By Richard Johnstone
11 May 2011
More than £2bn is lost to local authorities in fraud each year, the National Fraud Authority said today.
The NFA announced the figure as it published a ten-point counter-fraud blueprint for councils. This aims to tackle the causes of fraud in housing tenancy, procurement, pay, pensions and recruitment, council tax grants and blue badge schemes.
The checklist recommends councils use credit rating agencies to stop tax evasion and benefit fraud, and that they undertake background checks on staff to prevent fraudsters and organised criminals infiltrating key posts.
It also suggests that local authorities should pursue preventative strategies ‘more aggressively’ and maintain their specialist fraud investigative teams.
The NFA found that many councils and housing associations were already tackling fraud and error in housing tenancy claims – in one instance last year 51 councils recovered around £240m.
Local Government Secretary Eric Pickles,who requested the guidelines, said: ‘At a time when we need to cut the national deficit and government waste, cleaning up fraud could save the taxpayer over £2bn 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.’
Specifically, he called for other councils to consider Kent County Council’s work with credit rating agencies, which is detecting those wrongly claiming services. The NFA estimates that more than 400,000 people could be wrongly claiming a single person council tax discount, at a cost of £100m a year to councils.
Local Government Association chair Baroness Margaret Eaton said that local authorities already work hard to clamp down on fraudsters.
‘At a time when many councils are struggling to balance their budgets, it is more important than ever that local authorities continue to track down those trying to steal money intended for the sick and the elderly. The message from councils to fraudsters is clear – try to con the system and you will end up in court,’ she said.
‘While there is no room for complacency, the £2.1bn of fraud in local government is a small proportion of the £21.2bn worth of fraud across the whole of the public sector,’ she added.
