Turbulent times demand robust benefit payment systems
Providing welfare payments and support to citizens in need is one of the key functions of government. The unprecedented crises of recent years have highlighted the importance of flexible and responsive benefit mechanisms. On a recent Global Government Forum webinar, experts set out why these systems need to be even more robust amid trends such as migration, an ageing society, and workforce shifts.
As Lars Kirdan, Nordic director of business development at SAS Institute, put it, the pressures that governments now face mean that: “The state is back with a vengeance…and the speed is really accelerating.”
He shared an example from Denmark, where a slaughterhouse on one of the country’s islands had closed down, reflecting wider trends in the agricultural industry. Overnight, hundreds of people needed to find new ways to make their living, said Kirdan.
“And that’s what welfare is about. It’s safety when things are changing.”
Fighting fraud
The theme of the webinar was ‘how governments can get benefits payments right first time’. As well as getting money to people when they need it in a timely manner, an important aspect of this is also preventing fraud, which is crucial to protecting public funds.
“It’s really hard to get money back once that money’s out the door,” said David Williams, director, business programs, Microsoft.
This focus on fraud is made more urgent as systems are increasingly digitised to keep pace with citizens’ expectations, and the techniques of bad actors become more sophisticated.
Kirdan said that in Nordic states, fraud and error account for between 2-5% of welfare expenditure, “which equates to a lot of money”, while in the UK they account for 3.6% of benefits spending.
In a recent example, concerns were raised about high levels of fraud in Italy’s Citizenship Income scheme, launched in 2019 to reduce poverty and since abolished. Between April 2019 and mid-2023, authorities found that 84% of the 54,108 checks conducted revealed irregularities, involving over €505 million in fraudulent claims.
Kirdan noted that a substantial proportion of benefits fraud is perpetrated by serious organised crime outfits rather than individuals, which isn’t always conveyed in media coverage and political discussions.
“As we digitalise, as we move to more flexibility, as we try to accelerate our help to the ones that actually are in need” governments require an “efficient, risk-based control system,” Kirdan commented.
According to Williams, the key to this is to be able to “analyse data at scale and speed” across social benefit payments. This approach also helps to detect erroneous payments faster so that people who have unwittingly received incorrect payments or been paid too much are not hit with a large bill months or even years down the line, which can cause stress and potential financial hardship.
The UK’s Department for Work and Pensions, for instance, has recently come in for criticism regarding telling tens of thousands of unpaid carers to repay huge sums after buildup of erroneous overpayments.
Williams said a better solution for both organised fraud and honest mistakes “is implementing technology and systems that can identify those errors early”.
“Put systems in place that can look at the data, put just enough friction in the system to flag errors [or] flag obvious fraud [and] move to a secondary level of investigation to try to stop that money from going out the door, rather than let it go out the door, analyse the data post-event and then try to go chase it down,” he added.
Balancing act
Anti-fraud measures also mustn’t be so over-zealous that they block payments to people who are entitled to them.
Both speakers agreed that this is a “balancing act”, with Williams urging organisations to err on the side of “getting the benefits to the people that are in need because that’s where the harm really occurs” if people can’t pay their bills and buy food.
He likened the ideal scenario to systems used for credit card fraud prevention, noting that multiple levels of authentication can be automated at speed.
“It provides friction, but it doesn’t provide so much friction that a grandparent or a person that’s been put out of work has to wait six weeks” to get their benefits, he said.
There are many challenges to getting effective benefit payments mechanisms right, from gaining public trust in digital systems to getting political buy-in to managing the intricacies of data-sharing.
But speakers said that governments have no choice but to focus on these reforms.
“We are on a burning platform,” said Kirdan. “Fraud, social benefits, demographic change, unemployment, famine – we need to use the technology tools we have to ask new questions to some of the structural problems that we are actually facing on a global scale.”
He advised government organisations to “start small, start simple” with a hybrid strategy to drive change.
“You need to be able to integrate text, pictures, sound and digital data in the same analytical platform, and as much data as possible,” he said.
Use what you have
Some government organisations have limited resources to invest in new technology due to their size or budget but there are still steps they can take, the experts said. These include investing in solutions as a service as well as collaborating with other public organisations.
“You could share data integrators, data quality managers, analysts,” said Kirdan. “There are new solutions to be had.”
AI can also be an important tool to help spot anomalies, said Williams, noting that departments and organisations can also carry out simple checks such as running names against death registries for stolen identities.
“Don’t be afraid to explore tools,” he advised. “Not everybody can afford a really big, monolithic solution, but I think it’s getting democratised to the point that there are things that will help you beyond a calculator, a spreadsheet and a box of highlighters.”
Williams also noted the growing importance of identity resolution to prevent instances of fraud where individuals may attempt to receive benefits under multiple identities or provide false information to qualify for benefits they are not entitled to.
Tied to that is the development of digital identity, which several governments around the world are pursuing.
“You could solve so many problems by making sure that a person has an identity that is immutable and can’t be manipulated,” Williams concluded. “I think that’s something that’s coming at some point, and we should all start thinking towards that.”
‘How government can get social benefits payments right first time’ was held on 23 May in partnership with SAS and Microsoft. You can watch the full webinar here
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