Looking into it

To the uninitiated visitor, there is disappointment at first. The building is tatty and showing its age; the offices within are, like any other of its kind, uninspiring and dominated by computer terminals, towering stacks of paper and hours-old coffee cups; the low hum of conversation is occasionally punctuated by laughter from a nearby training session.

But don't be fooled. For this is the nerve centre of the Benefit Fraud Inspectorate, and new tactics are afoot.

Masterminding the changes is the burly - and appropriately named - Chris Bull: a cheery character straight from the pages of an action novel, with a disarming sense of humour and Action Man haircut. But again, don't be deceived: this is the man who made a name for himself while at the National Audit Office. In the early 90s, he was the man who busted the culprits behind the Gulf War fraud which saw shipping magnates tipped-off about the British Army's planned movement of troops, tanks and equipment, allowing them to organise their vessels in anticipation and hence unfairly snap up lucrative contracts. An even higher profile sting of his was the exposure of the financial scandal behind the £150m sale of Rover to British Aerospace in the late.

Unfortunately, and as he so ruefully recognises, Bull's sleuthing days are, at least for the near future, over. "Yeah, I do miss it. It was quite fun. That Gulf War one, I was working with the MoD police, known as "Mod Plod", and I was feeding them information about various brokers. One of them put up a notice on the Baltic Exchange saying "I shall shortly be leaving the country to pursue business interests elsewhere". Which meant he was running away because he could feel the trail closing in.

"I had to go ex-directory then, because the people involved in the fraud were ex-army people. And they can be quite nasty."

His experiences of government fraud while on secondment in Windhoek, Namibia, are equally diverting. But there is more to the man than Boy's Own adventures. His final work at the NAO was investigating the Department of Social Security's measures to combat housing benefit fraud, and how well local authorities were equipped to combat it, hence his move to the BFI in November last year.

As the new broom, Bull has been spending his time overhauling the BFI's operations, and will shortly unleash a new style inspectorate. His appointment came at a crucial stage for the government - housing benefit fraud has become a major political embarrassment. Of course, it's nothing new: a report by the Audit Commission as long ago as 1993 found that fraud was a significant probity issue. Seven years on, little ground has been made, with an estimated £600m a year in housing and council tax benefit being illegally creamed off. Bull is convinced that ministers are expecting him to bring some of his NAO experience with him. A little worrying for authorities, surely, when they start to get "the knock" instead of polite notification of their imminent arrival?

"I don't see why they should be worried," he insists. "These inspections, first of all they are done for free; the reports that we write as a result of these inspections are forward looking and they make positive recommendations when we do find problems, they are not about criticism for criticism's sake, they've been designed to improve standards and they only way we can do that is by making them as positive as we can."

That said, it will no longer be an easy ride for the worst performers. It is clear Bull is bringing with him a little of the NAO's more adversarial approach.

"We've maintained an emphasis on partnership," he says. "But there has been a shift, I think, in attitude and approach. People are disappointed about the persistence of fraud, about the levels it remains at. That, I think, has fed into quite tough lines coming out from government. We at BFI are likely to follow that in the reports that we write, they will perhaps be a bit less forgiving than they have been in the past. Whereas before we have said: "There are opportunities to improve this particular area", which is rather euphemistic, we would I think be a little bit more explicit and say "You're not doing this very well and here are some things you might wish to consider putting in place given that you're not performing." So there is a sort of change in tack there which reflects the increasingly tough line the government seems to be taking."

Internal fraud recently hit the headlines when the public accounts committee condemned councillors and officers for "making monkeys" out of parliament. This is a massive problem which Bull is deeply unhappy about. "It is a particularly disappointing result, high levels of cases like that," he remarks glumly. "I wouldn't agree that it is significant compared to local levels of fraud in general, but it is disappointing. People appointed on trust, in positions of trust, making money out of the system they're not entitled to.

"What all this is about is making sure people who have legitimate claims to benefit get the right amounts in the right timescale, that's our primary concern. By making sure the benefit systems are secure you increase the chances of legitimate claims getting through."

The prosecution rates of internal fraud are just 75 per cent - Bull places blames this almost entirely on the courts system. "I think it is because authorities see that if they do prosecute what happens to the guilty can be seen as quite insignificant, it might be several hours community service or a low fine. So I think that there's a sense that the courts aren't recognising benefit fraud as the serious thing it is. So maybe there does need to be a change in the way the courts look at fraud against benefits."

Tough new lines are all well and good, but there is growing evidence to show that all the emphasis on fraud is slowing up delivery of benefits. A recent survey found 49 per cent of homelessness agencies were losing revenue or suffering from cash flow problems because of the verification framework, and there have been increased rent arrears reported by housing associations. Authorities are clearly going to have to carry out an awkward balancing act or risk debilitating the already fraught housing process.

"It is certainly a challenge for local authorities," agrees Bull. "My view is that the verification framework is a statement of minimum operating standards which local authorities should be adopting. It seems to me a very common sense measure that will prevent fraud getting into the system, so I would advocate its implementation. Having said that, we do recognise that putting the thing in does represent a challenge for local authorities, particularly those that aren't use to managing projects because it's not something that you can plug in at weekends. You’ve got to shut down systems, devise new procedures, that sort of thing. But we would advocate that that be done."

Another new piece to the streamlined inspection process is the before and after scenario. Inspectors are to return to authorities to "see how they are getting on", as Bull puts it. "We'll do more of these second inspections to see if authorities are implementing our recommendations, looking more closely act the way they have been conducting themselves at being able to reduce fraud and making the system more secure against attacks."

The 30 authorities with the biggest benefits bills in the country will be the first to face the Bull-ish new regime - for they are the current phase of councils being inspected. Already, inspectors are reporting back a wide variety of standards - this is something the BFI also intends to address by stepping up the publication of new good practice guidance notes in the future. Inspection by theme, like the Best Value inspection process, may come into force shortly, such as a focus on recovery of overpayments in half a dozen neighbouring authorities. Self inspection it being considered too, setting out performance indicator benchmarks.

By its very nature, fraud is a hidden crime, particularly, as Bull admits, when there is such an inconsistency of performance. "The basic situation is of one benefit administered by 409 different administrative units, and that's quite a risk to take isn't it? I think you are always going to get variation in performance with those sorts of numbers."

But don't take that as a concession of defeat. While Chris Bull may no longer be breathing down the necks of large scale fraudsters, benefits offices should beware. He will not be a pushover.