Audit Commission: Fraud-busting councils

Last year England's councils detected around £99 million worth of benefit fraud, over £15 million worth of council tax fraud, and £21 million worth of other types of fraud including false insurance claims, and abuse of the disabled parking blue badge scheme.

Also, in a record-breaking year for tenancy fraud detection, almost 1,600 social housing properties that had been unlawfully sub-let were recovered. But it is estimated that as many as 50,000 houses and flats countrywide may still be occupied illegally.

The Audit Commission's latest national report on Protecting the public purse 2010 - Fighting fraud against local government and local taxpayers looks even deeper into the fraud menace that is draining money from cash-starved councils. It puts the spotlight on cheats who are illegally sub-letting or occupying social housing, falsely claiming council tax discounts, or taking council jobs without the right to work in this country, often peddling false identities and bogus qualifications.

The report contains the results of the Commission's recent surveys of detected fraud.

Latest figures show that:

• housing tenancy fraud is now one of the most significant frauds affecting the countrys economy - temporary accommodation for homeless families costs councils nearly £1 billion a year, an average of £18,000 for each family;
• 48,000 fraudulent council tax discounts claims were halted in 2009/10, giving £15 million back to the public purse. Councils are increasingly alert to false claims for single person discount, usually given when one adult occupies a property. This fraud alone robs the public purse of £90 million a year.

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

'Preventing and detecting fraud has never been more vital. Every pound saved can be used to strengthen public services. Cheats must not be allowed to block legitimate tenants from social housing, or divert other resources away from those in need.

'Councils have already performed well in fighting fraud, but need to be more and more vigilant. New processes and systems often open up new opportunities for fraudsters. Service providers need to stay one step ahead. For example, the number of people with personal social care budgets is increasing rapidly and councils must ensure that these vulnerable people are adequately protected. Councils must also watch out for procurement fraud in purchasing, sub-contracting, and outsourcing of services.

Among the fraud cases uncovered in this report:

• A housing association charged a tenant £53 a week for a property in west London. The tenant fraudulently sub-let the property to a pensioner for £225 a week for nearly two and a half years, with a £2,000 deposit and, under duress, a penalty of £1,000 for a late payment of rent. The association spotted the unlawful sub-letting, took court action to recover the property, and claimed costs and damages for the profit made by the fraudster. The court made a possession order and awarded costs of £27,169 to the housing association, who re-housed the pensioner.
• A registered social worker who was a former council employee received £25,000 in direct payments to meet her care needs over a two-year period. But when the care package was originally commissioned no medical evidence was provided to confirm the illness, supposedly a rare form of arthritis. The fraudster was well placed to exploit weaknesses in the direct payments system, stealing a carers identity and submitting false claims for direct payments. The fraudster received a 15 month custodial sentence and £25,000 was confiscated under the Proceeds of Crime Act.

Michael O'Higgins adds:

'Fraud prevention and detection requires a concerted response by local authorities and their partners. Good work is undoubtedly being done by many councils, as our case studies show. But research indicates that even this is uncovering only the tip of a huge iceberg. Our Protecting the Public Purse reports have encouraged organisations to work together on sharing information and specialist expertise. By joining forces, effective action can be taken in the fight against fraud.

'With the recently announced abolition of the Audit Commission, the annual detected fraud survey for local government and the publication of the results within Protecting the public purse will cease. The 2011 survey next year will be the last one that the Commission carries out. This is valuable information about how local government tackles fraud, helping to identify emerging risks and providing an early warning system for counter-fraud staff. The Audit Commission suggests that the Department for Communities and Local Government should discuss with the National Fraud Authority how best to continue this important work.

Notes to editors

1. A full copy of the report is available at: www.audit-commission.gov.uk/ppp2010
2. The Commission's Protecting the public purse reports focus on local government, consider the key fraud risks facing councils and related bodies and identify good practice. In addition, the Commission has run the National Fraud Initiative (NFI) data-matching exercise every two years since 1996. NFI compares data sets and identifies inconsistencies or circumstances that might suggest fraud or error. Participating bodies investigate the results from NFI.
3. The report includes summarised results of detected fraud in local government. The Audit Commission aims to make the local results available shortly after publication.
4. The Audit Commission has developed a tool that allows councils to compare their level of council tax single person discount with predicted levels, calculated using core census data. This can be accessed through the hyperlink on page 18 of the report.
5. 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.
6. On 13 August 2010 the Secretary of State for Communities and Local Government announced that he plans to disband the Audit Commission. His intention is to have new arrangements in place for auditing England's public bodies by 2012/13.

For further information please contact:

Tony Cox
Head of Corporate and Internal Communications
Audit Commission
Millbank Tower
London SW1P 4HQ
Direct line 0844 798 6697 / 0207 166 6697
24hr Press line 0844 798 2128 Mobile 07837 385193
E-mail: t-cox@audit-commission.gov.uk