Digital Economy Act 2017 Debt and Fraud Information Sharing Business Case

0.1

Cabinet Office (on behalf of Blackpool Council)

14.01.2021

1.0

Cabinet Office (on behalf of Blackpool Council)

26.01.2021

Revised following clarifications and discussions with Pilot Working Group

1.1

Cabinet Office (on behalf of Blackpool Council)

02.02.2021

Revised following updated pilot plans.

2.0

Cabinet Office (on behalf of Blackpool Council)

04.02.2021

Revised following updated pilot plans - removal of HMRC's proposal to retain pilot data.

2.1

Cabinet Office (on behalf of Blackpool Council)

08.02.2021

Revised following questions/queries from involved Local Authorities - expected to be the final draft version.

Is this information sharing arrangement for the purposes of managing/reducing debt, combating fraud or both?

Debt

List the specific clause in the DEA Act (2017)

For the purposes of the taking of action in connection with debt owed to a public authority or to the Crown, the Digital Economy Act (2017), Part 5, Chapter 3, Paragraph 48

Lead organisation - Please confirm which public authority or service provider you represent and which Schedule your organisation is listed in for the purposes of the proposed data share. 

Blackpool Council, as listed in Schedule 7, Paragraph 10 - 14

Please confirm which other public authorities are party to the proposed data sharing  arrangement, and which Schedule they are listed in.

DWP, as listed in Schedule 7 Paragraph 6

HMRC, as listed in Schedule 7 Paragraph 8

Cabinet Office, as listed in Schedule 7 Paragraph 9

If applicable, please confirm which organisation(s) is considered to meet the definitions in para 41 of Schedules 7 (debt) or 8 (fraud)

N/A

Legal basis

Digital Economy Act (2017), Part 5, Chapter 3, Paragraph 48

Review Board region

England and Non-Devolved

If your information sharing arrangement includes a service provider, please refer to paragraphs 42 and 43 of the Code of Practice

Please confirm if this is a submission for an informal review or the fully completed submission for Ministerial consideration

Formal Review

Please provide an outline of the information share. Note: you need not detail the counter fraud operations of partners

This should include:

• The legal basis for the pilot and that no other legal gateways are available or can be used
• The objective of the information sharing agreement, including:-

• • A description of how the fraud or debt has occurred
  • The financial implications
  • A user case example

• An overview of the activity under the arrangement and how the data will be used;
• An outline of what types of data will be shared and the data security arrangements to be put in place
• The period of duration for the arrangement, when the data share will be live
• How retention periods will be managed
• The potential benefits the pilot
• The success measures of the pilot

Legal basis:

The legal basis for this pilot is the Digital Economy Act (2017).

This has been determined with discussion with our legal team.

The objective of the information sharing agreement:

This is a follow-up pilot to the Council Tax Pilot (DEA/D/1-29) that was in operation from March 19 to March 20. This new pilot involves over 30 local authorities, DWP and HMRC.

Both this new pilot and the first are and were aimed at:

• Increasing the management and recovery of debt by utilising HMRC PAYE and Self Assessment (SA) data,
• Identifying and supporting vulnerable debtors.

As the country begins to recover from Covid-19, debt recovery action will recommence. Thus, the aims of this pilot are to support public authorities in enacting fair debt recovery programmes, supporting those who can't pay whilst managing and recovering debt from those who can pay.

The first pilot involved 29 local authorities supplying a sample of their Council Tax debtors to HMRC, whereupon HMRC returned the associated PAYE and Self Assessment data to the local authorities for them to use in managing and recovering debt (via communication with the debtors and by using Attachments of Earnings (AoE) where appropriate).

The first pilot has now ended and the results are being analysed. Early indications suggest it has successfully achieved a Council Tax debt recovery rate of approximately 20%. This new pilot is again limited to Council Tax debtors.

In building upon the first pilot, there are two areas that can be improved upon in launching this second pilot:

• The identification of vulnerability, and,
• The matching rate.

Identification of vulnerability - In the first pilot, we anticipated that the PAYE and SA information of debtors could indicate their vulnerability. This proved to be erroneous and no determination could be made from either data set. 

Matching rate - The first pilot's matching success rate was 54%. Although this was better than expected, the introduction of additional identification information can increase the match rate significantly, thus increasing the debt recovery rate.

Public authorities  -  This second pilot aims to include the following:

Local authorities, comprising 

• A core from the first pilot, and,
• A small selection of those who have expressed a new interest.

DWP - Included as the source for:

• Increasing the vulnerability identification, by returning matched debtors in receipt of income-based benefits,
• Increasing the matching rate with HMRC, by adding additional identification data (including NINO to debtors it matches).

The data requested from HMRC is:

• Address data
• To aid communication
• PAYE data
• To aid segmentation of recovery action
• Self Assessment data
• To aid segmentation of recovery action
• Furlough data
• To aid in the identification of vulnerable debtors

Neither HMRC or DWP is to retain the data beyond its matching operations. Cabinet Office is not to retain the data beyond its collation of the Local Authorities' spreadsheets, its passing of this to DWP and its return of disaggregated information to respective Local Authorities. An MOU will be drawn up between all parties (including Blackpool Council, Cabinet Office, DWP and HMRC) prior to the data share under Article 28 of the UK GDPR. Here, the process of transferring the data shall be detailed.

Background of the authority

Blackpool is a unitary authority with Council Tax making up a significant amount of the income stream for the Council. However, we have 8 out of the top 10 most deprived wards in the UK and given the high level of transience in and out of the borough and the sheer number of people moving within the borough (even during a pandemic) we struggle to maintain accurate records and therefore struggle to collect debt. A good collection rate is 91% - 93% but given the high levels of deprivation in the town and the numbers of people on benefits, we have difficulty in achieving an 'in-year' collection rate and continue to carry forward unprecedented sums each year, adding to the impossible to collect pile of debt.

We have a total of 4,481 outstanding Liability Orders for Blackpool since 2017 where there is no ongoing action, totalling £2,875,000.

Our debt policy is embedded further down in this document.

Blackpool Council follows standard debt recovery policies in accordance with Council Tax Regulations, issuing reminders, final notices and liability orders. We utilise all available debt recovery options to us including attachment of benefits, attachment of earnings and enforcement action.

However, we also take an ethical approach to debt collection and have our own in-house team of qualified debt advisors. In recognition of the impact of the pandemic for years to come, we have invested in a trainee debt advisor during 2020 to further assist residents to help them recover. Where customers need assistance, through a variety of access routes, then referrals are made to the Advice Team, helping customers to eventually manage to pay their ongoing liability and assisting with numerous debts, not just Council debt. We also allow customers to pay over 12 months instead of 10 months and during the pandemic moved instalment start dates from April to June to help residents.   

The Debt Recovery Guidelines embedded further down this document give further details of recovery cycles. However, cycles change dependant on availability of Magistrates Court Time, staffing resources, and workloads.

We hope that involvement in the pilot will allow us to identify those customers who have the ability to pay but also allow us to further assist those who may be struggling and offer alternative courses of help to traditional recovery routes. We operate a Shared Service with Fylde Council for Revenues and Benefits and hope that both Local Authorities can be involved with the pilot as we believe that the contrasting demographics of the neighbouring authorities would produce very different pilot results.   

Blackpool Council has identified that customer income-based benefit information from DWP and PAYE and Self-Assessment customer information from HMRC is useful and able to support:

• The managing of overall arrears and further developing of recovery procedures, by:
  • Identifying customers whose circumstances make them vulnerable and providing appropriate support and appropriate recovery action whereupon they engage with the Local Authority;
  • Identifying those in employment and allowing the recovering of individual debts by Attachment to Earnings Orders, where appropriate;
  • Identifying forwarding addresses for customers who have moved leaving arrears outstanding;
  • Identifying those receiving benefits and allowing the recovering of individual debts by Attachment to Benefits Orders, where appropriate.

This is a significant change from the current process and allows us to take positive action to identify and support vulnerable customers and recover debt from those customers who are not engaging in the process and who have already been informed of the action the local authority may take.

An overview of the activity under the arrangement and how the data will be used:

Blackpool Council, will undertake a one-off data share as to a reasonable sample of debtors. This sample is to be of an appropriate size in relation to Blackpool Council (as may include all debtors contained within our Liability Order dataset). There is no limit to this sample size. This sample is to be shared with Cabinet Office, who will then collate all of the submitted samples from the pilot's Local Authorities into a single document. This collated document will then be passed by Cabinet Office to DWP who will match against their benefits records. For those records matched, DWP will add income-based benefits data and add corroborative customer information (e.g., NINO and/or DoB) and then forward these records to HMRC. HMRC will then match these customer records against their systems and return the records to Cabinet Office with the associated address, PAYE and/or Self Assessment information. Cabinet Office will then disaggregate this information and provide the respective samples to each local authority, whereupon Blackpool Council shall receive its sample back.

The sample will exclude debtors who are;

• In receipt of debt support - full or partial;
• Deceased;
• Subject to committal and bankruptcy cases;
• Companies;
• Subject to a current Attachment of Earnings.

A snapshot of data will be taken before being issued to DWP/HMRC for evaluation during and post-action.

A proposed process map is shown below:

Once the data has been returned, Blackpool Council will analyse the results from DWP and HMRC and;

For those in receipt of DWP Income-based benefits:

Pass to debt support team for action,

Communicate with the debtor,

If debtor contacted and vulnerability discussed, support offered (where appropriate) and/or payment plan agreed

if no contact, Blackpool Council shall continue recovery action

For those in receipt of PAYE:

14-day letter (as per the first pilot) to be issued to the debtor.

If debtor contacted, payment plan or vulnerability discussed

If no contact, Blackpool Council shall progress Attachment of Earnings action.

For those in receipt of S/A:

Communicate with the customer noting they are in receipt of S/A

If debtor contacted, payment plan or vulnerability discussed.

If no contact, Blackpool Council shall continue recovery action.

An outline of what types of data will be shared and the data security arrangements to be put in place:

Blackpool Council will supply Cabinet Office with our sample which contains the following;

• Full name:-

• • Title;
  • First name;
  • Middle name or initials;
  • Surname.

• Current address and postcode
• Forwarding address and dates
• Date of commencement of Liability Order (if applicable)
• Unique identifier (Future proof)
• Telephone numbers (where available)
• Email addresses (where available)

In addition, either DoB or NINO will be provided as a minimum (where available) to assist DWP data matching.

Cabinet Office will collate our sample with the other samples from the Local Authorities involved in this pilot for onward transmission to DWP.

DWP will match against their benefits records and, for those matched customers, will add additional corroborative data and income-based benefits information as follow:

• Match successful - Yes or no
• Customer name as recorded on DWP records
• NINO as recorded by DWP (where available)
• DoB as recorded by DWP (where available)
• Telephone numbers (where available)
• Email addresses (where available)
• Income-based benefit in payment - Yes or no
• Payment frequency - weekly or monthly
• Benefit amount

This data will then be sent securely to HMRC.

HMRC will match against their records and, for those matched customers, will add the following data and return to local authorities via Cabinet Office;

• Match successful  - yes or no
• Address as recorded by HMRC
• If person is in current employment - PAYE data, including:-

• • Employer Name
  • Employer Address
  • Employer Contact Details (e.g., name and phone number)
  • Currently employed (as of last PAYE update) - Y/N
  • Employment End Date
  • Employment Pay Frequency
  • Taxable Pay in Period
  • Taxable Pay Year to Date
  • Payroll ID in this Employment
  • Individual Address

• Self-Assessment data, including:-

• • Tax Year
  • SA Total Income
  • SA Correspondence Address

• Furlough payments data, including:-

• • Furlough payment or average
  • Payment frequency
  • Period of furlough payments
  • Total furlough amount paid

HMRC will return the collated sample to Cabinet Office, who will split the samples and forward to each relevant council. In the spreadsheet to be produced with the data (both matched and unmatched), there shall be fields for both the Local Authority Reference Number and Name of Local Authority. This should prevent data from being sent to the wrong Local Authority. Other measures that Local Authorities seek to institute shall be detailed in the MOU to be produced prior to the data sharing commencing.

DWP and HMRC will conduct their own quality matching policy to the data to ensure match quality and data returned meet their standards.

Data will be securely transferred by encrypted email from a secure email address, will be stored in a secure folder and deleted after the completion of the pilot and analysis.

Persons at Blackpool Council receiving and disclosing data are limited to debt analysts and debt recovery officers.  All such users sign data disclosure agreements before system access is granted. All staff have had DPA and lately GDPR training.

Persons at DWP and HMRC receiving, analysing and disclosing data are limited to data analysts and processors, within the Centre for Data Exploitation, data management team. These staff have been security trained.

For any third-party entity or body which provides services to Blackpool Council and which has access to its software suppliers and is able to extract data to be used in a search tool available for other councils - Blackpool Council shall ensure no data supplied to them under this pilot is available for any other council to obtain.

The period of duration for the arrangement, when the data share will be live:

The duration period for the pilot shall be 12 months from when the data is shared by Blackpool Council to Cabinet Office, with this period enabling the analysis of the success or otherwise of the data share. An initial report will be compiled and submitted to the DEA Review Board via the DEA Secretariat after the end of the operational activity, as shall outline the progress made against the success criteria and any issues found.

A provisional timetable is outlined below:

• Feb 21 - Formal Business Case submitted to the DEA Review Board
• Feb  21 - Ministerial Approval
• March 21 - Data shared from Blackpool Council to Cabinet Office and this collated data (comprising all pilot Local Authorities data) is shared with DWP,
• April 21 - HMRC to conduct matching and return data to Cabinet Office, who will then disaggregate and share related data back to Blackpool Council.
• April/May 21 - Pilot authorities begin analysis and operational activity on returned data
• April/May 21 - Initial review of the pilot against the success criteria
• Sept 21 - Mid pilot review and report and BAU considered
• March 22  - Pilot ends and pilot evaluation report produced

How retention periods will be managed:

The retention period for the pilot shall be 12 months from when the data is shared with Blackpool Council to Cabinet Office.

Personal data that has been part of the DEA legal gateway process will be retained in accordance with the authorities' data retention policy. Shared data will be kept separate and recognisable to enable deletion at the end of the pilot.

Cabinet Office will destroy the collated data once:

• Blackpool Council has received the match results
• Anomalies in the data are resolved

Neither HMRC or DWP is to retain the data beyond its matching operations. Cabinet Office is not to retain the data beyond its collation of the Local Authorities' spreadsheets, its passing of this to DWP and its return of disaggregated information to respective Local Authorities.

The aggregated report produced will not be subject to a retention period as it will not contain personal data, only aggregated results.

For Local Authorities and HMRC, the pilot data will be deleted one year after the data has been shared with Cabinet Office, except where the data is being used operationally and will be deleted once recovery action has been completed.

However, the data received from HMRC in its raw format shall be deleted at the end of the pilot.

From the information supplied by HMRC, if Blackpool Council subsequently has this information confirmed by either the employer or the individual, then that information can be classed as having been supplied via another source (i.e., other than HMRC), then Blackpool Council shall be able to retain this data on its systems.

Please provide details of how the benefits of the information share will be measured.

This should include:

• The potential benefits the information share could bring; and
• The success criteria for the data share and the methodology you will use to measure success

The potential benefits the information share could bring:

Potential benefits;

• Increased debt recovered
• Increased in-year collection rate
• Increased identification of vulnerable debtors, as can be signposted for assistance within or externally of the Blackpool Council, where they engage;
• Increase in debt recovery due to knowledge of PAYE and Self-Assessment information
• Increase in take-up of reliable Attachment of Earnings
• Reduced failure rate of Attachment of Earnings
• Reduced need for using enforcement agents as a first port-of-call and the increasing of debt with fees.
• A fair approach to reducing debt with an ability to pay over a regular period.
• Improved effectiveness in debt recovery and thus reduced pressure on budgets
• Those in regular employment will avoid expensive and stressful enforcement agent visits.
• Customers knowing that we have access to HMRC data will encourage earlier take-up in contacting Blackpool Council and making arrangements to pay.
• Efficiency savings by reducing time/court hearings on committal or insolvency cases.
• Efficiency savings on not transferring cases to enforcement agents.
• Swifter repayment of debt
• Identification of individuals with a propensity to pay and take appropriate recovery action
• Reduced or mitigated problem debt

The success criteria for the data share and the methodology you will use to measure success:

Success criteria and associated metrics:

• Number of successful matches from DWP and HMRC
• Amount of debt recovered (£)
• Change in in-year collection rate
• Number of cases that were identified as potentially vulnerable due to data from DWP
• Number of cases that were referred to internal and external debt support, where they engage
• Number of AoE Issued, where applicable
• Number of no-payment Attachment of Earning, that the employer did not act upon (to be investigated), where applicable
• Decrease in the number of cases that go to enforcement agents
• Number of cases where previously unknown income now allows for effective customer engagement and payment commences
• Number of cases where previously unknown income now allows for effective customer engagement and enforcement action is taken upon non-payment
• At the end of the pilot, consideration can be given to the impact of the action on individuals and problem debt.

For debt information shares

 Please include details of how you have considered the Debt Fairness Principles.

The fairness statement summarises the steps we will take to ensure that the way we use the data sharing power is aligned with the fairness principles in Section 3.4 of the DEA Code of Practice.

Access to this data will allow a more segmented approach to the recovery of debt. The data received will, where possible, form part of an assessment to differentiate between

• Those who cannot pay their debts because of vulnerable circumstances or financial hardship;
• Those who may be able to pay their debt with additional support
• Those with the means to pay but have not paid

Blackpool Council has and will apply a policy which takes into account resident vulnerability and financial hardship. The policy includes taking reasonable steps to obtain a resident affordability assessment based on the Standard Financial Statement (SFS), the industry recognised standard.

Those identified as being in vulnerable circumstances or facing hardship will be treated fairly and where appropriate will be referred to internal and/or external sources of support.

This pilot also aims to reduce the use of more intrusive methods of recovery, which should only be considered as a last resort (e.g., use of enforcement agents, bankruptcy and committal to prison).

Where relevant we will contact individuals informing them of our intention to serve the AoE's, but allow them a 14-day period to engage with the authority before the AoE is served on the employer. This contact will include information that aims to encourage people to alert us to any affordability issues.  We will always attempt to conduct an affordability assessment before commencing an AOE.

Where taking such action exposes the debtor to vulnerability, hardship or the possible build up of further debt, we will look again at the Attachment of Earnings and decide if this is the best option at that time by considering varying, withdrawing the order or putting it on hold, as appropriate.

We will consider longer-term payment or other appropriate arrangements for those suffering hardship.

We will abide by Blackpool Council's debt recovery policies.

We have appended our Debt recovery and vulnerability / hardship policies to this business case.

For all information shares

Please include a statement showing how you will comply with the Code of Practice.

We confirm that this business case and associated documents adheres/complies with the Digital Economy Act (2017) and Information Sharing Code of Practice.

This has been demonstrated by the process to complete the business case and associated documents, which include ethical considerations, data security and for debt pilots a statement of how the Fairness Principles have been applied.

Please confirm that the following are in place:-

Senior Leader approval (Senior Responsible Officer)

Head of Revenues, Benefits and Customer Services

Funds are available

Yes

Resources (including staffing) are available

Yes

Supplier contract amendments are in place (if applicable)

N/A

Please add links or embed any relevant documents. 

Blackpool and Fylde Debt Recovery Guidelines

Income and Debt Recovery Strategy

Financial Inclusion Strategy

xxxxxxxxxx

Principal Recovery Manager

XXXXXXXXXX

Fraud/Debt Data Sharing Officer - Cabinet Office

XXXXXXXXXX

Business Analyst - DWP

XXXXXXXXXX

HMRC Data Sharing Service, CDIO Data Sharing & Acquisition

xxxxxxxxxx

XXXXXXXXXX

XXXXXXXXXX

Head of Revenues, Benefits and Customer Services

Name - Up to 150 characters

Pilot data share between Blackpool Council, DWP and HMRC to manage and reduce customer/council debt

Purpose - Up to 600 characters

To demonstrate the value of sharing local authority council tax debt data with HMRC to reduce and manage Council Tax debt. The pilot data share will help to manage and reduce Council Tax arrears; develop Blackpool Council recovery procedures; identify customers whose circumstances make them vulnerable and provide them with appropriate advice and support; and enforce appropriate recovery action.

Disclosed information - details of data items disclosed

Name, address and contact or forwarding address and supporting identification details of customers with Council Tax debt disclosed to DWP and HMRC; DWP to supply income based benefit data to support identification of vulnerable individuals and HMRC to supply PAYE and Self Assessment data

Controller names - Names of specific Controllers within a class of specified persons within the relevant schedule, such as a specific local authority. Free text.

Blackpool Council

DWP

HMRC

Information sharing method

Government Secure Email

Processor names - Names of specific processors within a class of specified persons within the relevant schedule, such as a specific local authority.  Free text

Cabinet Office.

Retention period - How long the information will be held by the recipient

12 months

Start date - when the information sharing agreement comes into effect

March 21

End date -  when the information sharing agreement comes to an end

March 22

Review date - when the information sharing agreement will be reviewed by the governance or Controllers with oversight responsibility for information sharing agreement where the data sharing is not a one-off sharing agreement

March 22

Contact - Contact details for any subject access requests or general enquiries about the information sharing agreement; email addresses for managed mailboxes rather than specific individuals.

Council Address: foi@blackpool.gov.uk

freedom-of-information-request@dwp.gov.uk

  foi.team@hmrc.gov.uk

foi-team@cabinetoffice.gov.uk

Information sharing benefits - Short description summarising the anticipated benefits of the information sharing agreement. Text up to 600 characters.

Increase in Council Tax debt recovered Increase of in-year collection rate identification of vulnerable debtors who can be signposted for assistance within or without the council, where they engage with the Local Authority; Increase in Council Tax debt recovery due to knowledge of PAYE and self-assessment information