Weekly Benefit Savings Scheme
Part Six: WBS2000 – The Dance Mix
In parts one to five of this series we reviewed the history of the WBS scheme and it effects on fraud investigation budgets, resources, and processes. In The final days of WBS the Department of Social Security has remixed WBS producing a slightly different tune to dance to. A dub version with extra beats.
The announcement of changes to WBS scheme came in January 2000. Reduction in penalties increases in subsidy banding, financial links to Verification Framework, removal of the 30% reduction and the introduction of a prosecution subsidy.
This last element is particularly welcome and is linked to one of the government’s key objectives of reducing benefit fraud and redirecting the savings to other departmental heads, especially education. However one would have to wonder why more effort is devoted in reducing fraud in other departments for similar purposes.
On the surface the proposals should be welcomed, and have certainly been welcomed by council fraud investigators. The backdating of the subsidy order will produce an unexpected windfall for councils who have been prosecuting fraudsters in the last year. One can't help but to expect a claim of unfairness, by those councils who have not been part of the Sol-b prosecution project (1), but life is full of unfairness.The problem is the new prosecution subsidy is not a very good example of "joined-up thinking" which the current government is so proud. But more of that later, let us first look at the other changes and how they will effect fraud sections throughout the country.
WBS penalty rate
In previous year’s councils who have failed to meet 75% of the baseline had £1 for £1 of the amount unachieved deducted from their subsidy claim.
Example: a council with a baseline of £360,000 meeting only £180,000 would have had their subsidy reduced by £90,000. From April 1999 that penalty was reduced to 50p in the £1. In the same scenario the subsidy penalty will be £45,000.
One can imagine that a council who spends more on their fraud investigation than the penalty that may result, may start to wonder why bother. If they implement VF and designate the visiting officers as fraud officers, they will get some WBS at least at the 75% rate. For example: A council spends £120,000 on the investigation of fraud. Their baseline is £100,000. They achieved £110,000 in 1998/99. This represented an income of £2,500. This represents a physical financial loss to the council of £97,500.
In 1999/2000 the picture for the same council could look like this:
WBS |
Income |
Cost |
|
| V/Os pt cost met by VF funding |
£37,500 |
£50,000 |
|
| Other costs | £15,000 |
£20,000 |
|
| 25 @ £50 pw WBS at 75% | £30,000 |
||
| WBS baseline | £100,000 |
||
| Difference | £70,000 |
£22,500 |
The cost to council will be £40,000
WBS subsidy rates
The subsidy rates have increased for the bandings as follows:
Old |
New |
|
| Between 100%-199% | 25% |
30% |
| Between 200%-299% | 30% |
35% |
| 300% and above | 40% |
40% |
For a council that has a baseline of £350,000 but achieved £400,000 in 1998/99 would
have received subsidy of £12,500. The same scenario in 1999/2000 would represent subsidy
of £15,000
WBS/VF clawback scheme
The purpose of this scheme was to reduce by 30% of the "Gone-away" WBS for VF
compliant councils. It was a complicated formula that even DSS representatives claimed
they did not understand. It was set up to make adjustments to double counting. The
Department now admits that double counting between VF and WBS will be too small to make a
difference and have wisely disposed of the scheme.
VF take-up Incentive
For Local Authorities who are VF compliant and achieve between 75% and 100% of their WBS baselines will get an extra 10% on every pound achieved in the upper quarter.
For a council that has a baseline of £350,000 but achieved £400,000 in 1998/99 would have received subsidy of £15,000 plus an additional £8,700.In addition to the subsidy the department has also given us a new word: Incentivising.
The Prosecutions Incentive
This scheme is to be welcomed, but it does have implications not only on council
policies but also on courts and crime and disorder policies. The arrangements for the
scheme are straightforward but the impacts are wider. The mechanics and implications of
the scheme are reviewed in The next WBS paper (WBS part 7)
Closed Cases
The one area of WBS that needs to be resolved is being able to claim on closed cases. This needs to be resolved if the prosecution incentive is to be truly effective. For example: An investigation takes place, but during the gathering of the evidence the case is closed by an assessor or the computer when a review is due. WBS can not be claimed even if the case is successfully prosecuted. The subsidy order must be changed in order for Local Authorities to be able to claim WBS against all cases that are investigated and either prosecuted, given a penalty or are cautioned.