By Suzannah.Brecknell

24 Feb 2014

More than three years after its launch, the government’s Fraud, Error and Debt agenda is now moving fast – leading to much more coordinated action across government. Suzannah Brecknell reports on progress

It’s a familiar refrain: to use its money more effectively, government departments must get better at working together, sharing good practice, and measuring performance. So said the NAO last week, in a landscape report considering the debts owed to central government (see news). The report did, however, have some encouraging conclusions: it noted that “the climate is now right” for greater joint working, and said that the cross-government Fraud, Error and Debt (FED) taskforce established in 2010 has “galvanised greater cross-government action... [on debt] where there was previously little or no coordinated activity.”

Indeed, according to Mark Babington, fraud lead at the National Audit Office and a member of the taskforce: “This is really the first time there has been a cross government focus on losses due to fraud and error.” Its establishment, he says, is “very welcome because it’s really upped the importance of this and helped focus the debate.” The prime minister’s interest in a stock-take of fraud and error savings, and the focus placed on the agenda in the Autumn Statement, have emphasised how important senior ministers think the agenda.

The taskforce has “enabled departments to work more closely together,” agrees Simon Dennis, director for central government at SAS – an analytics company which works with HMRC and DWP on their counter-fraud work. It has achieved the age-old government aim of breaking down silos and “debunked myths about data-sharing”, he continues, suggesting it has given departments confidence to share data where before they were overly cautious.

The taskforce has also reported significant savings, totalling £3.5bn in 2011-12 and £6.5bn in 2012-13. Despite this positive momentum, however, challenges remain – many of them, such as measuring results and securing investment cash, common to much of government’s work – and co-operation with local government has not been so straightforward.

Measurement and timings

Babington stresses that departments must find ways to accurately measure the savings achieved through FED work. This might, he says, involve developing metrics to express counter-factuals – such as the impact of better enforcement on deterring fraud – and should involve faster reporting systems. Some departments depend on statistical data which is only produced periodically, he explains: for example, the Department for Work and Pensions measures fraud losses through national statistics published only twice a year. “We need to try and find a way to measure losses [closer to] real time, because then you can identify the effectiveness of your measures to try and tackle losses, and you adapt your particular approach if things aren’t [working],” he says.

Richard West, head of DWP’s Fraud and Error Service, says his department is using HMRC’s Real Time Information service to see “almost immediately if someone in receipt of benefits has started to receive earnings or a pension from an employer. This means we can quickly contact claimants and customers and help them understand the impact on their benefits, reducing the potential for fraud, error and over- or underpayments.” The system has been used in Universal Credit pilot areas, and he expects it to reduce error and fraud by £1bn over five years when it is fully rolled out.

While Babington speaks of the need to measure results in real time, or as close to it as possible, SAS’s Dennis adds that counter-fraud measures will also have to speed up as more government services become digital. As approval is given and payments are made more promptly, audits and checks of compliance will need to move more quickly too. The technology exists to do this, he explains – it’s used to check online credit card transactions, for example – but may need to be adapted to the public sector context.

“There are challenges in the scale at which [the public sector] operates,” he says, “and the fact that they need to deal with every part of the country, every demographic.” Private companies, meanwhile, can be more selective in the customers they engage with. So a system checking applications for a government service might demand more sophisticated ways to assess risk than those checking credit card transactions.

Questions of resource

The minutes of taskforce meetings reveal another challenge for this programme: ensuring resources are in place to keep it moving. In the October 10 meeting, for example, during a discussion about the Debt Market Integrator (DMI) project – which aims to set up a cross-government debt management service – it was noted that the scheme “has a big need for resourcing” in the shape of more staff.

This pressure on resources is “why it’s useful to have the cross-government perspective” says Babington: aligning departments’ FED funds and staff will produce the best results from the available investment. The DMI project looks like a good example of this, with staff or cash contributions from HMRC, DWP and the Cabinet Office. The minutes record that Minister for the Cabinet Office Francis Maude argued strongly that the DMI must not be allowed to fail for lack of resources. “The MCO asked for a meeting to resolve the issue as soon as possible,” they report. “The project must not get bogged down in discussions about resources”.

The DMI project has not been straightforward: the NAO report notes that it has been delayed due to poor information and as departments reconciled conflicting priorities. It is now in the tender stage, however, and illustrates how government intends to address resource issues by partnering with the private sector. Tender documents for the DMI indicate that the plan is to create a joint venture company, involving a private sector partner, that will provide debt collection and analytics services to central government using both private sector and existing civil service expertise and data. The service is expected to be available from November.

Share but share not liked

Another programme focused on joint working is the Single Fraud Investigation Service (SFIS), formally announced in last year’s Autumn Statement. DWP’s West explains that this service, due to launch over the summer, “will mean a single fraud investigator can investigate all types of welfare fraud, including DWP benefits, housing benefit and tax credits.”

However, local authorities are concerned about the move, says Ian O’Donnell, head of finance at Ealing Council and chair of the Fighting Fraud Locally Group. Under the SFIS, responsibility for investigating benefit fraud will move from councils to DWP, and local authorities are worried that their staff may have to transfer into DWP employment under TUPE. Many such staff also work on other areas of fraud investigation or counter-fraud work, says O’Donnell, and councils worry about losing essential skills and capabilities. “We’ve learnt that once staff have transferred to DWP, some district councils won’t have any fraud resource at all,” he says.

He adds that the Department for Communities and Local Government has been championing councils’ concerns in discussions with DWP and the Treasury, and notes that there is some good news: government will be providing £16.6m to help councils fight fraud over the next two years. This will not be enough to replace the resources lost to SFIS, he says, but –combined with the possibility of “radical reorganisation in the way councils tackle this problem”, such as joint fraud investigation hubs – it may go some way to mitigating its negative effects.

At the time of going to press, the DWP had not confirmed that council staff will be TUPE’d into the civil service; West said only that the DWP is “working with our partners in HMRC and local authorities to make sure we implement the service safely,” and will continue to work with councils once the SFIS roll-out is complete. O’Donnell also called on DWP to promise to share data from the new SFIS with councils. In response, West said that DWP has set up a joint working group with councils to ensure good data-sharing; if required, this could push for additional legislation to remove obstacles to information exchange.

O’Donnell is clearly concerned about the shift of FED staff from local to central government – but in general, he’s positive about how the agenda is progressing across the public sector. Like the NAO, he senses that the climate is right for greater joint working. “These are tough times, and we’re all struggling to resource things,” he says, “but I will say that there’s more movement in this area than there has been for a long time.” He adds that “all the signs are that people are talking, [and] they’re talking about the right things.” The challenge, he concludes, is for public servants to “harness that energy, so we can make things better.”

The Fraud, Error and Debt 2014 conference, which is supported by CSW's publisher Dods, will be held in London on 3 March. See

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