Part Three – A Scheme under Pressure 

The Benefit Fraud Inspectorate vs District Audit

To complicate matters was the appearance of an unofficial war between the Benefit Fraud Inspectorate and District Audit (DA). While hostilities were not actually launched, a District Audit spokesman warned that the "Benefit Fraud Inspectorate were a threat to Local Authorities"(1).  While a Benefit Fraud Inspectorate spokesman told delegates at an LGA fraud conference (2) that "we were receiving a poor service from our external auditors".

What was happening is that the Benefit Fraud Inspectorate were identifying that poor WBS claims were slipping through the annual audit. Why there was a discrepancy between the Benefit Fraud Inspectorate’s audit of WBS claims and District Audit’s audit of WBS claims has never been established. Some LA officers thought that it was a case of one-upmanship, while others felt that the DA had vested interest in turning a blind eye to incorrect WBS claims.

The DA was running a national data-matching exercise, of which they were putting great store in the results being achieved. The results were being measured in WBS, and much of that success would be called into question if the correct measures were used to test the WBS claims, since many of the successes were "knock-offs".

District Audit tried to set up a service of pre-inspection. A Benefit Fraud Inspectorate spokesman rubbished the service by posing the question, "Why would you pay District Audit to do the job that they should have already been doing". A valid question which resulted in the service not being taken up.

Councils were caught in the middle of this rivalry whichresulted in the Benefit Fraud Inspectorate inspectors identifying areas where the Auditors had failed. The knock-on effect was in a much more intense audit by the external auditors, who wanted to find areas that the Benefit Fraud Inspectorate had failed to identify.

No council could be expected to escape criticism from either body in this sort of environment.

The National Picture

The effects of the changes in WBS is that nationally the amount claimed by councils dropped by 30% with several councils not even achieving their baseline and some not achieving 75% of the baseline.

Failing to meet a baseline would untimely result in a penalty. One council with a baseline of £800,000 was originally panning to meet £1.4m. They actually achieved £400,000, the result was that instead of an income of £150,000 they received a bill for £400,000.

A national survey conducted by the Electronic Counter-Fraud Group in early 1999 showed that 90% of councils thought that they would meet their baseline but did not think that they would achieve beyond that. 6% thought that they would not meet their baselines and the remaining 4% not being able to express a view. The overall view was "Be afraid, be very afraid".

The Audit Commission showed reported Housing Benefit fraud in their 1997 report, "Protecting the Public Purse" at some £980,000. In 1998 it dropped to £850,000 but in the recently published 1999 report it had risen to £1,040,000. The AC report is based on fraudulent overpayments and not on WBS. This may be in line with the move to designate over claiming to fraud, which attracts an 80% subsidy rather than claimant error, which is 25%.

The current state of affairs is given in a recent Benefit Fraud Inspectorate on a local authority from the kingdom of Gruffydd ap Rhydderch:

1. 1997 CIPFA Audit Conference in Warwick

2. 1997 London conference

See WBS part 4 for a changing Culture