time.
A fraudulent overpayment occurs when:
The first problem for councils is the level of proof required in order to demonstrate that an offence has occurred. This level will vary. Claiming of WBS is a civil matter and the recovery of the overpayment of benefit will occur through the Civil Courts. Therefore the level of proof is based on the balance of probabilities. For many fraud officers, especially where they were working to targets much higher than their baselines, this level of proof simply required a very loose view of the evidence before them and keeping the work to a minimum. The fact of the matter was that not all investigators understood that the test of "balance of probabilities" requires the additional test of reasonableness applied to it. What has also been misunderstood by investigators, the Department and the auditors is the nature of the 112(1)a SSAA92 offence, which is a strict liability(2) crime— a rarity in English Law.
It was very common practice to visit a claimant and find them not at home. Under these circumstances a letter was left requiring the claimant to contact the office. If the claimant failed to contact the office then the fraud officer would deem that the claimant was not at home and the officer would then state that the claim was fraudulent and claim the WBS. For some of the councils where this approach was used the claimant would simply reapply and receive backdated benefit.
The additional change in the 1998/99 subsidy that brought the whole thing into national debate, was the timing element. Now the order read "a fraudulent overpayment had occurred or in the case of a new claim would have occurred". In effect the DSS closed off the cash-cow that was known as "Knock-offs" and "Gone-aways". If a case was in payment you had to establish a period of overpayment rather than taking the claimant off benefit from the current date.
This was a problem if the claimant had moved without telling you, how did you know when they had gone. You had to investigate. It would not come as a great surprise that the landlord never knew when the claimant had left, especially if they were in direct receipt of the benefit. Directly paid landlords would always say that the tenant had left last Sunday in order to maximise benefit. No one should think either that this fib was given only by Rackman landlords. Social Landlords, Housing Associations and council's own rent sections all used this argument in order to keep rent arrears down, and who could blame them.
For a council’s point of view, council tax and council rents were subject to Audit Commission performance indicators, which politically were receiving more attention from council members. Joined up government had yet to be born — although in the civil service we seem to be still waiting for the conception.
Living Together cases where often a problem as you had to negotiate a start date for when the living together actually started. In other words you had to negotiate a period of overpayment in order to claim the WBS. Negotiation of course makes the investigator complicit in any offence that may be the result of the living together arrangements.
F17/98 attempted to set some standards on what was expected of investigators in order to achieve a proof of balance of probabilities. With all due respect to the Department, DSS policy officers seemed to show little understanding about the process of investigation and evidence gathering. While a valiant attempt at guidance, it lacked a proper link from law through concept to process. Guidance is difficult to write. At the end of the day it is only guidance and not legislation.
That having been said the guidance was much needed because nearly three quarters of the year had passed and no one knew what could be claimed as WBS and what would be removed from the audit by the external auditors. What was apparent from the circular is that meeting baselines was going to be difficult and resulting in much less WBS than theinternal targets already set by finance chiefs. This late in the financial year — considering for many councils the budget process had already been closed for the next year — the change was a critical problem.
Ministers tried to find a compromise between councils and the Department by introducing another change to the subsidy order. This change was known as the 75% rule, which allowed you to claim 75% of the WBS for gone away cases where you had made some effort to find the claimant who had gone away but had not actually been able to establish the date that they had left. The fact of the matter was that the "bad old" days of a half-hour investigation had disappeared. The Government and the Department were expecting something for their money.
In 1999/2000 it is difficult to remember the WBS roadshows of 1993 where the Department
was actively encouraging "knock-offs" in order to remove claimants from the
benefit records and therefore the national statistics. The best line from those roadshows
was the one where Department officials told us "You can use the money for whatever
you want. You can even build swimming pools with it." It was an invitation to print
money and swimming pools were built.
See WBS part 3 for "A scheme under pressure"