Fraud Investigation involving Experian Ltd and 'single person discounts'. Public Outcry

K Hodgkinson made this Freedom of Information request to Preston City Council

The request was partially successful.

From: K Hodgkinson

11 November 2009

Dear Sir or Madam,

IN 2006 your council was involved in an anti fraud initiative
centring on people receiving a 25% council tax discount deducted on
the basis of statutury assumptions relating to rate and amount.
This unpopular venture caused many complaints.

Please provide

Any legal briefings and policy documents obtained or produced by
the council in advance of this. Please include all relating to
human rights, data protection law and council tax regulations and
laws including demand notice regulations. In particular, please
include any which show the legality of using third party data to
confirm that a person is entitled to a 25% discount under Section
11(1) of the local government finance act. Please also include any
explanations of how threats to send adjusted demand notices to
households who objected or declined to eliminate themselves from
the investigation were felt to conform with the law on adjusted
demand notices.

Any instructions including those in contracts agreed with Experian
about how data should be used and obtained by the council and the
circumstances in which third party data should have been purchased
by the council.

Please provide copies of standard letters sent to individuals on
Experian's initial lists of households where it was thought that
more than one person might be living.

Please provide copies of any standard letters sent out
subsequently.

How many houses were sent initial letters asking for lists of
residents?

How many dwellings on this list turned out to be entitled to a
discount under Section 11 (1) and (2) all the time?

How many complaints did the council receive a) from taxpayers b)
from MPs c) from councilors

Were any complaints made about this to the Information Commissioner
either in respect of yourself or in respect of your partner
councils? If so, please provide copies of any internal documents
showing how any opinion of the Information Commissioner was
considered.

Were any complaints made about this to Experian Ltd in respect of
this exercise?

How much additional income was obtained by Preston Council as a
result of this exercise (Please do not include saving made by its
being cheaper to suspect people of fraud than to send annual
canvass forms).

Please provide any information you have about the steps you are
currently taking to ensure that when you participate in the NFI you
provide up to date council tax information, especially in view of
your policy as stated in documents available publicly of not
carrying out annual council tax discount reviews? What steps are
you taking to ensure that Preston residents are not on NFI hit
lists as a result of your administrative savings?

Yours faithfully,

K Hodgkinson

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From: FOI Freedom of Information Mailbox
Preston City Council

11 November 2009

Thank you for your e-mail. If this is a valid request made under Freedom
of Information you can expect to receive a response within 20 working
days.

Preston City Council

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From: Trish Ashcroft
Preston City Council

11 November 2009


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Please see attached

Mrs. Ashcroft

Information Manager

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From: Trish Ashcroft
Preston City Council

17 November 2009


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Please see attachments

Information Manager

Preston City Council

01772 906848

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From: K Hodgkinson

18 November 2009

Dear Trish Ashcroft,

Thank you very much for this prompt response.

The numbers of innocent people suspected of not being entitled are
shockingly large, though. And given that this exercise was
misleadingly publicised as a check on people who were 'claiming' to
live alone, the complainants must have been very distressed, for of
course, this discount is not based upon 'claims', like benefits
are, at all. We all know this from our annual demand notices, if we
trouble to read them.

The letters you sent out to taxpayers do not appear to accurately
reflect the law governing the administration of counci tax
discounts.

It is true that the law tells councils it must take reasonable
steps every year to ascertain whether any discount should apply,
but it is clear that this duty arises before any calculations are
made for the purposes of the demand notice, and that the actual
discount must be made on the basis of statutory assumptions
relating to rate and amount. The Council has no choice about this.

The 'records' in question appear to be the contents of data bases
and do not, as your letter suggests, reflect the basis of the
discount. To put it the other way round, if the council has
deducted the discount on the basis of claims about residence it has
been breaking the law.

Taxpayers are under a duty to inform the council of material
changes in circumstances, but not simply of changes in residence.
If somebody moves in or comes of age or if a different set of
people live in the house, there is no need at all to inform the
council.

Surely you ought to make it clear when you request personal
information what purposes the information is need for and the uses
to which it will be put.

In fact, if what you say in your letters is true, it would appear
that your council may have been, for the tax year in question, in
breach of its statutory duties under the AG G Act.

I note that your letters also contain threats to issue adjusted
demand notices. The law sets out the situations in which these may
be sent, and, obviously, the fact that credit records indicate that
another adult may be at the address is not such a circumstance.

It would appear that, for some reason, you are demanding that
people complete 'claim forms' half way through the year in respect
of a tax discount which, by law, you deducted on the basis of
statutory assumptions relating to rate and amount.

The encouragement, if I put it that way, that you provide to ensure
compliance with this bizarre request, is simply a threat to issue
bills for additional money when you have no particular reason to
believe that this money is owed. I am surprised that councils find
it appropriate to treat people in this manner.

To send letters containing such threats once would appear to be
tactless; would not sending two such letters in succession amount
to harassment?

Moreover, given that people are in receipt of a discount, the
threat to issue a backdated demand notice would appear to be
sending a pretty clear signal that you thought that something was
up and that you suspected fraud and lack of entitlement.

It would appear from what Experian state, that you may regard a
refusal to give in to the threat and fill in this form as a reason
to suspect a person of fraud, since the next step is to request
personal information from Experian. They will only release this if
it is felt necessary in each individual case.

Surely nobody should be suspected of fraud on the basis of a series
of actions like this?

I cannot see that it is good practice for councils to send
misleading information out to taxpayers, especially in what is
clearly the context of a criminal investigation. In so far as the
stated intention of this was to 'shock' and 'scare' people into
owning up, the letters probably shocked and scared a lot of
innocent entitled people too.

I can see why people complained. I do hope elected members took
appropriate steps to ensure that only accurate and fair information
would be sent to taxpayers in future, especially in anti-fraud
initiatives.

Yours sincerely,

K Hodgkinson

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K Hodgkinson left an annotation (21 November 2009)

Quote-marks A completely and typically misleading account of this exercise appears here

http://publicsector.experian.co.uk/Effic...

This false account alleges that the victims of this financial scam were making a 'claim' which was shown by Experian's data bases to be untrue. The trained and qualified Revenues Officers at the councils involved are fully aware that this does not represent the legal position of those involved.

I believe that these exercises are misrepresented in this way to massage public opinion and to conceal the cynical money saving aims of the public sector and the profit motives of traders in private information.

Suspecting people of fraud because it is cheaper than sendng out the very annual canvass forms which do involve 'claims' or 'declarations is a particularly regrettable way of dealing with your local communities. To allege that people were making particular claims, when claims have been abandoned to save money, is doubly unfair, and I think it is fair to say, hypocritical.

The true parallels, however, would be with a totalitarian police force which had a right to knock on any door and search any house, with no reason to suspect the occupant, in search of evidence that there might have been a crime. The search might be limited on the basis of prejudice against certain groups in the community, but that is all. This would appear to be the sort of state that the Audit Commission intends to usher in using its powers to assist in the prevention and detection of crime. This is the basis for the 'hit lists' it sends for investigation to councils, with their 'risk based' filtering systems. This is the basis on which the 'flag' HIGH RISK FRAUD is attached to thousands of people all over the country by the National Fraud Audit.

Councils that misrepresent what they have being doing so systematically, and, presumably, on the instructions of credit reference companies,risk losing the trust of large swathes of their residents.

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