D E P A R T M E N T O F C O R P O R A T E S E R V I C E S B E N E F I T S S E R V I C E PROSECUTION AND SANCTIONS POLICY AND GUIDANCE NOTES August 2009 1
Introduction This document sets out Canterbury City Council s policy on undertaking criminal proceedings or alternative sanctions against persons who have committed criminal offences against the Housing Benefit and Council Tax Benefit system. The Council is committed to protecting public funds and is aware of the risk of fraud and error within the benefits system. It also recognises that where benefit fraud is detected it needs to be dealt with in a firm but fair manner, both to punish discovered fraudsters and to serve as a deterrent to others. General principles Canterbury City Council is committed to the prevention, detection, correction, investigation and, where appropriate, prosecution of fraudulent benefit claims. The aim is to prevent criminal offences occurring by making it clear to our customers that they have a responsibility to provide accurate and timely information about their claims; to punish wrongdoing; and to deter offending. This policy supports and complements the Department for Work and Pensions (DWP) Departmental Strategic Objective (DSO 6) which is: pay our customers the right benefits at the right time. It also demonstrates the council s determination to drive down fraud in Housing Benefit and Council Tax Benefit. Each potential fraud referral is assessed against local criteria. This assessment will result either in cases being investigated further to criminal investigation standards as set out within the remainder of this document, or being passed to an officer for a less serious background check on circumstances (known as an intervention ). An intervention will comprise a review of a benefit customer s current circumstances. This can be done at a face-to-face interview, by post, or by telephone. The customer is asked to confirm their current circumstances, and these details are cross referenced against the details currently held on the council s benefit computer systems. Each case that is subject to criminal investigation is considered on its own merits, having regard to all of the facts, before an appropriate sanction is selected. There will also be some fraud referrals which are not suitable for any of these approaches, for example where Canterbury City Council is not paying any benefit. If such referrals are received and it is clear that DWP benefits are being paid to the customer then these referrals will be passed to DWP Fraud Investigation Service (FIS) to investigate. Organisation Criminal investigations are undertaken by the council s Benefit Investigation section, in accordance with the Police and Criminal Evidence Act 1984 (PACE) and its Codes of 2
Practice, and all other relevant legislation and common-law rules, and with advice from the council s Legal section. Staff undertaking such investigations have been trained to Professionalism in Security (PINS) standards, a nationally recognised standard within local authorities, DWP, the NHS, and Her Majesty s Revenue and Customs. Guidance is provided to staff and regularly updated in the form of circulars from DWP. This ensures that staff: Carry out investigations lawfully Interpret policy and the law correctly Make best use of recognised best practice The council also works closely with DWP and has aligned this prosecution policy to that of the DWP. The council supports joint working activity such as joint interviews under caution and investigations, to ensure the full extent of any benefit fraud is dealt with appropriately. We have signed the Partnership Agreement for Benefits Administration, Security, and Fraud, which is the document which governs the mechanics of joint working on benefit fraud between the council and DWP. Investigating and prosecuting DWP paid benefits Statutory Instrument (SI) 2008 No. 463 Social Security, The Social Security (Local Authority Investigations and Prosecutions) Regulations 2008, came into force from 7 April 2008. This Regulation, introduced within the Welfare Reform Act 2007 (WRA), gives local authorities (LAs) clear powers to investigate and prosecute offences against certain national social security benefits alongside local ones. The above Regulations define the extent of these powers for LAs and the certain national benefits, namely Income Support Jobseekers Allowance Incapacity Benefit State Pension Credit, and Employment and Support Allowance LA authorised officers can exercise these new investigation powers, into fraud against the national benefits, when also investigating fraud against HB/CTB in the same case. They will also be able to continue the investigation even if the HB/CTB element of the investigation is not affected. Similarly, when a LA in England and Wales has completed an investigation it can continue with a prosecution of the national benefit regardless of whether the LA bring proceedings against the HB/CTB. These new powers are entirely voluntary and it is up to the LA to determine whether to bring proceedings when there is no HB/CTB offence. Options 3
When fraud is discovered there are 4 options available to the authority. These are: Prosecution, Administrative Penalty, Formal Caution, Recovery of Overpayment only. Prosecution is a criminal prosecution through the Magistrates or Crown courts undertaken by local barristers, the DWP Solicitors Branch (SOLP), or by the Crown Prosecution Service (CPS) through the police. This is the most serious form of sanction that the authority can take in cases of benefit fraud. An Administrative Penalty can be offered as an alternative to prosecution, in suitable cases. The penalty is 30% of the amount of benefit fraudulently obtained and is recouped in addition to the overpaid benefit. The penalty is offered at a formal interview and if it is refused then the authority must consider prosecution action. A Formal Caution can be offered as an alternative to prosecution, in suitable cases. Formal Cautions are usually aimed at the less serious benefit frauds, and those where the overpayment is less than 2000. A caution can only be offered where the person has admitted the offence at an interview under caution. Again it must be offered at a formal interview and if refused the authority must consider prosecution action. Recovery of Overpayment only. This is to be used where the circumstances of the cases are such that it is felt that any kind of sanction action would be inappropriate, although if benefit has been overpaid the authority will still pursue the offender for repayments. Who Decides Whether to Prosecute? The ultimate decision as to whether or not to instigate criminal proceedings rests with the Head of Legal and Democratic Services. The decision whether or not to refer a case for prosecution to the Head of Legal and Democratic Services is made by the Director of Corporate Services in consultation with the Benefits Manager and the Investigation Team Leader. Prior to this the Investigation Team Leader and the Investigating Officer will have made a recommendation regarding the appropriate disposal for the case, adhering to the Code for Crown Prosecutors, and using the following basic criteria : Is there sufficient evidence for a realistic prospect of a conviction? (The Evidential Test) Would a prosecution be in the public interest? (The Public Interest Test) Would an administrative penalty or Formal Caution be a sufficient disposal of the case? (Test of reasonableness/proportionality) What Should Be Considered? 4
In making a decision, the following factors should be taken into account before recommending a case be considered for prosecution: Has a sufficient level of dishonest intent has been displayed. We do this by looking at the number of misrepresentations made and the length of time that the individual failed to report a change in their circumstances. Was the offence was disclosed voluntarily. I.e. If the individual informed us that they had committed an offence and wished to repay any fraudulent overpayment. Has the individual had committed fraud in the past. We would do this by checking with the DWP, any previous Local Authority (LA) they might have sought assistance from and with the National Anti Fraud Network (NAFN). Was the offence premeditated. I.e. was the claim clearly fraudulent from the outset, was conspiracy involved, were others involved in the deception and were forged documents used. The balance between how much money has been obtained and the cost of bringing a case to court. The cost of a lengthy prosecution action could negate taking the case to court. The duration of the offence. The longer period the offence has occurred over the more likely we would be to prosecute. How clear cut the evidence is. We would look to see if it is a case of failing to report a change in circumstances or were false documents supplied in support of the offence. The individuals well being at the time of the offence. If the claimant is registered disabled we would consider the fact that a disability may have exacerbated the alleged offence. Whether there was any failure in the way the Housing Benefit or Council Tax Benefit Schemes were administered. This might not preclude us from prosecuting but we would try and put right what we feel might be weaknesses in our administration of the scheme. Have there been any delays that might have occurred in bringing criminal proceedings. There are specific time limits to be adhered to when considering prosecution and we must work within these. The likely sentences that might be imposed. A first time offence for a failure to report a change in circumstance could result in a conditional discharge. The likelihood of the individual re-offending. At the conclusion of the Interview under Caution (IUC) it would be clear to an experienced investigator if true remorse was felt by the individual. The amount of benefit that has been overpaid. 5
Our general policy is that each case is considered on its own merits using the guidance detailed above. Even if there had been no financial gain attached to the fraud (and therefore no loss to public funds) we would still consider prosecution or sanction if the circumstances of the case pointed to this being appropriate. Whenever possible we will try to align our decision making on whether to prosecute or sanction with guidance and policy that the Fraud Investigation Service (FIS) of the DWP use. This will ensure consistency of treatment of benefit offenders. The financial bands that FIS work to are as follows: OVERPAYMENT OF BENEFIT ( ) 0 TO 2000 APPROPRIATE SANCTION FORMAL CAUTION (with clear admission of offence at IUC) 0 TO 2000 ADMINISTRATIVE PENALTY (without clear admission of offence at IUC) OVER 2000 PROSECUTION The table above generally applies to first-time offenders. Clearly if a person has previously been formally cautioned and it is subsequently proved that they have defrauded the benefit system again to the tune of 300, for example, then another Formal Caution would not be appropriate as it has had no deterrent effect the first time. Canterbury City Council therefore reserves the right to deviate from the above financial bands if the circumstances of the individual case warrant it, bearing in mind all the decision making criteria as above. Once all evidence is gathered, the Investigating Officer holds a case conference with the Investigation Team Leader. They then decide the best course of action to be taken. A recommendation is then made to the Benefits Manager in the case of sanctions and the Director of Corporate Services in the case of Prosecutions. If prosecution is recommended the case is passed to the Head of Legal and Democratic Services to authorise criminal proceedings. If the case is one where a joint investigation has taken place, each agency must satisfy itself that prosecution is the appropriate course of action. Therefore, regardless of which agency will ultimately be the prosecuting agents, the council s case file must be authorised for proceedings by the Director of Corporate Services. There may be occasions where the council wishes to apply sanctions against persons who are not actually receiving Housing Benefit or Council Tax Benefit. For example, landlords may commit fraud individually or in conspiracy with claimants. This policy applies equally to recipients and non-recipients of Housing Benefit and/or Council Tax Benefit to cater for such situations. 6
Alternatives As described above Administrative Penalties, Formal Cautions or Recovery of Overpayment only are alternative courses of action available to the authority. The offering of an Administrative Penalty will be considered if The case is not so serious that prosecution is the only option The claimant has been notified of the Decision Maker s decision, overpayment and appeal rights The overpayment is not so small as to make the penalty negligible nor so large that prosecution should be the first option (as above) There are no factors that would mean the authority would not want to prosecute the case should the offer of the penalty be declined The person has no unspent previous convictions, cautions or administrative penalties The issuing of a Formal Caution will be considered if: The offence is relatively minor and any court sentence is likely to be small The case is not one where an Administrative Penalty should be considered. The loss to public funds is small There are no factors that would mean the authority would not want to prosecute the case should the caution be declined The person has admitted the offence during an interview under caution The person has no unspent previous convictions, cautions or administrative penalties Overpayment recovery only (i.e no prosecution or sanction) will be considered if: The case would involve the authority in adverse publicity An examination of the papers reveals errors in procedures, such as unnecessary delay Sanction/prosecution action would place a vulnerable person at risk, such as an informant 7
Who Takes the Prosecution? The Social Security Administration (Fraud) Act 1997, gives local authorities the necessary powers to undertake criminal proceedings in respect of Housing Benefit (HB) and Council Tax Benefit (CTB) offences. The Social Security (Local Authority Investigations and Prosecutions) Regulations 2008, effective from 7 April 2008, give local authorities the legal powers to investigate and prosecute certain national benefits, as listed above, alongside HB and CTB. If it is recommended that the council should prosecute, the Director of Corporate Services will sign a Certificate of Authorised Sanction / Prosecution giving their authority for proceedings to be instigated. Once the certificate has been signed the Investigation Team Leader and the Investigating Officer will pass the case to the Head of Legal and Democratic Services to decide on whether or not to prepare the case for court proceedings. If during the investigation it becomes clear that there is a serious doubt as to the identity of the individual, or as to their place of permanent residence, the Police may be called to conduct an arrest of the individual. The council has signed up to an arrest protocol with Kent Police that outlines the circumstances and procedures to follow when an arrest will be considered. Should the individual subsequently be interviewed at a local Police Station the case will normally be taken forward by the Crown Prosecution Service or passed back to the council s own Legal Section, if appropriate. Where the individual is to be prosecuted by the DWP, the council may ask them to prosecute on its behalf, under the terms of the Service Level Agreement with the Solicitors Branch (SOLP) of the DWP. In such cases the council s case file will already have been scrutinised and authorised for prosecution by the Director of Corporate Services. Publicity In order to act as a deterrent against benefit fraud the authority will, at its own discretion, publicise cases where offenders have been prosecuted for fraudulently obtaining benefit from the council. We do this via the council s Press Office to ensure press releases adhere to required standard. Consideration will also be given to issuing more general press releases during the course of the financial year to further highlight the activities of the council s investigation team, and to ensure that local people are kept informed as to how they can contact the council with their suspicions. In cases jointly investigated with DWP, we may on occasions liaise with the DWP Press Office to ensure a consistent approach to publicity. If there are any high-profile cases that may lead to increased local interest, either positive or adverse, we will ensure that we seek agreement from the Director of Corporate Services before releasing any information to the press, and we will seek advice from the council s Press Office. Recovery of debt 8
Where an overpayment arising from fraud is identified, in all cases the council takes steps to recover the resultant debt, including taking action in the civil courts if necessary. This is in addition to any sanction the council may impose in respect of that fraud. This is to reinforce the message that crime doesn t pay. Methods of recovery used by the council are: Recovery from ongoing benefit Recovery from ongoing DWP benefit Invoicing Attachment of earnings order Recovery through civil court process Relevant legislation Relevant legislation used when considering cases for prosecutions and other sanctions can be found within the following Acts: The Theft Act 1968 The Theft Act 1978 Criminal Justice Act 1991 The Social Security Administration Act 1992 Criminal Procedures and Investigations Act 1996 The Social Security Administration (Fraud) Act 1997 Human Rights Act 1998 Regulation of Investigatory Powers Act 2000 The Social Security Fraud Act 2001 The Fraud Act 2006 The Welfare Reform Act 2007 9
ADMINISTRATIVE PENALTIES POLICY & GUIDANCE Introduction In December 1997 legislation came into force that allowed local authorities to offer an Administrative Penalty as an alternative to criminal proceedings. The penalty can only be offered to a person in respect of an overpayment that occurred after the commencement date of 18 th December 1997. If an overpayment of Housing Benefit spans the commencement date then only the part that occurred after 18 th December 1997 can be considered for the new penalty. The legislation governing the use of penalties is contained in Section 115A of the Social Security Administration Act 1992 as amended by section 15 of the Social Security Administration (Fraud) Act 1997 and the Social Security (Penalty Notice) Regulations 1997, which came into force on 18 th December 1997. ADMINISTRATIVE PENALTIES The following requirements are mandatory in considering whether a case is suitable for the administrative penalty. The decision to offer an administrative penalty is made by the Benefits Manager. There is no right of review against the decision to offer or not to offer a penalty. There must be grounds for instituting criminal proceedings. Offers of a penalty can only be made where the overpayment is recoverable under section 75 or 76 of the Social Security Administration Act 1992. A penalty can only be offered to a person in respect of an overpayment or part of an overpayment that occurred after 18 th December 1997. If a person agrees to a penalty then no criminal proceedings can be instigated against them in respect of the overpayment. The amount of the penalty must be calculated at 30% of the recoverable overpayment. Once a penalty offer has been accepted the person may withdraw from the agreement at any time during the period of 28 calendar days beginning with the day on which the agreement was reached. The penalty will be recovered using the same methods by which the overpayment is recovered. 10
The person cannot ask the local authority to review the amount of the penalty, however the person can still appeal against the original overpayment. Invitation To Attend An Interview Any case where prosecution is a possibility, but not the preferred option at the outset, may be suitable for the offer of an administrative penalty. In the event of a person declining to agree to pay a penalty, criminal proceedings against the person must always be considered unless exceptional circumstances apply (e.g. the person s health deteriorates dramatically before proceedings can be instigated). It is a serious misuse of this power to offer a penalty in a case where a prosecution would be unlikely to succeed in court. The following should be considered before offering the person the opportunity of a penalty: Is the case so serious that the council should only consider prosecution? Has an interview under caution taken place to establish and confirm that an offence has been committed by the person? Is there a doubt over the evidence or the cost effectiveness of proceeding? Has the person been notified of the recoverable overpayment? Once these have been considered the person should be invited to attend an interview to offer the choice of agreeing to pay a penalty. The interview should not be conducted under caution. If the person fails to attend the Penalty Interview a second appointment should be arranged before referring the case to the Legal Section to continue criminal proceedings. The interview should be conducted by one officer and be conducted in a formal manner. The officer conducting the Penalty Interview must not be the same officer that has conducted any Interviews Under Caution with the person. The following forms MUST be issued to the person before an interview is conducted and offered the choice of agreeing to pay an administrative penalty. The forms must not be altered. Invitation to discuss penalty Administrative Penalty notice 11
At The Interview The interview is an opportunity to provide information about Administrative Penalties, answer questions and to offer the person the option of agreeing to pay an administrative penalty. It is not an Interview under Caution. The person must never be pushed into agreeing to pay a penalty and the purpose of the interview should be explained to the person. It should be explained that in the light of evidence available, it is believed that there are grounds for instituting criminal proceedings for an offence. The person should understand that the Authority believes it has sufficient evidence to prosecute them for an offence. The seriousness of the offence should be emphasised. It should be explained that in the circumstances of their case, it has been decided to offer them an alternative of agreeing to pay an administrative penalty instead of their case being referred for prosecution. The meaning and purpose of an administrative penalty should be explained as follows: An Administrative Penalty is a financial penalty that can be offered to a person who, the authority believes, has caused benefit to be overpaid to them by a deliberate act or omission on their part and there are grounds for instituting proceedings against them for a criminal offence relating to the overpayment. A penalty is 30% of the recoverable overpayment. There is no discretion to vary this percentage. The person must be offered the choice of agreeing to pay the penalty, and advised that they will be expected to make a decision on whether to agree to pay a penalty at the end of the interview. The person should be reminded how much the overpayment is and how much the penalty would be should they agree to pay it. They should be advised that they are not obliged to agree to pay a penalty but if they choose not to, their papers will be passed to the Council s Legal team to consider taking legal proceedings. The person should then be shown a Penalty Agreement Form. The person s written agreement to pay a penalty in the prescribed manner should be obtained. The person should then be given a Withdrawal of Agreement to Pay an Administrative Penalty, in case they change their mind. It should be remembered that there is no obligation to admit guilt to any offence relating to the overpayment. 12
Post Interview Action If at the end of the interview the person has signed the Penalty Agreement, recovery action of the penalty can commence, even though the 28 day cooling off period has not expired. The Overpayment Team will create a new debt for the 30% penalty and produce an overpayment Penalty letter. This letter must include the wording The decision to recover a penalty is a local authority decision against which there is no right of review. If at the end of the interview the person decides not to sign the Penalty Agreement or subsequently withdraws their agreement to pay an administrative penalty, the following should be carried out. Criminal proceedings should be considered. A court may be informed in any particular case that the defendant has been offered a penalty but declined to agree to pay it and that is why the criminal proceedings are being brought. If the person agrees to pay an administrative penalty then the Investigation Team Leader will notify DWP 28 days later. This allows for the 28 day change of mind period that the offender has available to them. The DWP maintain a national database of penalties which can be accessed by LAs to assist them in decision making on the appropriate sanctions to apply. Formal Cautions A Formal Caution is an oral warning given in certain circumstances to a person who has committed an offence. The DWP has issued Formal Cautions in some cases since 1 July 1998.Fraud Investigators and Managers are responsible for deciding at an early stage of an investigation whether the case should be progressed to the Interview Under Caution (IUC) stage with a view to prosecution, penalty or caution action being taken. A Formal Caution is a meaningful deterrent for those persons at the lower end of the range of benefit fraud where criminal proceedings are not a first option and administrative penalty action is not appropriate. For example, an overpayment of less than 2000 and the circumstances of the offence and person indicate a Formal Caution may be appropriate. A Formal Caution can only be considered when: There is sufficient evidence to justify instituting criminal proceedings The person has admitted the offence during the IUC The person s history of previous convictions/cautions has been taken into account The person must sign a document to show they admit to the offence 13
The person agrees to the caution and they acknowledge they have been cautioned If the person is subsequently prosecuted for another benefit offence the caution may be cited in Court. If the person decides to refuse the caution the alternative course of action should be criminal proceedings. Therefore the quality of the evidence available to issue a caution must be of the same standard as that required to bring criminal proceedings. Where criminal proceedings are brought, the Court will be informed that the case has been brought because the person refused to accept a Formal Caution. Cautions should not be administered to an offender in circumstances where there can be no reasonable expectation that this will curb his/her offending. Cautions must not be given to people under the age of 18. It is important to note that the officer who interviewed the person under caution or was present at the interview cannot be the same officer who administers the caution. If the authority does not have access to a central database or previous convictions, then it cannot issue a Formal Caution. The DWP maintains a sanctions and penalties database that records the issue and acceptance of cautions and administrative penalties administered by the DWP (as described above). For checks on previous DWP and LA administrative penalties, cautions and convictions, investigators obtain information under agreement from the Home Office via the local DWP Fraud Investigation Service (FIS) and the National Anti Fraud Network (NAFN). LAs cannot legally have access to this information independently. However, FIS and NAFN will supply details of any previous DWP or LA administrative penalties, formal cautions or convictions in cases where the LA is considering issuing a Formal Caution. If the person accepts the Formal Caution they will sign 3 copies of the certificate of caution. This will be countersigned, timed and dated by the officer administering the caution, who should be of suitable senior grade to emphasise the seriousness of the offence. This is usually done by the Investigation Team Leader. The person will be given one copy of the certificate for their records. Post Interview action The Investigation Team Leader will send a notification to the DWP, together with one copy of the signed certificate of caution, to confirm that the person has accepted the Formal Caution. The DWP will then record this on their national database. This database again assists investigators and managers in deciding the most appropriate form of sanction in future cases. 14