Councils detect £185m in fraud but still 'only tip of the iceberg'

10 Nov 11
Councils detected £185m worth of fraud in 2010/11 – a 37% increase over the previous year but still only the 'tip of a very large iceberg', the Audit Commission warned today.

By Nick Mann | 10 November 2011

Councils detected £185m worth of fraud in 2010/11 – a 37% increase over the previous year but still only the ‘tip of a very large iceberg’, the Audit Commission warned today.

The watchdog’s annual Protecting the public purse survey said the total amount lost to fraud was more than £2bn.

It estimates that the cost of social housing tenancy fraud in particular – such as subletting homes for profit – is at least £900m a year. Councils recovered 1,800 homes from tenancy fraudsters in 2010/11, but more than half of authorities outside London failed to recover a single property.

Housing and Council Tax Benefit frauds were also identified as major issues. They represented 59,000 of the total 121,000 fraud cases identified in 2010/11, with a value of £110m.

Elsewhere, the auditor highlighted the growing problem of fraud relating to the £50bn a year councils spend on procuring contracts. Councils found 145 cases of procurement fraud costing £14.6m in 2010/11 – a 400% rise over the previous year.

There was also a significant increase in the detection of adult care payment fraud. Councils proved 102 cases in 2010/11, worth £21,000 per case on average. This, the Audit Commission said, represented a 101% increase in the average cost of detected social care fraud.

Commenting on the results of the survey, Audit Commission chair Michael O’Higgins said: ‘It is heartening to see councils making inroads, and improving detection rates in areas like council tax discounts. But they need to do more to tackle housing tenancy and procurement frauds.

‘Huge amounts of public money are still being diverted from the public purse into fraudsters’ pockets. National figures suggest that over £2bn a year is lost to councils by fraudsters, so it is clear that only a small proportion of frauds are being detected.

In light of this, O’Higgins called on councils to maintain the ‘strongest possible’ anti-fraud defences in order to safeguard both jobs and services.

Local Government Association chair Sir Merrick Cockell welcomed the increase in the amount of fraud detected by councils.

But he warned that planned changes in how Council Tax and Housing Benefit are paid could affect levels of fraud. He called on government to ensure data sharing arrangements are included in these changes.

‘Councils are the most efficient part of the public sector and this 37% increase in detection shows that they are working hard for local taxpayers,’ he said.

‘However, we cannot afford to be complacent as this will only lead to an increase of fraudand less money available for frontline services.’

He added: ‘The LGA is in discussions with the government, asking them to ensure that under the new arrangements for Council Tax Benefit and Universal Credit that they provide councils with all the documents they need to tackle fraud.

‘Councils must be allowed to continue keeping upthe pressure on anyone defrauding them, as fraud hits hard-pressed families who play by the rules in their pocket.’


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