A ten point counter-fraud blueprint for tackling criminals and dishonest people who are costing the country billions of pounds in fraudulent local government claims was published in May by Communities and Local Government Secretary Eric Pickles.
According to the National Fraud Authority Annual Fraud Indicator, Local government could be saving taxpayers £2.1 billion a year by cracking down on fraud in housing tenancy; procurement; pay, pensions and recruitment; council tax; grant; and blue badge schemes. Money currently lost to fraud and error costs every household in England almost £100 a year.
The ten point checklist was compiled, at the request of Mr Pickles, by experts in the National Fraud Authority. The recommendations include councils using credit rating agencies to stop tax evasion and benefit fraud; staff background checks to prevent fraudsters and organised criminals infiltrating key posts.
The Government’s Counter Fraud Task Force was launched last year to develop a new strategic approach to tackling fraud across the public sector with a focus on prevention. It will report in May.
Many councils and housing associations are already tackling fraud and error in housing tenancy claims with the departments help. £19 million has been committed to 51 councils to help recover unlawfully occupied homes. Last year they recovered nearly 1,600 properties worth around £240 million.
Eric Pickles said: "It’s time to get tough and take on the fraud cons. At a time when we need to cut the national deficit and government waste, cleaning up fraud could save the taxpayer over £2 billion in recovered cash currently being fraudulently stolen or lost to tax cheats.
"Better prevention, detection and recovery of fraud will help reduce the financial pressure on councils and help protect frontline services. Today I am publishing the top ten plays for cracking down on council finance fraud.
"Councils should carry out better credit checks through credit rating agencies before giving over discounts or benefits. They should properly vet staff in key positions and put stricter controls on who can use the council credit card."
Mike Haley, Director of Public Sector Fraud, National Fraud Authority said: "At a time when councils are attempting to protect front line services, fraud can no longer be tolerated. Substantial savings can be made, as demonstrated by the best local authorities, and reducing fraud can make a significant difference to local government finances. This ten-point plan, based on local authority best practice, is a starting point in helping councils get a grip on fraud."
Top ten tips for tackling local authority fraud:
1. Measure exposure to fraud risk;
2. More aggressively pursue a preventative strategy;
3. Make better use of data analytics and credit reference agency checks to prevent fraud;
4. Adopt tried and tested methods for tackling fraud in risk areas – such as blue badge scheme misuse;
5. Follow best practice to drive down Housing Tenancy and Single Person Discount fraud;
6. Pay particular attention to high risk areas such as procurement and grant awards;
7. Work in partnership with service providers to tackle organised fraud across local services;
8. Maintain specialist fraud investigative teams;
9. Vet staff to a high standard to stop organised criminals infiltrating key departments;
10. Implement national counter fraud standards developed by the Chartered Institute of Public Finance and Accountancy.
Estimates indicate that over 400,000 people could be wrongly claiming for single person discount at a cost of £100 million a year to councils in lost council tax. Birmingham City Council has identified £6.8 million of fraudulent and incorrect claims for single person council tax discounts.
Some councils are already seeing the benefits of using credit rating agencies. Cheshire East Council found nearly 2000 people had wrongly claimed using Experian credit data. It cost £80,000 but will recover half a million pounds in new income.
Kent County Council is pioneering a contract framework for credit rating agencies which all councils can buy into. This will keep costs down and tackle those that are wrongly claiming services. Mr Pickles believes other councils should take advantage of Kent’s example and sign up to it.
Local Government employs around two million permanent, temporary and agency staff. Ealing found that 6 per cent failed proper vetting checks but that the figure was higher for temporary staff at 13 per cent.
One council found an agency worker put in charge of a large budget had set up a fictitious company and made false claims totalling £110,000. The person had used a false CV and was later sentenced to two years in prison. The insurance company refused to pay compensation.
London councils have been targeted by a group of sophisticated and organised false identity fraudsters using fake passports to falsely claim £700,000 of services. Oxford Council hired a dedicated fraud officer last year and recovered 25 properties in the first six months. In 15 of these cases the unlawfully sub-letting tenant was still claiming housing benefit, the total cost of which was £1500 per week.
The Department for Communities and Local Government has committed £19 million to helping 51 councils tackle social housing fraud.
Notes
Last year £22 billion of Housing and Council Tax Benefit was paid out by councils. They detected around £99 million of benefit fraud, over £15 million of council tax fraud, and £21 million of other types of fraud including false insurance claims, and abuse of the disabled parking blue badge scheme.
In a record-breaking year for tenancy fraud detection, almost 1,600 social housing properties that had been unlawfully sub-let were recovered in 2010. But it is estimated that as many as 50,000 houses and flats countrywide may still be occupied illegally.
Housing tenancy fraud is now one of the most significant frauds affecting the country’s economy – temporary accommodation for homeless families costs councils nearly £1 billion a year, an average of £18,000 for each family.
The ten point checklist compiled by the National Fraud Authority is based on pockets of good practice identified through the organisations current local government counter fraud programme. The National Fraud Authority’s ‘Guide to tackling housing tenancy fraud’ is available here:
www.attorneygeneral.gov.uk/nfa/WhatAreWeSaying/Pages/fraud-news-may11-Pickles-Ten-ways-to-tackle-council-fraud-and-recover-%C2%A32bn-a-year.aspx
