Fraud is prevalent across the public and private sectors: no sector and very few organisations are spared. Local government is no exception.
Fraud is important and every pound that is lost through criminal activity is a pound stolen not just from a council but from the local community. It is a pound that is not available to finance key public services and programmes such as social care or children’s services or growth programmes.
There are many areas of local authority activity and responsibility where estimated fraud is likely to be most prevalent – these including housing and council tax benefit payments; business rates; procurement; housing management and rents; other welfare services; schools admissions; and in fact in every service and activity. It is further estimated that the level of fraud across English local authorities is over £2bn excluding benefit fraud.
Recently I attended a workshop arranged by the National Fraud Authority to consider how local government can take advantage of the National Fraud Strategy.
The National Fraud Authority estimates the £2.1bn to be made up of
housing tenancy fraud - £900 million; procurement fraud - £855 million; payroll and recruitment fraud - £152 million; council tax fraud - £90 million; Blue Badge Scheme abuse - £46 million; grant fraud - £43 million;
and pension fraud - £8 million.
These are large and not insignificant sums of money and could represent many millions of pounds for individual authorities (or put another way many hours of home care or Sure Start). And this sum does not take into account money that may be lost or wasted through inappropriate but not fraudulent behaviour.
Local government has to take fraud seriously whatever form it takes and whoever commits it.
Political leaders should not feel embarrassed by fraud within their authority to the extent that they would prefer not to pursue illegal behaviour. If they are seen to be taking action this should be seen as politically positive, as should putting in place robust, sensitive and proportionate risk prevention strategies.
These strategies must be sensitive to and not impede wider policy goals such as localism, decentralisation and personalisation.
This means that council leaders and chief executives as well as other senior officers and members have to take it seriously. They should
• ensure that the council has fraud policy and strategy; and that this assesses and estimates fraud risks across the council’s services and activities
• promote this strategy so that all councillors, staff, external partners, suppliers and all who deal with the council including local citizens are aware of this policy
• support their audit and other staff responsible for addressing fraud; and adequately resource audit and fraud teams
• make all managers accountable for fraud, its prevention and pursuit
• be willing to take action against those who commit fraud irrespective of the consequential media and political fallout
• promote the prevention and pursuit of fraud as positive – as it protects the tax payer, service user and community
• ensure that there are effective “whistle blowing” arrangements and incentives for staff and the public to report suspicion of fraud
• all the council’s commercial and partnership relationships and transactions are transparent
• ensure that all the council’s process and procedures are “fraud aware” but that anti-fraud preventative measures are proportionate to the risk assessment for the particular activity
• ensure that providers of outsourced services are accountable for addressing fraud on behalf of the council
• produce an annual report on progress and performance on the fraud policy and strategy including benchmarking; and for this to be subject to political and media scrutiny
• review the fraud strategy and performance annually at cabinet and the corporate management team; and with key partners
The National Fraud Authority is developing a Local Government Fraud Strategy. It is working with local authority practitioners and has an advisory group which includes some local authority chief executives and other sector representatives. Some national guidance and co-operation across Whitehall departments is required to ensure that strategies and practice is joined up and complementary across agencies; and data sharing issues must be addressed.
However, I believe that whatever advice and guidance is available nationally, individual council leaders and chief executives as well as the Section 151 officer must ensure that their authorities are fraud aware and equipped to take preventative and reactive action.
The motivation for doing this should be obvious. It is about good husbandry of public resources as well upholding moral and legal obligations. Above all it is about being accountable to the public and demonstrating to them that the council wants to ensure that every pound is used effectively; and certainly is not lost to criminals.
