FERIS (Fraud and Error Reduction Incentive Scheme): What’s it all about?

If you say the word “FERIS” to most people, it will call to mind either the ferris wheels found at carnivals or that classic 1980s movie, Ferris Bueller’s Day Off. But for certain sectors of local Government, it represents a lucrative – if highly questionable – source of income.

FERIS is a scheme introduced by the national Government in 2014, and the acronym stands for “Fraud and Error Reduction Incentive Scheme”. Let’s set aside for the moment that all levels of Government should already be fully committed to reducing fraud and error without the need for incentives. While the impact of benefit fraud is grossly overplayed in the media, it nonetheless does have some negative effect on the economy and it would be better for the nation if it were eliminated.

Housing Benefit Recoveries and Fraud National Statistics – Great Britain statistics for 2014/2015

Below is an image which was taken from the Governments own statistics on Housing Benefit overpayments and recoveries. The information they have provided in relation to this image is as follows;

This Statistical First Release contains statistics produced by the Department for Work and Pensions (DWP) on Housing Benefit Recoveries and Fraud (HBRF). The Housing Benefit Recovery and Fraud statistics are National Statistics.

Main Housing Benefit Findings – (based on imputed statistics at March 2015)

Main findings - based on imputed statistics at March 2015

Image Source: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/459172/hb-recoveries-and_fraud-data-to-march-2015-summary.pdf

We’ve never had anything against the Government’s desire to eliminated fraud and error, which is commendable.

There are, however, a few things we do take exception to, which are:

  1. The methods employed in fraud investigation and recovery, which are sometimes unscrupulous
  2. The use of private contractors for fraud investigation and recovery
  3. The contracting of foreign companies for fraud investigation and recovery
  4. The huge amount of money being wasted on investigation and recovery activity where it is not necessary, only major frauds should attract the level of investment that the Government is wasting these funds on, not pensioners who’ve accidentally gained an extra 20p per week
  5. The improper branding of many innocent actions as fraud, and the improper branding of innocent people as fraudsters
  6. Government using media reports as a deterrent before people have been found guilty of the accusations
  7. Policy that makes the assumption that people are guilty until they can prove their innocence, which is the opposite of natural justice. If we wanted to be governed under the Napoleonic justice code, we’d all move to France, wouldn’t we?

If you want to know more about the above issues, there are plenty of posts on this blog concerning them. What we’ll look at today is how things have changed since the introduction of FERIS and whether it can be considered a positive improvement.

First, let’s take a look at how FERIS works. To start with, it is a financial reward, but one that is only available to Government organisations, not to private individuals or companies. The fund is administered by DWP and local authorities have to claim it. Where it becomes messy is that there is a quota system in place.

Local authorities have a target to meet, and if they fail to achieve it, they will not qualify for funding. Like all quota-based enforcement policies, this makes the system inherently and inevitably corrupt. If there are not enough frauds to prosecute, local authorities must manufacture them, or risk losing their funding. This means there is incentive for local authorities to set up conditions where frauds and errors are more likely to occur.

If you are supposed to lodge a form on a certain date and you never receive the form and you’re not told of your obligation, you can’t fulfill your obligation. Just like that, you’ve become a fraud and error statistic. While in the long run you’ll probably be able to clear your name and have the matter sorted out, in the immediate term the Council is able to create the statistic and then resolve it, thus helping them to get closer to achieving their target. The fact that you will be stressed and inconvenienced as a result is simply incidental to this. That is not to say this is necessarily a widespread problem, but the potential is clear, and the implications of it are frightening.

Where all this becomes interesting is that in 2013/2014 the total amount of money said to have been overpaid was £1.4 billion, equating to approximately 4.77% of the total amount distributed. That’s a fairly high figure, but 75% of those overpayments were due to error, meaning that just 1.16% of the £1.4 billion total were due to fraud. The vast majority of the frauds, by the way, were tiny sums.

But then suddenly in 2014/2015, after the introduction of the FERIS incentives, Councils claimed they had identified a further £984 million in fraudulent overpayments. Is that logical? We are meant to ascertain that either there was a sudden surge of dishonesty in the community or that somehow the Councils had become incredibly competent almost overnight. Think for a moment about every action you have ever been involved with when dealing with your local authorities. Was that matter dealt with competently, efficiently, and flawlessly? We’ll let you draw your own conclusions!

The great concern for us here at Hylton-Potts is that clients are quite distressed when they are wrongly accused, and this is understandable. Even those who acknowledge they contributed to their own problems may still feel that the treatment they receive from authorities is not in proportion to the magnitude of what they have done, and this is going to cause a secondary problem to emerge where people will be less inclined to co-operate.

When authorities are too eager to apply harsh penalties for even the most minor transgressions, it doesn’t do anyone any good. Just because people may be guilty does not mean they should be treated with less respect.

Yes, they may need to be punished in some way if appropriate, but there is no need to strip away a person’s dignity in the process, especially when it is just a financial crime. The bizarre thing is, we have created a society where people get into more trouble for stealing money than they do for torturing animals, and there is obviously something very wrong with this.

A few things we would like to see the authorities implement:

  1. Treat all members of the public with appropriate respect, even those suspected of crimes
  2. Ensure punishments are not out of scale with the offence, and make allowances for mitigating circumstances
  3. Put more resources into investigating large-scale offences involving serious fraud and tax evasion, instead of wasting millions of pounds chasing very small amounts, which have been calculated as costing only £4 per household per year throughout the country… it is beyond ridiculous!
  4. FERIS is a huge waste of money and it increases the possibility of Government corruption and dishonest practices, targeting vulnerable people who often lack resources to defend their honour

An additional one I’d like to add, but which of course is clearly never going to happen, is “all politicians should have to spend three months living in a Council flat on JSA as part of their training”. That sounds rather extreme, but fitness for the post requires first-hand knowledge of what it’s like to live at all levels of society in our nation. We’re all for a world where politicians view people as individuals and not just numbers to be resolved and statistics to be targeted.

If you are one of those statistics who has been targeted, and you need help (believe us, you really do!), you can contact us on 020 7381 8111 or send an email to [email protected] for a confidential discussion about your situation.

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