Fraud and Error Strategy delivery Overview and planning assumptions 1.

This strategy is owned jointly by DWP and HMRC and confirms their shared commitment to reduce significantly the scale of welfare fraud across the benefits and tax credit systems by 2015. The detailed initiatives set out in this strategy, along with those set out separately by HMRC in its Delivery Plan, aim to achieve a reduction in the overall monetary value of fraud and error (MVFE) across benefits and tax credits of over one quarter, or 1.4bn by 2015 (Annex 1 figure 1) . 2. This reduction consists of: 600m in Tax Credits for which HMRC is taking forward a separate programme of initiatives based on its Delivery Plan 600m in existing DWP benefits to be achieved through 20 projects covering the key strategy recommendations, that will be delivered solely by DWP or jointly with HMRC, but managed and monitored as a single change programme (Annex 2 figure 3) ; and 200m from the introduction of Universal Credit (Annex 2) 3. As a consequence we anticipate the proportion of expenditure due to fraud and error in the DWP Benefit System to reduce from 2.2% in 2009/10 to 1.7% by 2015 (Annex 1 figure 2). 4. The Strategy committed to an additional investment of 425m to deliver the measures and step change reduction in levels of fraud and error in the benefits and tax credit systems. As we have refined our thinking we have reduced the costs to implement and deliver these reductions has reduced to 375m as our plans have developed. (Annex two: Financial DEL / AME overview). Plans and Implementation 5. A joint Programme Management Office (PMO) has been set up to manage the implementation of the 20 projects across DWP and HMRC. The projects have been developed in line with the five key elements of the strategy; to prevent fraud and error in the first instance; detect and correct fraud and error where it does exist; deliver tough punishments for those who defraud the system; and deter those who would try to abuse the system in future. Project leads were established in December 2010 to work with stakeholders and develop project briefs and plans. A more detailed project list, an implementation timetable and programme high level milestones is set out in Annex three: The strategy programme. 6. The design phase for activity is now complete and the first phase of delivery (2011/12) has begun, with early outputs from the programme now being delivered.

7. The Welfare Reform Bill has been introduced and includes a number of clauses key to delivering the new sanctions and debt regimes, as well as changing the investigation powers required for the new Single Fraud Investigation Service (SFIS). 8. As part of introducing the Integrated Risk and Intelligence Service (IRIS), a joint pilot (DWP and HMRC) has taken place using CRA data to prompt letters to customers suspected of having an undisclosed partner. This pilot is based on an operational model tested successfully in HMRC. The pilot will be evaluated in July 2011. 9. The ATLAS project, an IT development that will automatically inform local authorities where there is a new or change of award in DWP benefits or tax credits, has been successfully tested and went live in May 2011. 10. Over the summer, the first phase of the Mobile Regional Taskforce will begin. The area the Taskforce will be deployed in is currently being identified through analysis of fraud data and the Taskforce will be a joint DWP, HMRC and Local Authority initiative. 11. All case cleanse activities are now underway across the major benefits and have already saved over 3m in AME savings since April 2011. Jobcentre Plus has established a Benefit Integrity Centre with operational resource dedicated to cleansing IS, JSA and ESA, with a particular focus on customer error. Governance 12. Strategic oversight and governance is in place for the programme. The Fraud and Error Council (FEC) meets every 6 weeks and provides strategic leadership for the DWP elements of the strategy. Membership of the Council is at Director level and includes senior stakeholders from across the department. The Joint Strategy Programme Board (JSPB) is held monthly to oversee all joint areas of activity. The JSPB is jointly chaired by the respective SROs for HMRC and DWP (Annex 4: Governance). 13. Individual programme boards have also been established for the IRIS and SFIS/Mobile Regional Taskforce. Representatives from across DWP as well as HMRC and Local Authorities are members of these boards. In addition Project Steering Committees will be set up as appropriate to ensure delivery across the full programme. Monitoring progress 14. A benefits realisation plan is being developed across the programme to set out what is to be delivered, where and when the benefits will occur, and who will be responsible for their delivery. The plan will also set out the programme dependencies and identify other financial and non-financial benefits arising from the programme beyond the MVFE reduction and AME savings outlined above (Annex 5: Project dependencies). 15. Each project has now been issued with an agreement which set out the terms of delivery, their approved DEL and AME profile as well as reporting and monitoring arrangements. Project will provide highlight reports to the PMO, on behalf of the Fraud and Error Council and Joint Strategy Programme Board on a monthly basis to enable progress to be monitored against the project agreements and benefit realisation plan.

16. The benefits realisation plan and project agreements will be used to track, monitor and manage the collective set of benefits associated with the programme. The Fraud and Error Council will oversee the programme and will monitor delivery of DWP AME savings against the DEL investment. The Joint Strategy Programme Board will oversee and monitor the delivery of the joint elements of the programme. 17. Additionally, the departments Risk Assurance Division is performing an audit review of the fraud and error strategy to ensure effective governance is in place and assist at the outset of our delivery programme. 18. We have established a change control and escalation process to ensure performance is monitored closely. If there is any significant change that could affect the scope, timescale or DEL/AME profile of a project that will impact on the overall programme, this will need approval at the appropriate board level. 19. Importantly, in addition to this our Fraud and Error Account Managers will use diagnostic analysis, including root cause, to show the impact of activities on fraud and error for each of the major benefits. These diagnostics will highlight any gaps or areas of concern in the programme and will enable the relevant board to make effective decisions to adjust activity where necessary. 20. The diagnostic assessment will form a key part of our measurement and evaluation of strategy implementation performance. This will be used by the Fraud and Error Council alongside project delivery reviews to enable a comprehensive view of programme impact and to consider corrective measures where appropriate. Implementing the strategy as one programme of activity will enable clearer accountability across the business areas and from policy through to service delivery. 21. Finally a risk management process for the programme is being coordinated by the PMO. A programme risk register has been established to identify, record, review, monitor and communicate risks associated with implementing the strategy. A joint risk register has been established with HMRC to highlight and monitor risk of delivering the joint elements of the strategy.

Annex 1 Fraud and error strategy overview

Figure 1: fraud and error strategy overview
DWP and HMRC Fraud and Error Strategy
To reduce the level of fraud and error in the Benefit and Tax Credit systems by 1.4bn by 2015

DWP

Universal Credit

HMRC

To reduce the amount of benefit expenditure overpaid by 600m in 2015

The introduction of Universal Credit to reduce amount of benefit expenditure overpaid by 200m in 2015

To reduce the level of Fraud and Error in the current Tax Credit systems by 600m by 2015

Full breakdown by initiative set out in Annex two, Figure three.

Figure based on current planning assumption that 40% savings will be realised by 2015in line with transition timetable to full implementation.

Full breakdown by initiative set out in the HMRC Tax Credits Error and Fraud Delivery Plan

Figure 2: DWP fraud and error spending review forecast

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Benefit expenditure bn Baseline: Current level of Fraud & error in the system (%) Planning Assumption: Level of fraud and error in the system after impact of interventions (%)

148.0

152.4

157.0

162.2

163.4

167.4

2.2%

2.2%

2.2%

2.2%

2.2%

2.2%

2.0%

1.9%

1.8%

1.7%

The benefit expenditure forecast in the above table is based on the figures published by the Department in April 2011 and are consistent with Budget 2011.

Annex 2 DWP Financial overview

Funding Source
FE Strategy FE Strategy FE Strategy FE Strategy FE Strategy FE Strategy FE Strategy FE Strategy FE Strategy FE Strategy FE Strategy OBR2011 OBR2011 StS2010 StS2010 StS2010 StS2010 StS2010 StS2010 StS2010

Project Name
Integrated Risk and Intelligence Service (IRIS) IT Fixes (EASD & IT PROMPT) DWP Accreditation scheme Hotlines Single Fraud Investigation Service (SFIS) Mobile Regional Taskforce (MRT) PDCS PC Case Cleanse (extension & escalation) PDCS DLA Correctness extension Measurement Communications Universal Credit fraud and error proofing Debt Sanctions ATLAS Business Rules Engine PDCS RPP PDCS APC JCP ESA Cleanse JCP Call Cleanse & SDP Debt Management: StS 1

11/12 DEL
13 1.1 2.3 0 0 5.4 10.3 4.5 0 0 0 0 4.4 3 9.8 1 4.3 0.3 23.9 7 2.5

SR DEL (m)
118.5 1.7 7.7 0 38.5 33.3 44.6 15.6 0 0 0 0 5.6 6.6 16.7 4 4.3 0.9 61.1 9 7

11/12 AME
11 0 2.3 0 0 16.2 20.3 35 0 0 0 0 0 130 11.9 1 15 4.9 78.9 58 0

SR AME (m)
488.6 5 29.3 0 24.4 106.3 279.2 160 0 0 0 12 109.7 540 90.3 36 45 33.4 322.6 91 0

Estimated MVFE reduction (SR)

177 2 11 0 18 28 96 41 0 0 0* 0 0 130 27 16 14 11 106 0 0

Programme delivery teams

1. Fraud and Error Strategy Programme total

92.8

375.1

384.5

2372.8

677 877

2. Fraud and Error Strategy Programme total including Universal Credit Programme

Figure 3: DEL/AME/MVFE overview The Universal Credit savings outlined in Figure 1 are from the implementation of the Universal Credit programme, not from the Universal Credit F&E strategy project which is looking to ensure that we minimise the risks of fraud and error in the design of and transition to Universal Credit. The 200m reduction in MVFE from the introduction of Universal Credit assumes that only 40% of savings will be realised in 2014/15, in line with current transition plans. The MVFE levels have been estimated based on the AME savings predicted for each initiative. We have assumed that the maximum MVFE drop achieved by an initiative is similar to the maximum amount of AME achieved across the lifetime of the initiative and that, once that MVFE drop is achieved, the MVFE will remain at that level for the lifetime of the initiative. This is based on the assumption that once an initiative has cleansed the caseload of overpayments, we would expect the businesses to then maintain the caseload at that improved MVFE level. In addition to the AME savings, projects will also have other benefits that will form part of the wider benefits realisation plan. For example, efficiencies will be realised through the implementation of the new integrated single fraud investigation service across DWP, HMRC and Local Authorities.

Annex 3 The strategy programme

Projects summary Prevent Integrated Risk and Intelligence Service (IRIS) to gather and process data and intelligence on fraud and error and debt management Three IT improvement initiatives to prevent fraud and error entering the system Staff accreditation scheme to introduce a quality standard for benefit processing Detect Single fraud investigation service (SFIS) with statutory powers to investigate and prosecute fraud across DWP, HMRC and local authorities Mobile Regional Taskforce using intelligence to target fraud and error in a local area Rationalise fraud hotlines into one welfare fraud hotline offering incentives Correct

Six case-cleanse exercises to purge the system of fraud and error Two debt recovery projects to reduce the debt stock and increase the rate and scope of debt recovery

Punish Strengthen punishments with a new regime of sanctions and civil penalties Deter Develop communications activity at a local level to increase the fear of being caught committing benefit and tax credit fraud Cross-cutting Develop a common approach to the measurement of Universal Credit Ensure that fraud and error risks are minimised in the design and delivery of Universal Credit

Figure 4: implementation timetable

Project Name
Integrated Risk and Intelligence Service (IRIS)* IT Fixes (EASD & IT PROMPT) DWP Accreditation scheme Hotlines* Single Fraud Investigation Service (SFIS)* Mobile Regional Taskforce (MRT)* PDCS PC Case Cleanse (extension & escalation) PDCS DLA Correctness extension Measurement* Communications* Universal Credit F&E proofing* Debt* Sanctions* ATLAS Business Rules Engine PDCS RPP PDCS APC JCP ESA Cleanse JCP Call Cleanse & SDP Debt Management: StS 1

2011
Q1 Q2 Q3 Q4 Q1

2012
Q2 Q3 Q4 Q1

2013
Q2 Q3 Q4 Q1

2014
Q2 Q3 Q4 Q1

2015
Q2 Q3 Q4

Projects marked with an * indicate they are joint initiatives between DWP and HMRC. Figure 5: Programme high level milestones
2010 Q4
O N D J

2011 Q1
F M A

2012 Q3 Q4
S O N D J

2013 Q3 Q4
S O N D J

Q2
M J J

Q1
F M A

Q2
M J J

Q1
F M A

Q2
M J J

Q3
A S O

Q4
N D J

2014 Q1
F M

4.Comms Strategy agreed Feb 11

8. CRA bulk data & IDV/RBV procurement exercise begins Apr 11

12. Mobile Taskforce pathfinder begins Jul 11 17.SFIS Full Go-Live - Apr 13 15.Lay Consequential Regulations Dec 11 19.Universal Credit A Day Oct 13

1.Strategy published 18 Oct 10

6. Secure funding Mar 11

10. Mini sampling begins May 11 (start delayed)

16.Pension Credit and JCP Go-Live Apr 12

1 2

4 3

6 7 5

8 10 11 12 13 9
11. Invitation to Tender Jun 11 9. Letters pilot begins Apr 11 7. First results LA Data Mar 11 (start delayed)

14 15 16
14.Royal Assent Nov 11

17 18
17.SFIS soft launch - Oct 12 18.New aligned Measurement Framework Implemented - Apr 13

19

2.FEC Mtg 6 Dec 10

13. Mobile Taskforce national rollout Oct 11

16.Implementation of IRIS Apr 12

3. Welfare Reform Bill introduction Feb 11

15.Debt new measures come into force Apr 12

16.Introduction of new Sanctions regime Apr 12

5. Scoping complete Mar 11

Position at 24 May 2011

16.Launch of Hotline Financial Reward Scheme Apr 12

KEY:

Complete milestone

Critical path milestone

External Critical path milestone

Go live

Annex 4 Governance
Figure 6: Governance structure

DWP Fraud and Error Council

HMRC/DWP Joint Strategy Programme Board

PDCS AME Control Governance Board

Jobcentre Plus Spend to Save programme board

IRIS programme board

SFIS/Taskforce programme board

Debt programme board

Fraud & Error Measurement sub-group

Formal governance arrangements for the Accreditation, Hotlines and Sanctions projects are currently being considered. They currently feed into the weekly strategy implementation board which feeds directly into the Fraud and Error Council. In addition, links have been established between the strategy and the Universal Credit programme through the Universal Credit Programme Board. A number of project steering committees are also in place at project level.

Annex 5 DWP Project dependencies

Figure 7: Project dependency map
IRIS plays a pivotal role- clarity will be needed in disaggregating IRIS benefits from other projects

BRE

Mobile Regional Taskforce

SFIS Hotlines IRIS Sanctions

Customer error 50 civil penalty and higher rate fraud administrative penalty added to debt stock for recovery

ATLAS

IRIS CRA and JCP case cleanse AME savings derived from BIC activity

JCP cleanses

PC cleanses

Debt

IT prompts

DLA correctness DLA cleanse (inc. RPP) SP cleanse (inc. APC

Comms.
These projects are relatively independent, however Comms. will support individual projects as well as having an overarching strategy objective

Accreditation

Measurement

Outputs from these projects can help shape the Accreditation strategy through identification of error, etc