Guidance

Appendix A: Housing Benefit Award Accuracy Indicator - frequently asked questions

Updated 20 December 2021

Introduction

The Local Authority Partnership, Engagement and Delivery (LA-PED) division use and share Housing Benefit Award Accuracy (HBAA) Indicator data as Management Information (MI) with LAs but it is not published. This allows for benchmarking of an LAs’ performance against its own historic performance and against similar LAs (by region and by Office for National Statistics grouping).

This document includes the most frequently asked questions (FAQs) from LAs about the Indicator. These FAQs were compiled by LA-PED with support from LA representatives for use by the wider LA community.

Questions not covered by this document should be sent to [email protected]

Where appropriate, further answer to questions will be added to these FAQs and circulated.

HBAA risk model

Q1. How does the model work? How do you calculate the expected value of weekly reductions for my authority? How is my score calculated?

A1. The HBAA Indicator score is calculated by dividing the value of reductions to entitlement achieved (calculated directly from SHBE (Single Housing Benefit Extract) by the value of reductions to entitlement expected (calculated using a model, based on SHBE caseload information).

HBAA indicator score = HB reductions achieved ÷ HB reductions expected

The value of reductions achieved is calculated by adding together the value of terminations (when a claimant ceases to receive HB) and decreases (when a claimant receives less HB than in the previous month). This gives a value of reductions to entitlement achieved for each claimant in each month. The individual values are then summed across months to get national, regional and LA level figures for each quarter.

We also take into account cases that move to Universal Credit (UC). A claimant who moves to UC may still be receiving Housing costs, so it would be misleading to assume that the LA had found a reduction of the full value of HB entitlement. We therefore identify claims that have undergone a natural move to UC (by data matching with the UC caseload) and exclude them from both the achieved and expected values where they are claiming UC Housing costs and remain within the same LA. This allows us to draw meaningful comparisons between the HBAA Indicator scores of LAs with different levels of migration to UC.

The expected value of reductions is calculated by adding together the estimated value of terminations and decreases which are determined by a risk model. The expected value of terminations and decreases are calculated by multiplying the probability of a termination/decrease by the expected value of a decrease in entitlement. The probabilities and expected values of decreases are estimated using a risk model which uses the following characteristics; claim type (for example, passported/standard), tenancy type, amount of HB entitlement, claimant’s age, gender, capital, total disregarded income, number of dependants, number of non-dependants, temporary/supported accommodation and partner status. The expected value of reductions is therefore based on the HB caseload composition of each LA using these claim characteristics.

This gives a value of reductions to entitlement expected for each claimant in each month. Monthly values are then summed to get national, regional and LA level figures for each quarter. We also observe seasonality in LAs’ activity. For example, certain tasks are more likely to be undertaken at year-end at the expense of other interventions. To ensure that our expected value of reductions reflects this we use slightly different equations for each quarter.

Q2. Why introduce this now when HB is being phased out and my caseload is reducing? Is this more to do with cleansing the caseload ready for UC?

A2. The spend on HB for the financial year ending March 2021 was £18.3 billion, third only to State Pension and UC. The estimated cost of inaccuracy to the taxpayer is estimated to be £1.1 billion per annum. HB will continue to be administered by LAs for many years; moving Working Age claimants to UC will not be completed until September 2024 at the earliest. HB Pension Age customers will continue to receive HB well beyond 2024. HB caseload data continues to fall at a relatively slow rate despite the impacts of the COVID-19 pandemic. The latest published HB caseload data is for August 2020 (3,045,794), down from 3,452,410 in August 2019. This represent a 11.8 % drop in HB caseload There has not been a drastic reduction in HB caseload due to UC natural migration which is expected to continue at a slow and steady rate.

Actioning cases

Q3. How do I action more than one change for the same claimant and how will this affect my score?

A3. When calculating the reductions that a LA has achieved we use the live claim records (D records) from each SHBE extract. It does not matter how many change records (T records) have been entered. To calculate the reductions, you have achieved we look at the difference in entitlement on the D record from one month to the next.

Performance

Q4. What if I have a query about the Indicator information for my authority or wish to discuss how to understand or improve on the level of scoring?

A4. The Performance Development Team (PDT) is happy to engage with you. PDT offer free consultancy which is currently being undertaken ‘virtually’.

PDT would also be interested to engage with you if you are a good performer and are able to share any good practice.

For performance contact [email protected]

Q5. Why is the Indicator calculated using only reductions and not increases as well?

A5. Developing an accuracy indicator which incorporates both increases and reductions in entitlement is very complicated as unreported increases may offset unreported changes. As this would also make the indicator less meaningful it is sensible to focus on reductions in HB entitlement. The HBAA Indicator is an estimate of how well each LA is managing its HB caseload. Unidentified reductions in HB are estimated to be far larger by both volume and value than increases in entitlement. Activities LAs undertake to identify unreported changes will identify both increases and reductions in entitlement and this is a key element of paying the right amount to the right person at the right time.

Q6. What if we experience a rise in ‘expected’ HB reductions, will this contribute to a decrease in performance?

A6. As the HBAA Indicator score is calculated (see Q1) by dividing the value of reductions to entitlement achieved by the value of reductions to entitlement expected, any increase in expected reductions without a corresponding increase in reductions found/achieved would lead to a decrease in performance. Normally we would expect that a rise in the expected values would indicate a ‘riskier’ caseload with more reductions to be found by type and/or value.

During the current pandemic the increase in Local Housing Association rates from April 2020, plus increase in supported accommodation/temporary accommodation cases, has led to increases in expected reductions. The effects of the pandemic have meant that there isn’t as much movement in caseloads, ultimately leading to a general decrease in achieved reductions found.

When evaluating your individual score, it is important to note wider trends in the economy and labour market during the pandemic. The HBAA Indicator score has reduced across most LAs over quarters 1 (Q1), April to June and Q2, July to September, in 2020 to 2021. This reduction is likely to be due to the impact of the COVID-19 pandemic. The pandemic has meant that HB claimants have not widely experienced the changes of circumstances that would usually lead to a decrease in HB awards. For example, a negative labour market has led to fewer claimants with an increase in hours worked or an increase in self-employed income. This means that there was an overall reduction in HBAA Indicator scores across most LAs.

Miscellaneous

Q7. Why should I report on this to Members?

A7. HBAA is a key driver for the Department for Work and Pensions. The HBAA Indicator information can provide Members with meaningful information at LA level on award accuracy which enables LAs to monitor both delivery and accuracy. The volume of HB new claims has fallen significantly since the HB Working Age gateway closed in December 2019. This is therefore a good time to consider, improve and report award accuracy. In addition, award accuracy could have a significant financial impact on the HB subsidy allocations for your LA.

If the reporting accountant identifies HB award errors in their case sampling, which is required for the audited final HB subsidy, this could result in subsidy being recovered and the cost would need to be borne by the LA. On this basis alone it is expected that your council Members would be interested to know that you are taking proactive steps to improve your HB award accuracy.

Q8. Why is HBAA information anonymised?

A8. As we do not publish the HBAA Indicator data it needs to be anonymised. We issue full anonymised data at the same time as individual LA information this allows LAs to see how well other LAs are performing. If LAs want to share their performance and good practices between themselves, they are free to do so.