Source · Select Committees · Public Accounts Committee
Recommendation 4
4
Rejected
The Department has not taken responsibility for detecting child maintenance fraud, instead shifting this responsibility...
Recommendation
The Department has not taken responsibility for detecting child maintenance fraud, instead shifting this responsibility onto its customers. The Department asserts that it does not treat tackling child maintenance fraud, where children often suffer as the end user, with any less enthusiasm than it does tackling fraud against the taxpayer. However, its approach does not appear to reflect this sentiment. It has not assessed the risk or actual level of fraud and error within child maintenance in the way that would be required if it was public expenditure, and its approach to fraud detection relies almost entirely on receiving parents challenging the value of maintenance assessments. This last point means that if a paying parent is notified that they are under investigation for allegedly understating their income there is a risk that they will know or suspect that their ex-partner has reported them. It would therefore be understandable that many receiving parents would be reluctant to come forward with such reports, particularly if it is not clear what the outcome will be. The Department says that, in 91% of cases, it can rely legally on historical earned- income data from HMRC and its own benefits data to assess people’s earned income and benefit status, and also plans to update legislation to include unearned income information held by HMRC in the initial calculation. Nonetheless, the Department accepts that child maintenance is still vulnerable to certain types of customer fraud and error, such as misdeclaration of personal circumstances that affect the award but are not related to income, or the 9% of cases where it cannot rely on historic tax or benefit records. Whilst we welcome a proportionate, iterative approach to tackling fraud and error, the Department’s current approach risks seriously underestimating its susceptibility to fraud and ignoring the various good reasons why parents may not raise concerns about fraud. Recommendation: The Department should take res
Government Response Summary
The government disagrees with the recommendation to take responsibility for detecting child maintenance fraud, stating it already has proportionate and cost-effective controls and a fraud strategy in place.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. The department already has proportionate and cost-effective controls, such as: • a dedicated Financial Investigation Unit • use of verified income from HMRC and benefit systems • use of child benefit systems to verify qualifying child(ren) • procedures and policy to request additional verification • a robust mandatory consideration and appeals process. The department recognises the potential for different types of fraud to be committed within CMS and therefore has a fraud strategy in place. Annex 4.9 of Managing Public Money and the Cabinet Office Government Functional Standard for Counter Fraud applies to misreporting of income on CMS. This underpins CMS’ strategy to preventing fraud, which focuses on developing and promoting an anti-fraud culture. The department continually reviews its fraud strategy to ensure proportionate controls are maintained. Enhancements are currently being made; it has already consulted on legislative changes to enable the child maintenance calculation to automatically include unearned income, which further reduces risks relating to those who commit fraud by not disclosing their real level of earnings. The department will use risk profiling and threat scanning to target fraud as it enters the child maintenance system, alongside responding to customer instigated investigations. The CMS’ main objective is securing maintenance for children between parents. Intrusive investigation or sanction to a paying parent can result in the complete breakdown of maintenance payments, impacting the welfare of the child(ren).