Social security fraud investigation regulations and code of practice: consultation

Ministerial Foreword

We are building a new public service in Scotland, that will be founded upon the principles of fairness, dignity and respect. The scale of this undertaking is massive - once our agency Social Security Scotland is in steady state operations, we will be making regular payments to some 1.4 million citizens in Scotland, with a value in excess of £3 billion. While the instances of benefit fraud as a percentage of claims is very low, we can expect that deliberate attempts will be made to defraud the social security system.

In line with the rest of the Scottish public sector, fraud will not be tolerated – money lost to fraud is money that cannot be invested in social security or other public services in Scotland.

The Social Security (Scotland) Act 2018 received Royal Assent on the 1 ^st of June. It sets out the offences that may be committed if false or misleading information is provided in making an application, or if there is a failure to report changes in circumstances in a reasonable timescale and without reasonable excuse. Importantly, these offences have been carefully framed to ensure genuine errors and mistakes will not be criminalised.

However, where there is an allegation or suspicion that a fraud offence has been committed, Social Security Scotland will be responsible for gathering information and the evidence required to determine whether an offence has been committed. Any such investigation will be carried out under a presumption of innocence, in line with our rights-based approach. However, should the evidence suggest an offence has been committed, the evidence will be passed to the prosecuting authorities.

To enable effective evidence-gathering, the Act sets out a power for Ministers to make regulations for fraud investigations. This refers to powers required to compel people and organisations to provide us with information relevant to any investigation. The regulations will also set out who is allowed to use these powers and the circumstances under which they can be used.

However, just as important is the way in which these powers are deployed. Section 76 of the Act rightly requires that these regulations are accompanied by a Code of Practice for Investigations. We consider it important not only to set out how we will use our proposed regulatory powers for investigations, but to demonstrate how we will ensure people are treated with dignity and respect during an investigation.

This consultation will inform our final policy, and ensure that the scope of these investigatory powers are acceptable and proportionate to what we are trying to achieve. We now need your views to inform final decisions and to check that the detail of what we are proposing is right before we lay the final regulations. I encourage you to respond to the consultation, and thank you in advance for taking the time to give us your views.

Shirley-Anne Somerville MSP
Cabinet Secretary for Social Security and Older People

Introduction

1. Through the Social Security (Scotland) Act 2018, which received Royal Assent on the 1st of June 2018, we will deliver the eleven benefits being devolved. Integral to the successful delivery of these benefits are several 'cross-cutting' services and the ability to effectively investigate fraud is one of these.

2. Both the Scottish Public Services Manual and the Scottish Government's fraud strategy underline the importance of preventing fraud where we can, but also of detecting it, recouping the funds and enforcing the legislation where offences have been committed. While our main focus is on designing robust, secure processes and systems, it is inevitable that there will be fraudulent attempts to obtain assistance.

3. Detected fraud overpayments in the UK benefits system are currently at 1.2%, which is the highest recorded rate. While these figures are influenced by a range of factors, it is clear from existing practice that that there is no room for complacency.

4. The Social Security (Scotland) Act sets out offences that may be committed by individuals and organisations, at sections 71 - 73. These include obtaining social security assistance by deceit, failing (or causing another person to fail) to notify a change of circumstances, and individual culpability for corporate offending.

5. Social Security Scotland will be a Specialist Reporting Agency and will be responsible for investigating and gathering evidence in relation to allegations or suspicions of fraud. However, the decision to prosecute these offences will rest with the Crown Office and Procurator Fiscal Service ( COPFS). Based upon the evidence gathered during a social security investigation, the COPFS will decide whether there is sufficient proof and it is in the public interest to prosecute.

6. Various methods of gathering information are already available to Social Security Scotland such as accessing open sources of information, or using Schedule 2 paragraph 2 of the Data Protection Act (which allows the disclosure of personal information where it is for the prevention of crime). Those powers are also used by a number of Scottish public organisations such as Scottish Student Awards Agency and the Scottish NHS Counter Fraud Service that do not have special statutory information-gathering powers.

7. By its nature, benefit fraud is an act of misrepresentation or concealment and those who are deliberately dishonest in their benefit claims are unlikely to provide information voluntarily. Equally, many organisations are bound by a duty of confidentiality to their customers and may be uncertain or cautious about exercising the discretion required to decide whether they should provide information, even where they are allowed to do so under the Data Protection Act. These are not therefore reliable methods of obtaining information and experience of other agencies suggests they are not always successful.

8. The creation of statutory information gathering powers that allow authorised officers to compel people and organisations to provide information addresses this problem. It removes any doubt about whether or not they should comply with a request for information. It also shifts the onus of accountability onto Social Security Scotland to make judgements about what is requested and to be able to justify those requests.

9. Section 75 of the Social Security (Scotland) Act sets out a power for Scottish Ministers to make regulations for the investigation of fraud offences and these proposed powers are the tools we believe will enable Social Security Scotland to do that effectively. Section 76 of the Act also places a duty on Ministers to publish a Code of Practice for Investigations, which will be published in advance of any fraud investigations carried out by the agency.