Monday, March 26, 2007

Fraudulent benefit fraud figures?

Following on from my post earlier regarding the prosecution success rate in comparison to calls to the Benefit Fraud Hotline I can exclusively reveal to you further Benefit Fraud Hotline statistics obtained under the Freedom of Information Act.

In the six years preceding the previously mentioned figures, the average number of calls each year to the Benefit Fraud Hotline was 199,191 (rounded up by 0.25). At the same time the average number of prosecutions achieved as a result of these calls for each year was 628. This actually represents an average hit rate of 0.31% so things are looking up from earlier (as an average at least)!

However, in addition to these figures there is also the question of the operating cost of the hotline. On Friday, in response to a question from the Tory MP, David Ruffley on this matter, the Parliamentary Under-Secretary at the Department for Work and Pensions, James Plaskitt said
"[t]he operational costs of administering the national benefit fraud hotline include the costs of administering the report-a-benefit thief online service. These costs cannot be separated. The available information is in the following table."
The table then presented to Parliament (at the top of this page) simply detailed the budget allocation, rather than the operating cost for the hotline on the basis of the reasons given in the quote. Now, this may of course seem perfectly reasonable, after all, the hotline costs and another "grass on your neighbour" project have a joint budget that cannot be separated, it makes sense to simply display the budget allocation instead right?.... wrong!

In figures I've received under FoI, the operating costs for NBFH during 2005/06 is not the £986,000 joint budget that Parliament was told and is in fact significantly higher for just the NBFH. The FoI response states clearly that the "actual operating costs for NBFH during 2005/06 was £1,212,901". This represents an overspend of £226,901 on NBFH alone.

The FoI response (drawn up in January) goes on to state that the "forecasted operating costs for 2006/2007 are £1,497,425" which is in marked comparison to the supposed budget allocation of just £597,010 in the Parliamentary response. This forecast represents an overspend of £900,415 on just one project in a budget that, according to the Government, exists for two distinct projects.

This leads to a few important questions. Firstly, who and how is the overspend being paid for? Secondly (and perhaps most importantly), isn't someone somewhere being fraudulent (how ironic) with the benefit fraud hotline figures?


kinglear said...

... and I'll bet they aren't even getting the £1.5m back

Benedict White said...

Dizzy, "This actually represents an average hit rate of 0.31% so things are looking up from earlier!"

Your earlier post shows a current hit rate of 0.28% so the service is going downhill.

Furthermore there are two potentially different reasons for this low hit rate.
1. Not enough resource is being devoted to investigating each allegation.

2. The hotline encourages vindictiveness rather than accurate and credible reports of fraud, and many people are being put through the wringer for little positive benefit.

If 1. is true, then the system needs a bigger budget, if 2 is true the system needs scrapping the day before yesterday.

BTW well done for the FOI success. When I get some I'll email you.

dizzy said...

"Your earlier post shows a current hit rate of 0.28% so the service is going downhill."

True, I was comparing a mean average ot a specific year.

The Remittance Man said...

King Lear,

I guess to find whether all this overspend, plus any overspend on the Grass Up Your Neighbour scheme, is worth it, one would have to ask for full details of the successfully prosecuted cases.

My gut tells me that if they get back even the amount the government has budgetted for this exercise I'll fall off my chair in amazement.

Adam said...

It seems to me that two important questions are, firstly, 'What is a normal law-enforcement hit rate for a tips hotline?' and secondly, 'what is the average total cost of a benefits fraud prosecution'. Those will help judge whether or not there is value for money here, or not.

dizzy said...

Actually Adma, I don't think this is really about "value for money" as such, and more about the fact that the NBFH provided me with figures that are wildly different to the budget allocations central Government says they have. Where and how is that overspend managed, and on what budget sheet?

Adam said...

Oh, sure, I agree with that. I was sort of carrying my train of thought forward from the previous thread (that was about value for money) and adding to what Benedict White said.

Count me all in favour of transparent accounting.

machiavelli said...

Bear in mind of course that the scheme's probably not designed to work in the first place. After all, benefit cheats overwhelmingly vote Labour...

Fahrenheit said...

Don't be fobbed off with budget allocations, they're almost always spurious.

As the watergate chap said, follow the money. DWP should have actual spend, right down to all the individual account codes related to the hotline, readily available at next to no cost.

The reason for the difference is that managers often put 'finger in the air' budget bids in at the start of the year, transfer funds around amongst themselves based on what they actualy need to spend, and then expect the whole thing to match the DWP total budget by the end of the year (the overspend/underspend issue is generally ignored as long as money can be transfered between budgets easily enough to hide it).

It's a dispicable but surprisingly common practice - Treasury turn a blind eye as long as the end-of-year results are right, and the Public Accounts Committee generally don't know enough about internal civil service processes to spot what's going on.

If they're presenting budget allocations to parliament as though they were actual costs, then that is seriously misleading as the two are only very lightly connected. Could be a genuine scandal here.


neil said...

Aside from the budget figures I think the true issue is whether or not the ends justify the means. The hotline creates a fear culture amongst benefit claimants that they may get caught if they try to cheat the system. In terms of actual return on investment I dont think it will be shown to be economic but I think its existence is more political than economic.

DannyC said...

Just thought I would give my 2 cents on the benefit fraud side of things...

I found the direct link for anyone wanting to support the capture of benefit thieves...