Successive British governments have set targets to achieve
multi £bn savings from enabling citizens and business
to transact with local and central government departments
in real time, on line. Central and Local Government has
invested £bns in pursuit of this objective but this,
as with most initiatives, is not without risk. Unfortunately, in order to achieve
the aggressive targets set, most departments and authorities
have focused their efforts on designing, building and
implementing the systems required.
The difference with the risks associated with the eGovernment
initiatives as opposed to others is that the speed and
efficiency of the computer, the main focus of the initiative,
will serve to both speed and amplify the consequences
of errors when they occur.
In order to avoid these risks when developing their e-strategies,
organisations must focus effort, resource priority to
developing means of monitoring the activities and process
that the new systems are designed to automate. Failure
to do so is nothing short of negligence on the part of
the authority and the executives there of.
Paying benefits under the New Tax Credits (NTC) was a major
government initiative designed to get people back to work.
Under the initiative, rather than receive a cheque from
the Benefits department and pay tax to the Inland Revenue,
HMRC would pay your benefits by way of reducing your tax.
This massive project was beset with problems from the start
when the system failed to perform sufficiently, resulting
in many benefits claimants have their cheques stopped but
not receiving their tax credits as they should.
Under NTC claimants are legally required to advise HMRC
of any changes that might affect their entitlement and ,
as a minimum, submit annual returns confirming their status.
A claimants Tax Credits would automatically be stopped if
a return was not received and, if HMRC were not notified
of a change of circumstance the claimant would be held liable
for any over payment made by HMRC. Both these factors are
subject of massive advertising campaigns in the press, national
radio and national television.
To be effective, this strategy relies heavily on the speed
of information exchange and, to be cost effective to the
government, minimal human intervention. As such the then
Inland Revenue introduced a NTC portal through which claimants
could submit returns and other information electronically.
Identification of Issue
Unfortunately HMRC has
not published any details as to how or when they identified
this issue. As a result, it is difficult to determine how
much of the £4bn of over payments and fraud that HMRC
acknowledge is due to this particular form of fraud.
Cause
Organised crime.
Implications
To the Genuine Claimant
Many of these claimants are the most vulnerable in society,
those who can least afford delays in receiving payments
and least likely to be able to return over paid benefits.
As a result of the fraudsters, the legitimate claimants
have been forced to endure the delays associated with
the circumstance, and some have been put in very awkward
positions as a result of the HMRC being unable to process
the claims efficiently at times of high demand, i.e. when
the annual returns are due.
To HM Government
The most obvious implication to the government is the
increased cost and delay involved in processing claims.
Having said this, must be compared to the potential losses
that might otherwise have been made had the attempted
fraud gone unnoticed.
Whilst some might consider this a failure on the part of
the government, the fact that the attempted fraud was identified
must be considered a success. It demonstrates the importance
and value of monitoring system throughput, as without such
monitoring the fraud would have continued.
Having said this, the reason NTC was being so closely monitored
was that it had previously been identified that the system
had made over £4bn in overpayments over the previous
two years. How much of this was due to the use of DWP staff
details has not been made public.
Implications to Senior Executives - None, but…..
Where such losses have been made in the private sector companies
have folded and senior executives have lost their jobs and
reputations. More increasingly, where such losses now occur
the senior executives are also being held accountable in
law with many high profile cases of executives being prosecuted.
If a local authority were to make a similar scale of losses
it is likely that, being publicly accountable, the senior
executives would found liable and might be surcharged, dismissed
and prosecuted.
Solution
Issue Identification
Issue
Resolution
Issue Prevention
A RAS Audit solution would make use of multiple data
sets to identify potential fraud. For example, given that
all employees of the DWP have a national insurance number
that is used in the HMRC records of their employment,
the RAS audit would use this and other key data fields
from the HMRC Tax records to determine if a claim appeared
genuine or otherwise. This would identify where more than
one claim was being made for a given individual, where
different addresses were recorded in both systems or where
tax records indicate that a DWP employees earnings were
such that they were unlikely to qualify for New Tax Credits.
Once built this audit could be run on a monthly basis
to identify records that were indicative of attempted
fraud and where other elements of the claimants submissions
and payments were otherwise incorrect or failed to reconcile.
In terms of the fraud element of this case study, there
is no means by which the issues identified could be resolved
with out careful, manual intervention, including contacting
the claimant concerned. Such an audit may however, identify
other issues such as miscalculations or incorrect addresses
etc, where the correct values could be easily identified
and implemented. Where this involved high volumes of records
a RAS Rectifier solution could be used to identify and correct
the incorrect records.
It is possible that a RAS
Enforcer solution could be implemented to identify attempted
fraud at the point of data capture. A RAS Rectifier solution
could be used to validate all the data fields of a claimant's
submission and then compare the key personal data to those
held by the HMRC in other systems to validate their integrity.
This would enable the HMRC to validate the claimant's identity
as well as the legitimacy of the claim at the earliest possible
stage. It is probable that, where suspects records were
identified, RAS would recommend that they be flagged for
investigation, thus providing HMRC and the authorities with
the opportunity to catch those trying to defraud.
In December 2005 HMRC was forced to close the NTC portal
as it was discovered that organised criminals had gained
access to the personal information of Department of Work
and Pensions (DWP) staff and were using them to make fraudulent
benefits claims.
In March 2007 the portal remains closed, forcing claimants
to submit information by telephone, in person at DWP offices
or in writing.
