Research and analysis

Summary: Findings from the Local Authority Insight Survey Wave 34: Fraud and error in Housing Benefit, changes to local authority structures and services and Housing Benefit limiting absences outside Great Britain

Published 18 December 2018

By Joanne Maher and Tim Buchanan.

This report presents findings from wave 34 of the Local Authority Insight Survey (LAIS), which focuses on:

• fraud and error in Housing Benefit (HB)
• changes to local authority (LA) structures and services
• HB limiting absences outside Great Britain (GB)

This online survey of HB managers at 380 local authorities (LAs) was conducted in spring 2018.

Main findings

Fraud and error in HB

Encouraging or educating HB claimants to report changes of circumstances was the most commonly used way to combat fraud and error but it is very difficult to measure the success of it.

The top 2 influences on fraud and error were pressures on resources and the fluctuating earnings of claimants, both of which were considered the most significant influences.

LAs use Customer Management Information (CMI) primarily to compare themselves with other LAs and as a means to judge performance. A majority (90%) understand the data (partly or fully) and those who use it overwhelmingly consider it accurate.

The Verified Earnings and Pensions (VEP) service is considered very easy to use and very effective by a small majority of LAs. Most others thought it fairly easy to use and fairly effective.

Changes to LA structures and services

The most likely services to be introduced in response to welfare reform were personal budgeting support funded by Universal Credit (UC) through Universal Support (US), assisted digital/digital support, again funded by UC through US and UC information.

All LAs had carried out multiple preparations for welfare reform.

LAs consider their relationship with the Department for Work and Pensions (DWP) locally to be largely good.

HB: limiting absences outside GB

Whilst the majority (60%) of LAs said that they had not seen an increase in denials of HB, just over a fifth (22%) had seen an increase since the limit of 4 weeks was introduced in July 2016.

The new limit has had either a small or no impact on LA workloads and any impact is largely manageable.

Methodology

NatCen Social Research (NatCen) conducted an online survey of HB managers and those in a similar position at 380 LAs in England, Scotland and Wales. Email invitations containing unique links to the survey were sent to each LA. In total, NatCen received responses from 132 benefit managers which covered 140 LAs. This amounts to an overall response rate of 38%, in line with other waves of the LAIS.

The survey responses in the report are drawn from the experiences of the benefit managers at the LAs and reflect the varying policies and practices of LAs.

Policy background

Fraud and error in HB

The Right Benefit Initiative scheme, which ran for 12 months from April 2017, provided LAs with funding to tackle earnings and employment related Fraud and Error by processing Real Time Information (RTI) referrals.

CMI is a proxy measure of HB fraud and error and provides an estimate of how well each LA is managing their HB caseload. By identifying the changes of circumstances that lead to a reduction in entitlement LAs can take action to minimise or prevent overpayments from occurring – thereby minimising fraud and error.

Due to methodological changes in CMI, current statistics are delayed and the revised date will be published on the statistics release calendar and the Housing Benefit entitlement reduction statistics page.

The verification of employment and pension income is a lengthy clerical process, which relies on claimants providing accurate information. DWP’s mission is to provide DWP and LA users with a simple, fast and reliable way to verify claimants’ earnings and to help users identify claimant error before it enters the welfare system. This is done by allowing HB processing staff in LAs access to the VEP service which is a user interface that shows the latest and historic payment information for the claim duration as reported by employers to HM Revenue and Customs.

For 2018 to 2019, £25 million has been allocated to support the administration of the VEP Service Alerts; with a similar amount available in 2019 to 2020. This will reduce thereafter in line with UC rollout plans and migration. Funding is to provide LAs with the capacity to process VEP Alerts and RTI referrals where LAs are awaiting the rollout of the service.

Changes to LA structures and services

Since 2013 a series of welfare reforms have been implemented which aim to make the welfare system fairer and improve work incentives; these include the removal of the spare room subsidy and the benefit cap. The rollout of UC during the same period, accompanied by US, has changed the role of LAs in delivering welfare and support services.

The fieldwork for this research took place between 26 February 2018 and 29 March 2018, developing the evidence base for US ahead of an internal review, which led to the announcement in autumn 2018 that Citizens Advice would be delivering US (funded by DWP) from April 2019.

The impact of limiting absences outside GB to 4 weeks on local authorities and claimants

In July 2016 DWP introduced a limit of 4 weeks to absences outside GB for HB (bringing it in line with UC), although there are still some exceptions (for example absence relating to bereavement).

Claims with absences of more than 4 weeks (including those that state they will have such an absence at the new claim stage) are automatically stopped and the claimant must reapply on their return to GB.

In respect of the potential impact on claimants, DWP expected (as certified by the Office for Budget Responsibility) that over half of claimants would adapt their behaviours to avoid any benefit losses and that around 35,000 would continue to take an absence between 4 and 13 weeks and incur a loss of benefit of, on average, around £600 in total per year. The impact on LA workloads was therefore projected to be minimal.

Aims of the research

Specific objectives of the research in relation to fraud and error in HB, changes to LA structures and services, and the impact of limiting absences outside GB were to understand:

• which other activities they had implemented to manage their caseloads and help reduce fraud and error and to rate the success of these activities
• to identify the influences on fraud and error in the LA
• to quantify and capture changes to LAs’ structures and services in response to welfare reforms, as well as their priorities for financial year 2018 to 2019
• if the expected impact on HB absences outside GB was as manageable as predicted
• if any specific claimant groups had been impacted to a greater extent than predicted

Full findings

Fraud and error in HB

After encouraging or educating claimants to report changes of circumstances, the second most likely method of reducing fraud and error in HB was data matching of claimant records; which was considered a success by many LAs and can be measured from management information.

In general, LAs would like more resource to tackle fraud and error and they would like to take back control of it. They also ask that data provided through RTI and VEP service be accurate, that DWP fraud services are more accessible to them, and that DWP definitions match those of LAs.

LAs want clearer guidance on the methodology used for CMI and request that the information is easier to understand.

Changes to LA structures and services

Half of LAs utilise a mixture of direct service provision and contracted out services, whereas a third of LAs provide all services directly.

The most commonly contracted out services were debt advice, and Personal Budgeting Support (funded by UC through US).

The top 3 partners to LAs to assist them with HB and welfare services are:

• Jobcentre Plus
• Citizens Advice
• housing associations

LAs’ priorities for the next 12 months (February 2018 to February 2019) include the rollout of UC, managing Discretionary Housing Payments (DHPs) as well as changes to temporary accommodation.

LAs would like DWP to assist by improved funding, better and more timely communications, continued support and liaison through partnership managers, removing barriers to data sharing and better quality data.

The impact of limiting absences outside GB to 4 weeks on local authorities and claimants

Whilst the majority (60%) of LAs said that they had not seen an increase in denials of HB, just over a fifth (22%) had seen an increase since the limit of 4 weeks was introduced in July 2016. The remaining 18% were unsure and a similar proportion (but not the same LAs) said the new limit was impacting specific groups, including:

• Asian families going home to visit family or on pilgrimage
• EU workers going home for long holidays
• pensioners going away in the winter for their health

The new limit has had either a small or no impact on LA workloads and any impact is largely manageable.