Income Support (Mortgage Interest) (Hansard, 27 October 1998)

§ Mr. Denham

The administration of Income Support is a matter for Peter Mathison, Chief Executive of the Benefits Agency. He will write to my hon. Friend.

Letter from Peter Mathison to Mr. Andrew Love, dated 26 October 1998: The Secretary for Social Security has asked me to reply to your recent Parliamentary Question asking what estimates he has made of the losses in respect of Income Support (IS) with mortgage interest from (a) fraud, (b) claimant error and (c) agency error in each of the last five years; what efforts are being made to reduce these losses. The information is not available in the format requested. The Benefits Agency (BA) estimates of the level of fraud within major benefits are informed by the BA's Benefit Review programme. 93W However, the IS reviews did not separately identify losses arising from fraud where mortgage interest was included. BA's Quality Support Teams provide estimates of agency error on certain benefits including IS. Estimates relating to claimant error could only be provided at disproportionate cost. Estimates for agency error are enclosed on the attached table. The Agency is actively looking at ways of working with mortgage lenders to prevent losses where the benefit includes mortgage interest. The vast majority of IS claimant's eligible housing costs have been paid direct to their mortgage lenders under the Mortgage Interest Direct (MID) arrangements since May 1992. The Agency undertook a comprehensive mortgage scrutiny during 1994.The findings of the scrutiny supported the streamlining of the MID scheme. From October 1995 the MID scheme was simplified by introducing a standard interest rate (SIR) which eased the administration of the scheme and removed the reliance on customers for up to date mortgage information. BA have introduced a number of measures to tackle fraud and incorrectness across all benefits including the introduction of a mandatory pre-payment check and a review of the poorest performing districts. Other initiatives introduced are enhancements to our computer system (relating to deductions from benefit), automating case reviews, increasing the number of pre-payment checks, funding additional training initiatives, new claim visits and targeted reviews, new checks on identity and new evidence based checks on claim details. I hope this reply is helpful.

Estimates of Income Support mortgage interest losses due to official error
£million
Year	Official error
April 1995—March 1996	92.46
April 1996—March 1997	33.27
April 1997—March 1998	21.10

Notes:

1.This information has been provided by the BA's Quality Support programme of visits, it is provisional and may be subject to change.

2.This information has been extracted from samples checked by the BA's Quality Support programme to provide national accuracy results in percentage and monetary accuracy terms. These results reflect the accuracy of benefit processing by BA staff, based on the documentation and information available.

3.BA monetary value of error results between 1995 and 1998 were based on samples of between 30,000 and 60,000 cases and are subject to a margin of error of plus or minus ten per cent.

4.Extracting data from the sample in respect of one type of error, substantially reduces the statistical validity of the resulting figures. The monetary values quoted for mortgage error give an indication of the scale of the over and underpayments identified in the course of the Quality Support programmes. However, these values should be treated with caution. A substantial checking exercise would be required to provide figures with greater statistical validity.

5.The information for 1995–96 is based on a twelve month sample period and includes all claimant groups including the unemployed and reflects the introduction of the Standard Interest Rate in October 1995.

6.The data for 1996–97 are based on a six month period but has been annualised to project a full year. The estimate is based on the latter half of the year following the introduction of Jobseeker's Allowance in October 1996 and does not include information relation to unemployed claimants.

7.The data for 1997–98 are based on a six month period at the start of the year and annualised to project a full year. This is because the end of year data are still being finalised.