Is the service delivering value for money?

This section includes good practice on:

• Estimating costs of administration
• Achieving value for money
• Benchmarking
• Effective procurement of services and information technology (IT) systems
• IT systems
• System testing
• Using innovative ways of working to achieve efficiencies
• Partnership arrangements
• Partnership working through shared services
• Maximising legitimate subsidy entitlement
• Reducing incorrect benefit
• IT access
• Internal control mechanisms
  • Post opening
  • Secure administration
• Managing overpayment recovery

Estimating costs of administration

There is no national standard costing structure for benefit administration and no definition of the cost factors to be considered when measuring cost per claim. However, the following good practices will assist in delivering the best possible value for money.

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 Achieving value for money

Good practice includes:

• operating a costing structure that provides an assessment of the benefit service's overall cost, including counter-fraud work, and shows the relationship between cost and the level of service provided. Costs are monitored, reviewed and adjusted in the light of potential over or under spends or efficiency objectives and there is an audit trail on the costs and adjustments
• operating and regularly reviewing a costing structure that aims to achieve a reasonable assessment of cost per claim. This should include easily identifiable costs such as staffing, IT, stationery, accommodation and administrative overheads
• using the cost per claim information as a key measurement for planning improvements in the local authority's (LA) benefits service
• relating costs to the relative complexity of their claims mix to provide a range of 'cost/claim' ratios that can then be used for budgeting and resource planning purposes
• reporting annually to Members on cost per claim
• analysing areas of high cost compared to benchmarked LA, identifying areas where efficiency savings could be gained and monitoring the action taken to achieve that aim
• reflecting the risk and monetary value of Housing Benefit (HB) and Council Tax Benefit (CTB) compared to budget expenditure for other services when determining level of Internal Audit (IA) resources used and days committed to HB and CTB
• benchmarking the level of resources devoted to HB and CTB against other LAs of similar size and caseload
• value for money can be achieved by eradicating waste in Benefits services processes and systems.  Waste is defined as something that does not add value to the customer experience, for example, the failure to do something right for customers the first time of asking. Useful information on improving processes and systems can be found in the section on Performance Management

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Benchmarking

Help on benchmarking can be obtained through a variety of sources such as the Office of Government Commerce website, or the Improvement and Development Agency website. The paragraphs below provide useful background and may help you get started on benchmarking activity

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What is 'process benchmarking'?

• Definition
  Process benchmarking is the comparison of practices, procedures and performance with specially selected benchmarking partners, studying one process at a time. Benchmarking focuses on work processes instead of the end product. This is based on the concept that if you improve processes the end product will improve as a consequence.
• How it works
  You compare your processes with other LAs and decide who is the highest performer. This normally means that LA has the most efficient and effective practices in place. After you have selected them as a partner you interview them to find out how their process works, modify it to make it work in your LA and adopt it.
• Why it's important
  It is important because of:
  • increased customer satisfaction - One of the main purposes of benchmarking is to make your service better meet the needs of your customer
  • improving performance - The first goal of benchmarking is to improve your performance by adopting the good practices of your benchmarking partners
  • increased efficiency and effectiveness - The second goal is to do things better (improve the efficiency of the process) and do things right (improve the effectiveness of the process).
• Characteristics of benchmarking
  These include:
  • a focus on a single process at a time
  • partners being chosen after undertaking a thorough analysis of your own practices and performance. You then find out who is doing better than you and identify the procedures they use to outperform you, i.e. their good practices, and adopt those procedures and practices to your benefit service
  • comparisons being formed, wherever possible, by actually visiting partners
  • the exchange of information being kept confidential.
• Advantages to process benchmarking
  These include:
  • allowing a focus on something that will make a significant difference to your effectiveness
  • allowing a customer focus as well as an efficiency focus
  • enabling a detailed examination of the drivers for success and efficiency
  • change arising from process benchmarking is generally readily accepted by employers and management
  • creating opportunities for both individual and organisational development

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Getting started

• Obtain the appropriate level of management support
  You need to know the level of support management are willing to provide, such as available funds for travel, and how they feel about staffing levels and workflow during the benchmarking project.
• Identify processes to benchmark
  These include:
  • identifying problems in your work processes and determining what you should benchmark - in process benchmarking, one process at a time is studied. If you want to study more than one process, it is best to set up separate studies for each process
  • understanding how your processes work - flowcharting will break the process down into steps and enables those involved to analyse what is done on a daily basis
  • benchmarking those areas that are important to your customers.
• Identifying stakeholders
  Once stakeholders are identified set up a team. The team should include representatives of all the key stakeholders in the process being studied. Someone that works with the selected process should be on the team because they will be instrumental in making needed changes.
• Developing a baseline
  These include:
  • developing an intimate knowledge of your own practices and performance. This may be via flowcharts, identification of problem areas, cause and effect analysis
  • understanding the process as it is currently being practised before you can discuss it with benchmarking partners. Creating a process map can help you understand the process in question.
• Researching and selecting partners
  These include:
  • ensuring your partner has demonstrated good/excellent performance in the process you have decided to benchmark
  • comparing externally - via site visits or detailed discussions, exchange information with your partners that allows both you and each partner to gain some new ideas about how the process is carried out, its performance results and what enables good performance
  • using available data - benchmarking requires a combination of quantitative and qualitative data
  • collecting data
  • identifying the procedures they use to outperform you, i.e. their good practices
  • comparing processes - via site visits or detailed discussions, exchange information with your partners that allows both you and each partner to gain some new ideas about how the process is carried out, its performance results and what enables good performance
  • selecting partners with similar demographic profiles to your own.
• What to avoid
  These include:
  • rushing to compare with partners without an intimate knowledge of your own processes
  • selecting partners for geographical convenience rather than for excellence
  • not allowing enough time for the methodology to work properly
  • selecting processes that do not have sufficient potential for improvement.
• Implementation
  These include:
  • planning for change - as a result of what you have learnt from your partners, identify which ideas you can adopt or adapt to improve your process, and how to implement them
  • developing a plan
  • implementing new processes and/or improvements - put the ideas in place, monitor their success and get ready to re-benchmark them at specific intervals
• How often should you benchmark?
  Benchmark annually as benefit service good practices are always evolving.

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You may find this Benchmarking Process Model helpful

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Effective procurement of services and IT systems

An LA may choose, having considered the potential benefits and risks, to outsource aspects of HB/CTB administration. The service provided by the contractor must be as effective and secure as the service provided by the LA. The LA remains fully responsible and accountable for the administration of HB, CTB and Discretionary Housing Payments.

The Contracting Out (Functions of Local Authorities: Income-Related Benefits) Order 2002 extended the range of functions that an authority could authorise people other than those directly employed by them to undertake on behalf of the authority. In practice these authorised people will be contractors or agency employees.

Where the benefits service is contracted out, LAs must comply with European Union and British laws on contract tendering and awarding at the time of contract award.

Good practice includes:

•  specifying in any new or renewed contract, amongst other things:
  • the limits of the contractor's remit and authority
  • performance and service standard requirements, with remedies for failure and incentives for achievement
  • procedures for the remedy of errors and the handling of complaints
  • the contract's duration, review/breakpoints and termination/variation/renewal arrangements
  • contract management and reporting arrangements, defining the roles and responsibilities for LA and contractor
  • any other matters of relevance to the parties, for example employee training.
•  ensuring that the contract defines the sharing of risks and benefits between the LA and its contractor

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IT systems

It is vital that every LA makes the most of available IT to support the strategic plan it has for delivering an effective and secure HB and CTB administration.

The IT should ensure that the technology supports the business and secures improvements in service delivery and assist the LA in making progress in accordance with the e-government agenda.

Good practice includes:

•  ensuring the IT systems support all aspects of paying and accounting for benefit, including counter-fraud and debt recovery, and interface effectively with other relevant council IT systems. They provide accurate management and statistical information and enable production of standard and ad hoc management information and exception reports
• managing IT systems in a controlled technical environment with documented fallback and recovery plans, which are regularly tested
• ensuring that changes to other applications or systems do not have an adverse impact on HB and CTB administration, e.g. through fully documented testing
• testing new releases off-line
• having in place the necessary protocols, tools and techniques to ensure the integrity of computer evidence for fraud investigation purposes
• having an integral debt recovery system in the HB and CTB processing system
• benchmarking the IT system(s) with other users of the same products
• working in partnership with IT hardware and software suppliers and other LAs using the same products to improve performance and achieve prompt implementation of change
• having clearly documented IT policies, procedures and controls as follows:
  • putting in place an IT Security Policy, which covers the use of the Internet, Intranet and e-mail and gives guidance on Data Protection
  • making the IT Security Policy available on the Intranet and communicating it to employees
  • developing written procedures for the IT team on setting up users, passwords, access levels, etc.
  • including IT security as part of induction training and ensuring refresher training is provided on a regular basis

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System testing

Good practice includes:

• maintaining a copy of the live benefits IT system for testing and enhancement purposes to ensure data could be recovered if problems were encountered during system upgrades
• having processes to ensure data recovery if problems are encountered during system upgrades
• ensuring the IT system provider notifies the LA and produces a report for checking if they have accessed the Benefits IT system remotely when, for example, testing it.

Using innovative ways of working to achieve efficiencies

Many LAs have experienced, or are considering major change programmes to introduce mobile or partnership working. Good practice identified by LAs who have experienced change is set out below.

Mobile working

Managed correctly mobile working can bring significant changes to the way benefit services are delivered. Authorities need to consider the opportunity that mobile working technology offers to improve service delivery, reduce costs and significantly improve customer service

Before considering mobile working it is good practice to:

• analyse the viability of mobile working in the context of the LA's overall strategic and operational plans bearing in mind resources available. If introduced, the results of mobile working should be closely monitored and assessed
• carry out a cost/benefit analysis to ensure that the introduction of mobile working is a viable option
• consider the extent to which mobile working equipment can be utilised before making any purchase by firstly carrying out business process re-engineering. This will help ensure the end solution will meet any restructuring or efficiency needs
• identify any type of customer resistance you may find during the planning phase
• consider converting back-office employees into mobile assessors to improve processing times as the majority of claims can be processed in real time
• identify how to maximise transaction volumes once mobile technology is in place. The return on investment in wireless technology increases as the number of transactions increase
• recognise that mobile technology will be a massive change agenda for most organisations presenting a range of staffing issues. As with all change management programmes, open and honest communication will help employees manage the change
• ensure your employees understand what the new technology can do for customers and for the organisation. Their acceptance of the concept can help eliminate many barriers to a successful roll out of the technology
• consider carefully which roles are best suited to using the technology. For example, do you use traditional back office employees with strong processing skills but potentially little customer facing experience, or do you use existing customer facing employees?

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Partnership arrangements

In the current climate of public service efficiency reviews, all LAs, regardless of size, need to examine whether partnership or joint working could generate greater efficiencies in the benefits service. Many LAs already work jointly to procure such services as training provision or recruitment. Others have taken this a step further and are jointly procuring IT systems. A number are also considering, or have already set up, partnership arrangements to administer HB/CTB jointly.

Automation of processes should enable greater efficiency, greater consistency of output and reliable and timely management information, which should be used to monitor performance and to inform intelligent management decisions.

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Partnership working through shared services

Getting started

Good practice includes:

• considering sharing your service with a neighbouring authority, even if you have little or no history of working together
• undertaking a feasibility study once your potential partner/s has agreed to the idea in principle.

Key stakeholders

Good practice includes:

• knowing the needs of all key stakeholders
• understanding the personalities and power dynamics
• recognising that the change will affect the various stakeholders differently
• recognising the stakeholders' positions may differ within and across the affected organisation

Strategic fit

Good practice includes:

• ensuring there are strategic:
  • mission statements (statements of intent)
  • policies
  • aims and objectives
  • priorities and performance targets.
• identifying the business drivers:
  • economy
  • efficiency
  • effectiveness
  • customer experience
  • political.
• establishing the scope, extent and type of partnership:
  • how many LAs or other bodies are included?
  • how many services are included?
  • which part of each affected service is included?
  • joint working, merger or take over?
• assessing (critically) the scheme's feasibility
• technological fit:
  • telephony
  • benefit IT systems and all interfaces
  • data imaging systems
• human resource (HR) fit (pay and conditions):
  • recruitment, induction and training
  • pay, grading and pensions scheme
  • hours of attendance and flexible working, homeworking
  • performance appraisal and personal development schemes
  • absence management
  • capability procedures
• understanding partnership performance:
  • current performance levels
  • performance management reporting arrangements
  • partners' (existing and future) capacity.
• ensuring all partners are aware of responsibilities:
  • assurance
  • compliance
  • performance
  • accuracy
  • security
• considering any potential industrial relations issue, and involving trade unions in the project.

The business case

Good practice includes:

• identifying and factoring in:
  • project planning and management costs
  • implementation costs
  • succession planning costs, in terms of:
    • staff relocation
    • staff redeployment
    • cost of terminating existing supplier contracts or estate leases
  • priorities and performance targets.
  • post partnership live-running costs.
• deciding who will provide authorisation to spend
• deciding who will make decision on the required return on investment.
• deciding who will make the decision on the timeframe for realisation of any efficiencies.

Planning and implementing

Good practice includes:

• appointing a Project Steering Group or Management Board, with representation from senior managers of all partners to ensure that the appropriate drive and focus is maintained throughout the life of the project. A suggested framework is below.
• appointing a project manager
• identifying success criteria
• identifying and developing evaluation against the criteria
• consider the need for specialist support for:
  • business case and financial reporting
  • technology
  • estate adaptation or rationalisation
  • HR and cultural change
  • business process and procedures design and development
  • communications:
    • external - marketing and branding
    • internal - newsletters, staff and Member education and awareness workshops
    • with staff - continually keeping informed all staff involved even if there is nothing to tell, particularly where there is more than one LA involved.

Transitional management

Good practice includes:

• appointing a new service manager
• appointing a new management team
• outlining any interim operation management arrangements, teams and team leaders
• promoting the new operation management arrangements, including team and team leaders
• highlighting any interim and final support arrangements for:
  • policy officer(s)
  • training officer(s)
  • IT support officer(s).
• arranging regular site visits throughout the process.

Closure

Good practice includes:

• ensuring that the project is complete by confirming what has been delivered meets the original specification and business case
• ensuring the Business Manager is content with any variances or exceptions
• considering the need for closure/lessons learnt report.

Temporary support

Good practice includes using a remote link to offer temporary support to neighbouring LAs during periods of staff shortages and/or abnormally high peaks of workload. The benefits include:

• offering mutual support in both directions when required
• helping to build flexibility into existing service arrangements
• recharging only actual costs to the benefiting LA
• helping to minimise risks within business continuity planning
• limiting the need to use temporary agency worker.

Benefits of partnership working

These includes:

• cost savings
• larger teams can provide a more resilient service and are less prone to fluctuations in processing times
• increased capacity can allow better service enhancements
• improved purchasing power
• enhanced ability to capitalise on an increased skills base
• capacity to maximise the effective use of IT
• reduction in the duplication of effort
• established dedicated business development roles
• explicit service level expectations
• improved career and development structure
• employee retention
• the expansion and introduction of new services to the customer, for example the Pension, Disability and Carers Service(PDCS)/LA visiting
• standardisation of procedures

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Maximising legitimate subsidy entitlement

LAs should provide the Department for Work and Pensions (DWP), the Audit Commission and Accounts Commission with accurate and timely Management Information System (MIS) and subsidy returns. Guidance can be found in the Housing Benefit and Council Tax Benefit Subsidy Guidance Manual.

Good practice includes:

• having a clear rolling internal audit (IA) programme that provides assurance that the systems and transactions are secure and comply with the benefit regulations
• considering the implications of any matters concerning benefits administration arising out of the annual audit certificates on the LA's accounts and the HB and CTB subsidy from DWP. Action plans to respond to those matters should notify and obtain Members' endorsement.

Reducing incorrect benefit

Good practice includes paying the right benefit at the right time is the responsibility of everyone working in or having management responsibilities for HB and CTB administration. It is an integral part of that administration that everyone is aware of the risks of both customer and official error. Effective engagement with customers will encourage them to report changes of circumstances on time, and timely administration of new claims and changes will help prevent fraud and error entering the system.

IT access

LAs should guard against internal fraud through restricting access to IT systems, internal controls and a programme of internal assurance.

Good practice includes

• controlling access to Customer Information System (CIS) in accordance with the minimum standards set out in the Memorandum of Understanding
• restricting access to the internet, intranet, HB/CTB system, Council Tax, CIS and all other IT systems with individual passwords for users
• using forms that require management authorisation to set up or remove users on the various IT systems
• using a form to apply for a password to be reset that requires management authorisation
• keeping a complete audit trail of all authorised forms
• ensuring access levels are agreed by the benefits managers and team leaders, so that users are given the appropriate access levels required for their job. For example, a fraud officer should not have claims processing access
• ensuring adequate separation of duties. For example, a checking officer should not be processing claims
• using the Benefits IT system's audit trail to produce transaction logs
• restricting fraud system or fraud dialogues within the Benefits IT system to employees on the Fraud Team
• ensuring employees sign a 'declaration of interest' declaring any relatives, etc., who may be on benefit. These accounts should then be made 'sensitive access'
• requiring benefits IT system users to change their password every 30-60 days. The CIS system does not force employee password changes. Good practice would be to send e-mail reminders to employees each month to change their CIS password and having a pop-up box on log in that reminds employees about security, which they have to accept before getting into the system
• having an automatic 'lock-out' for PCs when employees are away from their desks and forcing the user to enter a password to regain access
• checking quarterly for any authorised users who have not accessed the system in the previous two months. Any such identified users are referred to their line managers to see if continued authorised access is still appropriate (for example only off sick or on maternity leave). This will identify users who have left the service and whose manager has not signed an authorisation to have their access revoked
• reviewing access levels on a quarterly basis
• reviewing IT security regularly by IA

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Internal control mechanisms

Post opening

Good practice includes having documented post opening procedures and monitoring compliance against them. The procedures include:

• ensuring post received is stored securely
• having post opening supervised by a higher level of officer than those opening the post, with contingency arrangements in place if the officer has to leave the post opening area
• ensuring employees do not take any personal belongings such as bags or coats into the post opening area
• operating a policy that after post opening has started, employees are not allowed to enter or leave the area until the operation is complete
• ensuring that when original documents are received by hand, the photocopies, after being stamped 'original seen', are signed by the receiving officer, with their name printed and the date noted. Employees responsible for this process must be trained in document verification. Uitraviolet scanners may also be useful in this process
• ensuring the valuables register is kept securely
• having secure procedures for handling returned HB cheques. All returned cheques should be cancelled immediately and recorded in the valuables register. There should be a secure system to monitor and control the receipt of returned cheques
• having a process for dealing with post-dated, and incorrectly made out, cheques
• ensuring all cheques and cash are passed by hand to the cashier immediately after post opening
• ensuring that there are secure procedures for the receipt, recording and return of valuables delivered in person by the customer. Compliance with these procedures is monitored
• ensuring the cashier acknowledges receipt of valuables in the presence of the post opening clerk, by signing the valuables register
• recording the receipt of recorded and registered delivery post in a separate register. The person receiving the post should be identified in the register
• having a procedure for dealing with post marked, 'private and confidential' or 'personal' which ensures the integrity of the post opening process.

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Secure administration

Good practice includes:

• carrying out IA work programmes following formal risk analysis of working practices and IT functionality for compliance with documented procedural guidance and legislative requirements.
• having a clear, rolling IA programme, that:
  • has been approved by Members
  • ensures coverage of known risks to security and failures in effectiveness
  • is sufficient to provide assurance, given the extent of the LA's expenditure on HB and CTB
  • provides assurance that the systems and transactions are secure and comply with the benefit regulations.
• ensuring all audit reports are considered by the senior managers with ultimate responsibility for benefits administration.
• providing Members with all audit reports and then:
  • monitoring the actions taken by the responsible managers to implement audit recommendations
  • ensuring that those actions are taken within timescales indicated in the audit reports.
• ensuring that HB and CTB service managers and IA agree that report findings are accurate and fair before presenting to Members
• benchmarking the level of resources devoted to HB and CTB against other LAs of similar size and caseload
• lA including follow-up audits in their programme
• members overseeing IA report through a dedicated audit committee
• producing recommendations designed to improve effectiveness and security
• ensuring IA conduct follow-up work on IA and External Audit (EA) reports
• ensuring that a process for Members to deal with IA reports exists
• considering inspection reports of HB and CTB administration conducted by the Audit Commission, Audit Scotland and Wales Audit Office
• seeking further audit work where it requires independent assurance that action taken to meet the strategic plan for HB and CTB is having the desired impact
• actively encouraging IA and EA to co-ordinate their respective programmes of audit work
• building follow-up audits into its own IA programme, to provide independent assurance on the extent to which EA recommendations have been implemented
• using IA to review progress on action in between EA visits and where necessary for the LA to take remedial action if progress does not meet the plan

Managing overpayment recovery

Firm and fair action taken by the LA in administering overpayments will have the effect of encouraging customers or their representatives to give correct and timely information regarding their claim and encourage the timely reporting of change of circumstance. This will therefore lead to a reduction in the amount of benefit that is overpaid.

Any overpaid benefit that is recovered, can be kept by the LA. Therefore adopting efficient recovery methods can increase the LA’s income. If an overpayment is caused by the claimant, the LA can only claim 40 per cent subsidy for it. However they can also keep whatever they recover. Therefore if it is fully recovered, the LA will recoup 140 per cent of the benefit they originally overpaid.

• Useful guidance is contained in the HB and CTB Overpayments Guide