Benefit Fraud

Prosecution and Sanctions Policy

Canterbury City Council, Dover District Council and Thanet District Council have entered into a new shared service to allow joint working and make savings in the Benefits, Council Tax and Business Rates sections.

Where 'EK Services' and 'EKS' is mentioned this refers to the shared service between these three authorities.

Introduction

This document sets out EK Services’ (hereafter referred to as ‘EKS’) policy on undertaking criminal proceedings or alternative sanctions against persons who have committed criminal offences against the Housing Benefit and Council Tax Benefit system.

EKS is committed, on behalf of its clients, to protecting public funds and is aware of the risk of fraud and error within the benefits system. It also recognises that where benefit fraud is detected it needs to be dealt with in a firm but fair manner, both to punish discovered fraudsters and to serve as a deterrent to others.

General principles

EKS is committed to the prevention, detection, correction, punishment and deterrence of fraudulent benefit claims. This policy is aimed squarely at the ‘punishment’ and ‘deterrence’ strands. The aim is to punish wrongdoing, to prevent further criminal offences occurring by making it clear to our customers that they have a responsibility to provide accurate and timely information about their claims; and to deter offending.

This policy supports and complements the Department for Work and Pensions (DWP) and Her Majesty’s Revenue and Customs (HMRC) strategy document ‘Tackling fraud and error in the benefit systems’ (2010). It also demonstrates EKS’s determination to drive down fraud in Housing Benefit and Council Tax Benefit, on behalf of its clients.

Each case that is subject to criminal investigation is considered on its own merits, having regard to all of the facts, before an appropriate sanction is selected.

Organisation

Criminal investigations are undertaken by EKS’s Benefit Investigation section, in accordance with the Police and Criminal Evidence Act 1984 (PACE), its Codes of Practice, and all other relevant legislation and common-law rules, and with advice from the relevant council’s Legal section.

Staff undertaking such investigations have been trained to Professionalism in Security (PINS) standards, a nationally recognised standard within local authorities, DWP, the NHS, and HMRC. Guidance is provided to staff and regularly updated in the form of circulars from DWP. This ensures that staff:

• Carry out investigations lawfully
• Interpret policy and the law correctly
• Make best use of recognised best practice

EKS and its client councils also work closely with DWP and have aligned this prosecution policy to that of the DWP. EKS supports joint working activity such as joint interviews under caution and investigations, to ensure the full extent of any benefit fraud is dealt with appropriately. Client councils have signed the ‘Partnership Agreement for Benefits Administration, Security, and Fraud’, which is the document which governs the mechanics of joint working on benefit fraud between councils and DWP.

Investigating and prosecuting DWP paid benefits

Statutory Instrument (SI) 2008 No. 463 Social Security, The Social Security (Local Authority Investigations and Prosecutions) Regulations 2008, came into force from 7 April 2008. This Regulation, introduced within the Welfare Reform Act 2007 (WRA), gives local authorities (LAs) clear powers to investigate and prosecute offences against certain national social security benefits alongside local ones. The above Regulations define the extent of these powers for LAs and the certain national benefits, namely

• Income Support
• Jobseekers Allowance
• Incapacity Benefit
• State Pension Credit, and
• Employment and Support Allowance

LA authorised officers can exercise these new investigation powers, into fraud against the national benefits, when also investigating fraud against HB/CTB in the same case. They will also be able to continue the investigation even if the HB/CTB element of the investigation is not affected. Similarly, when a LA in England and Wales has completed an investigation it can continue with a prosecution of the national benefit regardless of whether the LA bring proceedings against the HB/CTB. These new powers are entirely voluntary and it is up to the LA to determine whether to bring proceedings when there is no HB/CTB offence.

Options

When fraud is discovered there are 4 punitive options available. These are: Prosecution, Administrative Penalty, Formal Caution, recovery of overpayment only.

Prosecution is a criminal prosecution through the Magistrates or Crown courts undertaken by LA solicitors, the DWP Prosecution Division, or by the Crown Prosecution Service (CPS) through the police. This is the most serious form of sanction that a local authority can take in cases of benefit fraud.

An Administrative Penalty can be offered as an alternative to prosecution, in suitable cases. The penalty is 30% of the amount of benefit fraudulently obtained and is recouped in addition to the overpaid benefit. The penalty is offered at a formal interview and if it is refused then the local authority must consider prosecution action.

A Formal Caution can be offered as an alternative to prosecution, in suitable cases. Formal Cautions are usually aimed at the less serious benefit frauds, and those where the overpayment is less than £2,000. A caution can only be offered where the person has admitted the offence at an interview under caution. Again it must be offered at a formal interview and if refused the local authority must consider prosecution action.

Recovery of overpayment only. This is to be used where the circumstances of the cases are such that it is felt that any kind of sanction action would be inappropriate, although if benefit has been overpaid the authority will still pursue the offender for repayments.

The DWP have announced, in their strategy document ‘Tackling fraud and error in the benefit and tax credit systems’ (2010), their intention to no longer issue cautions in cases where criminal intent is proved. Instead, they will introduce a tough minimum penalty, in the region of £350, plus four weeks loss of benefit payments. However, until legislation is passed that enables such penalties, the option of issuing a Formal Caution will be retained.

In the same document the DWP announce their intention to ensure that administrative penalties more accurately reflect the severity of benefit fraud by raising the penalty rate from 30% to 50%.

Additional measures to sanction and prevent benefit fraud (Loss of Benefit Provisions, also referred to as ‘One Strike’ and ‘Two Strikes’)

If a person is convicted in court, accepts a Administrative Penalty or a Caution as an alternative to prosecution, any benefit they receive now or in the future may be the subject of a reduction or withdrawal in accordance with the Social Security (Loss of Benefit) Regulations 2001 as amended by the Social Security (loss of Benefits) Amendment Regulations 2010.

‘Two strikes’ legislation applies where a claimant, their partner, or a family member is convicted of a second benefit offence in two separate proceedings of offences relating to disqualifying benefits and the second offence commences within 3/5 years of a previous conviction. For this to apply both the offences and convictions must have occurred after 1 April 2002. If a ‘two strikes’ sanction applies then a person’s qualifying benefit is reduced for 13 weeks.

‘One strike’ legislation applies where a claimant, their partner, or a member of their family is convicted of a benefit offence (or accepts and Administrative Penalty or Formal Caution), and the offence was wholly committed after 1 April 2010. If a ‘one strike’ sanction applies then a person’s qualifying benefit is reduced for 4 weeks.

Only FIS (acting as the Secretary of State) can ‘determine’ whether a loss of benefit sanction applies. Following a Conviction, Caution or Administrative Penalty for a benefits offence, EKS will provide FIS with relevant information to consider if the Loss of Benefit Provisions (one or two strikes) applies.

Who Decides Whether to Prosecute?

The ultimate decision as to whether or not to instigate criminal proceedings rests with the relevant council’s Head of Legal Services. The decision whether or not to refer a case for prosecution to the Head of Legal Services is made by the relevant council’s nominated officer.

Prior to this the Investigation Team Leader and the Investigating Officer will have made a recommendation to the relevant council’s nominated officer regarding the appropriate disposal for the case, adhering to the Code for Crown Prosecutors, and using the following basic criteria:

• Is there sufficient evidence for a realistic prospect of a conviction? (The Evidential Test)
• Would a prosecution be in the public interest? (The Public Interest Test)
• Would an administrative penalty or Formal Caution be a sufficient disposal of the case? (Test of reasonableness/proportionality)

What Should Be Considered?

In making a decision, the following factors should be taken into account before recommending a case be considered for prosecution:

• Has a sufficient level of dishonest intent been displayed. This is done by looking at the number of misrepresentations made and the length of time that the individual failed to report a change in their circumstances.
• Was the offence disclosed voluntarily. I.e. If the individual informed us that they had committed an offence and wished to repay any fraudulent overpayment.
• Has the individual committed fraud in the past. This is done by checking with the DWP, who have access to national records.
• Was the offence premeditated. I.e. was the claim clearly fraudulent from the outset, was conspiracy involved, were others involved in the deception and were forged documents used.
• The balance between how much money has been obtained and the cost of bringing a case to court. The cost of a lengthy prosecution action could negate taking the case to court.
• The duration of the offence. The longer period the offence has occurred over the more likely it would be that prosecution is appropriate.
• How clear cut the evidence is. We would look to see if it is a case of failing to report a change in circumstances or were false documents supplied in support of the offence.
• The individuals well being at the time of the offence. If the claimant had health issues that may have caused or contributed to the offence.
• Whether there was any failure in the way the Housing Benefit or Council Tax Benefit Schemes were administered. This might not preclude us from prosecuting but we would try and put right what we feel might be weaknesses in our administration of the scheme.
• Have there been prejudicial delays that might have occurred in bringing criminal proceedings that would prevent a fair hearing. There are specific time limits to be adhered to when considering prosecution and we must work within these.
• The likely sentence that might be imposed.
• The likelihood of the individual re-offending. At the conclusion of the Interview under Caution (IUC) it would be clear to an experienced investigator if true remorse was felt by the individual.
• The amount of benefit that has been overpaid.

Our general policy is that each case is considered on its own merits using the guidance detailed above. Even if there had been no financial gain attached to the fraud (and therefore no loss to public funds) we would still consider prosecution or sanction if the circumstances of the case pointed to this being appropriate.

Whenever possible we will try to align our decision making on whether to prosecute or sanction with guidance and policy that the Fraud Investigation Service (FIS) of the DWP use. This will ensure consistency of treatment of benefit offenders.

The ‘financial bands’ that FIS work to are as follows:

The table above generally applies to ‘first-time‘ offenders. Clearly if a person has previously been formally cautioned and it is subsequently proved that they have defrauded the benefit system again to the tune of £300, for example, then another Formal Caution would not be appropriate as it has had no deterrent effect the first time.

EKS therefore reserves the right to deviate from the above ‘financial bands’ if the circumstances of the individual case warrant it, bearing in mind all the decision making criteria as above.

Once all evidence is gathered, the Investigating Officer holds a case conference with the Fraud & Visiting Team Leader. Having considered the facts and evidence of the case the Fraud & Visiting Team Leader makes a ‘recommendation for case disposal’. If the case is considered suitable for a Formal Caution or an Administrative Penalty, the case is passed to the Support Manager to authorise that sanction.If the case is considered suitable for prosecution the case is passed to the relevant council’s nominated officer. The council’s nominated officer, if in agreement with the recommendation, then passes the case to the appropriate council’s Head of Legal Services to authorise criminal proceedings.

If the case is one where a joint investigation has taken place, each agency must satisfy itself that prosecution is the appropriate course of action. Therefore, regardless of which agency will ultimately be the prosecuting agents, the EKS case file must be authorised for proceedings by the nominated officer and the Head of Legal Services at the local authority.

There may be occasions where EKS wishes to apply sanctions against persons who are not actually receiving Housing Benefit or Council Tax Benefit. For example, landlords may commit fraud individually or in conspiracy with claimants. This policy applies equally to recipients and non-recipients of Housing Benefit and/or Council Tax Benefit to cater for such situations.

Alternatives

As described above Administrative Penalties, Formal Cautions or Recovery of Overpayment only are alternative courses of action available to the authority.

The offering of an Administrative Penalty will be considered if

• The case is not so serious that prosecution is the only option
• The claimant has been notified of the Decision Maker's decision, overpayment and appeal rights
• The overpayment is not so small as to make the penalty negligible nor so large that prosecution should be the first option (as above)
• There are no factors that would mean the authority would not want to prosecute the case should the offer of the penalty be declined
• The person has no unspent previous convictions, cautions or administrative penalties

The issuing of a Formal Caution will be considered if:

• The offence is relatively minor and any court sentence is likely to be small
• The case is not one where an Administrative Penalty should be considered
• The loss to public funds is small
• There are no factors that would mean the authority would not want to prosecute the case should the caution be declined
• The person has admitted the offence during an interview under caution
• The person has no unspent previous convictions, cautions or administrative penalties

Overpayment recovery only (i.e no prosecution or sanction) will be considered if:

• The case would involve the authority in adverse publicity
• An examination of the papers reveals errors in procedures, such as unnecessary delay
• Sanction/prosecution action would place a vulnerable person at risk, such as an informant

Who Takes the Prosecution?

The Social Security Administration (Fraud) Act 1997, gives local authorities the necessary powers to undertake criminal proceedings in respect of Housing Benefit (HB) and Council Tax Benefit (CTB) offences. The Social Security (Local Authority Investigations and Prosecutions) Regulations 2008, effective from 7 April 2008, gave local authorities the legal powers to investigate and prosecute certain ‘national’ benefits, as listed above, alongside HB and CTB.

If it is recommended that the council should prosecute, the Director of Shared Services will sign a ‘Certificate of Authorised Sanction / Prosecution’ giving their authority for the case to be passed to the appropriate council’s nominated officer. They will then discuss the case with the Head of Legal Services and consider instigating proceedings. Once the certificate has been signed the Investigation Team Leader will pass the case to the Head of Legal Services.

If during the investigation it becomes clear that there is a serious doubt as to the identity of the suspect(s), or as to their place of permanent residence, the Police may be called to conduct an arrest of the suspect(s). All of EKS’s client councils have signed up to an arrest protocol with Kent Police that outlines the circumstances and procedures to follow when an arrest will be considered.

Should the suspect(s) subsequently be interviewed at a local Police Station the case will normally be taken forward by the Crown Prosecution Service or passed back to the appropriate council’s own Legal Section, if appropriate.

Where the suspect is to be prosecuted by the DWP, the council may ask the DWP to prosecute on its behalf, via the DWP’s Prosecution Division. In such cases the council’s case file will already have been scrutinised and authorised for prosecution by the Director of Shared Services.

Publicity

In order to act as a deterrent against benefit fraud EKS will, with agreement from the client council, publicise cases where offenders have been prosecuted for fraudulently obtaining benefit. This will be done via the client council’s Press Office to ensure press releases adhere to required standards and approval process. Consideration will also be given to issuing more general press releases during the course of the financial year to further highlight the activities of EKS’s investigation team, and to ensure that local people are kept informed as to how they can contact EKS with their suspicions.

In cases jointly investigated with DWP, EKS will advise the client Council’s press office, so that they can liaise with the DWP Press Office to ensure a consistent approach to publicity. The client Council’s press office will be responsible for issuing out all information to the media and placing them on the client Council’s website. They will also be the first point of contact for press enquiries, speaking to EKS to obtain information and agree a response.

Recovery of debt

Where an overpayment arising from fraud is identified, in all cases EKS will take all appropriate steps to recover the resultant debt, including taking action in the civil courts if necessary. This is in addition to any sanction the client council may impose in respect of that fraud. This is to reinforce the message that ‘crime doesn’t pay’. Methods of recovery used by EKS are:

• Recovery from ongoing benefit
• Recovery from ongoing DWP benefit
• Invoicing
• Attachment of earnings order
• Recovery through civil court process

Relevant legislation

Relevant legislation used when considering cases for prosecutions and other sanctions can be found within the following Acts:

• The Theft Act 1968
• The Theft Act 1978
• Criminal Justice Act 1991
• The Social Security Administration Act 1992
• Criminal Procedures and Investigations Act 1996
• The Social Security Administration (Fraud) Act 1997
• Human Rights Act 1998
• Regulation of Investigatory Powers Act 2000
• The Social Security Fraud Act 2001
• The Fraud Act 2006
• The Welfare Reform Act 2007
• The Welfare Reform Act 2009

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