LC briefing: Lie detectors – where your money is going

11:58 am - March 16th 2009

by Unity    

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For this LC briefing, using Freedom of Information requests, I can tell you exactly how much taxpayers’ money has been spent on the trial to date and exactly where this technology is being used to vet benefits claimants.

If James Purnell’s department did decide to roll out this system nationally, one company could, within the next five years, build an effective monopoly over the processing of welfare benefit claims worth tens of millions, if not hundreds of millions, of pounds a year.

So here’s the breakdown, and a little surprise I uncovered last week…

Year one (2007/8)
In the first year, the technology was trialled directly by the DWP, through a joint-site Jobcentre Plus pilot in Lincoln and Nottingham and by a total 12 local authorities, 5 individual councils and two ‘shared service’ pilots in which a number of neighbouring councils operate a shared system for processing benefits claims.

The table (below) shows where the trials took place and how much each individual trial cost the taxpayer:

Location Cost of Trial
DWP/Jobcentre Plus (Lincoln/Nottingham) £240,000
London Borough of Harrow £125,000
City of Edinburgh Council £71,000
Wealden District Council £10,000
DERWENTSIDE SHARED SERVICE (Derwentside, Chester Le Street, Durham, Sedgefield) £72,000
WARWICKSHIRE SHARED SERVICE (Coventry, North Warwickshire And Warwick) £56,000
London Borough of Lambeth £63,000
Birmingham City Council £63,000
TOTAL £700,000

Interestingly, Harrow Council’s trial, which has been put forward in the press as the ‘flagship’ for the whole programme, appears to have cost £125,000, double the amount (£63,000) that the media have been reporting.

Year Two (2008/9)

Responding to my FOIA request, the DWP have given the following information for the costs of the second year of the trial.

Location Cost of Trial
Aberdeen £107,000
Barking and Dagenham £40,000
Basildon £40,000
Bexley £40,000
Bristol £107,000
Bromsgrove £107,000
Bury £108,000
Coventry £91,000
Doncaster £107,000
Eastbourne £15,000
Flintshire £107,000
Glasgow £107,000
Lichfield £70,000
Northamptonshire Shared Service (Northampton, Corby, Kettering and Wellingborough) £107,000
Swindon £40,000
Vale of Glamorgan £25,000
Walsall £108,000
Windsor and Maidenhead £40,000
Birmingham £50,000
Derwentside shared service (Chester-le-Street, Derwentside, Durham, Sedgefield) £50,000
Edinburgh £106,000
Harrow £50,000
Lambeth £50,000
Warwick £42,000
TOTAL £1,714,000

(The £1.7 million is £200,000 more than the figure given to parliament last year by the-then junior minister responsible for the trials, James Plaskitt).

I’ve also now found that Jobcentre Plus is not taking part in the second year of the trial. This information was released to the BBC only on Thursday last week, the day before the DWP released this information to me (four days late).

And guess what: according to the Beeb, the reason that Jobcentre Plus pulled out of the trial is the high rate of false positives (63%) that the system was generating. What a surprise.

A money-spinner for Capita

One key issue that hasn’t been widely reported, until today, is that a set of exclusive licence agreements between Nemesysco and Capita’s key partner, DigiLog UK, and between DigiLog and Capita means that Capita is the ONLY company that could roll out this system to public sector agencies in the UK until, at least, 2014. If the DWP buy into this system, Capita would have a minimum five year window of opportunity in which to build a monopoly over the processing of welfare benefits claims.

So, what could that monopoly potentially be worth to a company like Capita?

Based on the most recent available figures, the estimated cost of administering the UK’s welfare benefits system is, currently, around £5.7 billion a year, £2.8 billion of which is taken up in staff costs. The remainder, which is actually just over £3 billion (the DWP earns around £120 million a year by providing admin services to third parties) covers everything from the costs of office space and overhead, to IT services, to outsourced contracts and the costs of reorganisations and other short-term costs incurred in the never-ending search for greater efficiency.

Almost 65% of the DWP administrative costs are taken up by the provision of working age benefits such as Jobseeker’s Allowance, Housing and Council Tax Benefit, Incapacity Benefit, etc and last year, the DWP handed local authorities a total of £541 million in subsidies to help cover the costs of administering Housing Benefit and Council Tax Benefit.

That’s the basic value of the market over which Capita could gain an effective monopoly, if the DWP buy into this system.

But this massive sum is only a fraction of the total amount of government business that Capita could attract, if it can leverage this technology into the creation of an effective monopoly over the processing of Housing and Council Tax benefits by local authorities, many of whom are putting all their eggs in one basket and contracting out all their outsourced services to a single consortium supplier.

But, that all depends entirely on the DWP buying into the idea that Nemesysco’s technology actually does the job that its developer (Nemesysco), and UK licensees (DigiLog UK and Capita) claim that it does.

Over at Ministry of Truth I have more this week on the scientific evidence.

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About the author
'Unity' is a regular contributor to Liberal Conspiracy. He also blogs at Ministry of Truth.
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Story Filed Under: Blog ,DWP lie detectors ,e) Briefings ,Local Government

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Reader comments

I’ve not had time to read this series of DWP related articles yet but thank you so much for investigating the area. Last week Jobcentre plus sent out letters to all benefit claimants explaining that the day benefits are issued is to change. It was supposed to explain what to do as this affects bills etc (like shifting from a weekly pay packet to a monthly for example) but didn’t really.
These kind of letters are sent to all claimants regularly, the most recent example of waste being the letters sent to claimants to tell them they would receive their ‘extra’ £60 before the end of March. Most letters arrived a couple of days after the additional payment went into bank accounts, as do the ones about the £10 xmas bonus. I’d be interested to see the costs of this kind of mass mailshot and what if any the benefits are.

2. the a&e charge nurse

Polygraphs, identity cards, super-computers – money no object implementing these madcap scheme’s.

Where will at all end ?

So, a question – an obvious one I think.

The government are willing to spend billions to save millions?

What are the raw figures of spending to saving ratio?

4. Shatterface

I don’t know if Liberal Conspiracy hand out awards at the end of the year, but if so I expect a teary speech from Unity thanking all those who made this award possible and wishing great grandmama could be here to see it, as this series has been the best this site has published since I started reading it.

Great stuff.

5. the a&e charge nurse

Seconded, Shatterface – I think they used to call this sort of stuff investigative jounalism ?

6. Shatterface

Wouldn’t it be great if there was some kind of daily printed medium for this kind of thing?

Once again an excellent post.
Interestingly after reading the first article you posted on this I asked a few friends who work in HB (Housing Benefit) at the local LA about it. They said they were currently going through training for it. I asked them what they thought about it and they said it was ‘just’ going to be used to limit the need for additional paperwork to assess claims. So rather than ask someone to come down and prove their ID (‘Validation’ in HB speak) they would simply call the claimant and ask them over the phone. Once the system shows that person is being truthful then there is no need for further proof.
For them it means that they can speed up the assessment of the claims and help the LA to hit further central government targets.
They said no one in the department knew anything about how good/bad the system was, it was just a case of ‘here’s a new tool that will make your lives easier as far as assessing is concerned’. For their managers this will be a good tool as they have been told that the system works very well.
The funny thing is, once you have done the job for a while, as I have done in the past, you intuatively know if someone is pulling a fast one. Yet because Fraud Sections are in the main self funded, they want dead certs as opposed to ones where you have a ‘feeling’ – even one that is borne about through years of experience. So guess what – now they have a new ‘tool’ that will give them a dead cert!

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