Source · Select Committees · Public Accounts Committee
Recommendation 33
33
The Department refers cases of suspected fraud to its Financial Investigations Unit (FIU) to assess...
Conclusion
The Department refers cases of suspected fraud to its Financial Investigations Unit (FIU) to assess the accuracy of the award. Its FIU detected 1,400 cases involving fraud in 2020–21 and increased the child maintenance owed by £10.9 million.74 The Department relies almost entirely on parents to detect child maintenance fraud. It told us that its “most fruitful references come from the receiving parent, often because it is the receiving parent who knows an awful lot about the paying parent’s situation and financial affairs as they chase things down” but that this was not its only route to detect fraud as it could pick this up through casework.75 However, the NAO found that in reality nearly all the Department’s referrals to its child maintenance FIU team come from receiving parents challenging the value of the assessment through the variation process. The NAO identified several reasons why a parent may not challenge the value of an assessment, such as not knowing enough about the other parent’s circumstances or not having access to the level of credible information required to substantiate a challenge, and that there may be other barriers, such as domestic abuse or financial control, that would prevent the parent from contacting the Department regarding suspected fraud.76 68 Qq 85–87; C&AG’s Report, para 25 69 Q 98; C&AG’s Report, para 2.28 and Figure 14 70 Q 86; C&AG’s Report, para 2.29 71 Q59; C&AG’s Report, paras 2.4 and 2.8 72 Q126 73 Q53; C&AG’s Report, para 2.6 74 C&AG’s Report, para 2.7 75 Q 53 76 C&AG’s Report, para 2.7 22 Child Maintenance
Government Response
Not Addressed
HM Government
Not Addressed
4. PAC conclusion: The Department has not taken responsibility for detecting child maintenance fraud, instead shifting this responsibility onto its customers. 4. PAC recommendation: The Department should take responsibility for managing the overall level of fraud and error in statutory child maintenance payments. It should: • Assess the risk of fraud and error within child maintenance on an ongoing basis; • Strengthen its controls proportionately in response to issues identified in its assessment of the risk of fraud and error; Make better use of available data to strengthen existing controls, for example from departments outside of HMRC; and • Publish, as part of its annual report on accounts for the Child Maintenance scheme, an annual fraud and error estimate, and target rate, to enable Parliament and the public to monitor its performance 4.1 The government disagrees with the Committee’s recommendation. 4.2 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. 4.3 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. 4.4 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. 4.5 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).