Estimating fraud and error in the Scottish social security system: Consultation

2. How fraud and error will be measured in the Scottish social security system

Options for producing estimates of fraud and error in the caseload were developed based on best practice and we explored the legislative requirements associated with each.

This identified a methodology which ensures that fraud, client induced error, and official error can all be robustly examined and estimated. It requires a regular, ongoing programme of sampling within an identified timeframe followed by thorough review of selected cases, and analysis. This will allow Social Security Scotland to estimate the Monetary Value of Fraud and Error (MVFE) and produce other official statistics on the root causes of error.

The MVFE is an estimate of the proportion and value of benefits paid incorrectly due to fraud or error. It estimates the percentage of overpayments and underpayments based on sampled cases in a particular year, and also converts this into a total money value.

The process consists of four main stages:

Stage 1: Sampling

When a benefit is selected for audit, there will be random monthly selections from all cases in payment, with exclusions applied where appropriate. This ensures representativeness and minimises bias.

Only a small proportion of people receiving Scottish benefits are likely to be impacted. For most benefit reviews we would plan to review around 1,400 cases in a given year, which is similar to the sample sizes undertaken in equivalent exercises by DWP. This would equate for example to around 0.3% of people on Adult Disability Payment.

As inclusion in the sample itself does not affect entitlement, there are no appeal rights against decisions about exclusion. However, individuals retain full rights to challenge any new determination of entitlement made as a result of the review.

Stage 2: Case review

A review is formed of two parts:

• Check for official error: Desk based checks of records of the existing decision to identify error by Social Security Scotland;
• Check for and verification of change of circumstances relevant to entitlement: This involves contacting individuals to gather up‑to‑date information about their current needs. Individuals may request an exemption from this part of the review where they have a good reason.

Accessibility needs and reasonable adjustments will be supported throughout, including rights to advocacy and to have a supporter present, unless it is unreasonable to do so.

Stage 3: Classification

Where incorrect payments are identified, they will be categorised as client error, official error or fraud for statistical purposes.

Any corrective action would take place following classification.

• Underpayments will be paid,
• Overpayments may be recovered in line with liability tests in the 2018 Act or common law,
• Potential criminal offences may be referred for further investigation.

Stage 4: Estimation & publication

Annual statistical estimates of the MVFE are prepared, validated and published and used to inform assurance, reporting, audit, parliamentary scrutiny and to inform operational improvements.