National fraud initiative detects £215 million public sector fraud and overpayments

The National Fraud Initiative, the UK-wide antifraud programme, helped trace £215 million¹ in fraud overpayments and error in 2008/09, according to the latest report released today. The previous report (2006/07) found £140 million.

The NFI is a sophisticated data matching exercise. Since its launch in 1996 it has helped detect £664 million in fraudulently obtained benefits, pensions and jobs. In 2008/09 it helped trace £183 million of fraud and overpayments in England alone.

NFI compares information from 1,300 organisations including local authorities, the police, the NHS and nearly 100 private companies. Matching data is hosted on a secure website and participants investigate their own matches for possible fraud and overpayments.

The biggest increase in 2008/09 was for single person discount (SPD), the 25 per cent discount on council tax available to adults who do not live with another adult who counts for council tax purposes. More councils provided data in 2008/09 and with it NFI helped to detect over £62m in wrongly claimed or paid discounts. This is almost five times as much as the £13m total reported in 2006/07².

Salford City Council identifiedataxpayer who had been receiving the single person discount since 2001. The person's partner, who should not have been disregarded for council tax purposes, had lived with them throughout the period. The discount amounted to £2,200 and the council is now seeking to recover the money. Through this and similar cases, the Council expects to raise an extra £1 million in council tax.

The NFI also helped track £84 million in pension fraud.

Data matching helped South Tyneside Council identify one pension overpayment totalling £30,000. Following a pensioner's death, his step-grandson had fraudulently collected pension payments for some years. The Council referred the case to the police and after prosecution he was given a 12-month prison sentence.

Michael O'Higgins, the Chairman of the Audit Commission, said:

'We simply can't afford to ignore losses to the public purse, especially from fraud. Those who steal benefits, pensions, jobs and homes ought to know the NFI is on their trail, and others who fancy trying their luck should realise they will be caught.

'The latest NFI has helped achieve record savings. But it could do more. We are inviting government departments to put their data into the NFI and use its technology to stop the loss of taxpayers' money.'

Case studies

Immigration fraud - Yorkshire Ambulance Service NHS Trust

The Trust investigated an NFI match between payroll and UK visa data. It found that an employee had worked for the Trust for several years and been paid over £190,000, despite having no right to work in the UK. Investigations by the Trust's Local Counter Fraud Specialists and the Northern and Yorkshire regional team of the NHS Counter Fraud Service showed that his visa and passport were forgeries.

The individual was claiming asylum support, stating that he was not working and did not have any income. Following arrest and interview, he absconded from the country before returning to court. The employee's wife had no right to stay or work in the UK, but was working for a local employer having deceived that employer who believed she was entitled to work here. They are seeking to recover the tax, national insurance and pension contributions wrongly paid.

Housing fraud - Jephson Housing Association

Data matching of housing information revealed that a person held two separate tenancies at the same time with different social housing landlords. Follow-up found the tenant was not living at one of the properties and had been sub-letting the house for some time to another person. An eviction order has now been granted to remove the person unlawfully occupying the house.

Payroll fraud - London Borough of Croydon

Payroll data matching showed that a member of the Council's staff appeared to be working at two different authorities at the same time, while also living at two different addresses. Investigation revealed that two separate individuals existed, but the Council's employee was working illegally and had used a false identity and false national insurance number. The employee was subsequently sentenced to four months' imprisonment. The police charged the other person connected with this data match with the offence of knowingly allowing their details to be used fraudulently to gain employment.

UKBA, which worked with the authority on this case, has used the intelligence to make two other arrests for use of this identity, one at a local authority and the other at London Underground.

Notes for editors

1. The figures used throughout this report for fraud detections, errors, overpayments and recoveries include both already delivered and estimated outcomes. We include estimates where it is reasonable to assume that fraud and overpayments would have continued undetected without NFI data matching. A more detailed explanation is in appendix 2 of the report.
2. The NFI matches council tax records against the electoral register. Checks help identify individuals receiving the single person discount, despite living with other adults who are countable for council tax purposes. It identified over £56 million of fraudulent or wrongful claims for single person discount in England. This compares with £10 million detected in the NFI 2006/07. After the 2008/09 exercise all councils were required to present their data.
3. The large increase is because in 2006/07 Council Tax SPD matching was on a pilot basis, with few councils taking part. In 2008/09 nearly all councils have participated.
4. The Commission compares information through a secure website, and we pass the resulting matches to councils and other organisations for investigation for fraud or error.
5. NFI 2008/09 resulted in:
   • 269 prosecutions; 308 administrative penalties and 441 official cautions,
   • 256 members of staff dismissed or resigned
   • 16,535 blue disabled parking badges and 21,534 concessionary travel permits cancelled and
   • 97 properties recovered for those entitled to social housing.
6. The Serious Crime Act 2007 gave powers to the Secretary of State to extend data matching beyond fraud. The Act defines these purposes as helping the'prevention and detection of crime other than fraud, the apprehension and prosecution of offenders; and recovery of debt owing to public bodies'.
7. The Audit Commission is an independent watchdog, driving economy, efficiency and effectiveness in local public services to deliver better outcomes for everyone.

Our work across local government, health, housing, community safety and fire and rescue services means that we have a unique perspective. We promote value for money for taxpayers, auditing the £200 billion spent by 11,000 local public bodies.

As a force for improvement, we work in partnership to assess local public services and make practical recommendations for promoting a better quality of life for local people.