Interviews

Fraud initiative

by msecadm4921

The National Fraud Initiative (NFI), a data matching system, has already helped to identify £939 million worth of fraud, overpayment or error across UK public bodies since it began 16 years ago. The Audit Commission published the latest results in the work against fraud in the NFI National Report. The NFI has grown into a partnership of 1,300 participating bodies from the public and private sectors, including the Audit Commission’s sister audit agencies in Scotland, Wales and Northern Ireland.

 

 

Chairman of the Audit Commission, Michael O’Higgins, says: ‘This process delivers impressive results year after year, and is well on its way to returning a landmark £1 billion to the public purse, money that would otherwise have been lost to fraud, over-payment or human error.’

 

NFI data matching is carried out continuously, and the Audit Commission reports results every two years. Since the last report in May 2010 the scheme has identified almost £229 million of fraud, overpayments and errors in England, and £47m worth in Scotland, Wales and Northern Ireland – a national total of £275 million. (Where applicable, amounts included in this report have been rounded to an integer, 0.5 and above were rounded up and under 0.5 rounded down. The actual figures are England = £228.695m, Wales plus Scotland plus Northern Ireland = £46.650m, Total = £275.345m.) The highest value categories identified in England continue to be Pensions (£98 million), Council tax single person discount (£50 million) and Housing benefit (£31 million). Among other headline figures, the latest report shows: 

 

Some 164 employees were identified as having no right to work in the UK;

321 false applications were removed from housing waiting lists following a pilot with London borough councils;

731 people were prosecuted, 636 of them for housing benefit fraud;

31,937 blue badges and 51,548 concessionary travel passes were cancelled.

An increasingly wide range of frauds are signposted by NFI data matching, and then investigated by the participating bodies. This year’s report gives details of:

 

Immigration fraud work with the UK Border Agency to detect refused and expired visas;

398 prevented or detected cases of council payments made to private residential care homes after the residents’ deaths, worth £3 million;

Social landlords recovering 235 properties since 2010 that were unlawfully occupied, and reallocating them to genuine tenants who would otherwise be placed in expensive temporary accommodation; 

NFI working with the Serious Organised Crime Agency to identify ‘virtual addresses’ used as a front for unlawful activity or scams.

NFI working with the Metropolitan Police to spot large scale identity theft. A pilot using the Amberhill police database of known fraudsters generated over 200 matches.

NFI can help to detect everything from small scale individual fraud or error to serious organised crime. Fraudsters often target different organisations at the same time, using the same bogus identities. The NFI combats this threat by data matching information held by 1,300 different organisations.

 

However, the report notes that, across central government, only the Department for Communities and Local Government and the Highways Agency have joined so far.

 

Michael O’Higgins adds: ‘Despite its strong focus on tackling fraud, central government is still not sharing in the obvious benefits of the NFI. Every public body audited by the Commission is required to take part, but government bodies can choose whether or not to do so. And so far most have chosen not to. I have written to Sir Bob Kerslake, Head of the Home Civil Service, suggesting that he makes it a requirement for Whitehall and its arm’s length organisations to take part in the NFI.’

 

Also, only a handful of housing associations are using the NFI to tackle the problem of tenancy fraud. Despite clear evidence that it is a powerful tool for detecting fraudulent occupation of social housing – a driver for increased homelessness costs – fewer than 6 per cent of registered housing associations currently take part in the NFI. If all social landlords had joined it is estimated that the number of unlawfully occupied properties recovered since 2010 would have more than doubled to 487. Michael O’Higgins has written to Lord Taylor, Chair of the National Housing Federation, and Robert Napier, Chair of the Homes and Communities Agency, to alert them to this issue.

 

Michael O’Higgins says: ‘NFI works within a strong legal framework, including the Data Protection Act 1998, to protect individuals’ personal data. It is also undeniably cost-effective, helping to recover hundreds of millions of pounds of public money each year against an annual outlay of around £1.3 million. The introduction of real-time data matching marks a shift towards fraud prevention as well as detection. The government has committed to continuing NFI after the Audit Commission is abolished, and the Commission pledges to continue to lead this vital work until data matching powers are transferred to a successor.’

 

On publication of the National Fraud Initiative’s 2012 report, in mid-May, Alan Downey, partner and head of public sector at KPMG commented on the measures needed to reduce public sector fraud. 

 

He said: “What the National Fraud Initiative figures show is that fraud, overpayments and errors, particularly in pensions, council tax and housing benefit, are all causing huge losses to the public sector totalling £229m in England since May 2010. This is of major concern at a time when the public purse is already stretched thinly.

 

“Of course, it’s fair to say that, as organisations across the public sector implement austerity measures and change their day-to-day business operations, fraudulent claims should become easier to detect.  But at the same time, the reality is that there are fewer people available to identify fraud meaning that judgements have to be made about what resources are put in place to tackle the problem.  What matters now is how organisations put robust checks and balances in place to ensure that decisions about fund distribution are not made in isolation.  They also need to agree a consistent set of criteria to determine how funds are allocated. 

 

“The UK cannot afford to foot the bill for fraud and the only way to tackle it is to ensure the right people and processes are established. It’s tough enough providing a service with reduced funding so measures must be carried out to prevent budgets escaping through the back door.”

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