Audit Commission highlights falling fraud detection rate

14 Nov 13
There has been a 14% fall in the number of cases of fraud being detected by local councils, the Audit Commission revealed today.

In its annual Protecting the public purse report, the commission said that 107,000 cases of fraud, with a value of £178m, were detected in 2012/13. This was down from 124,000 cases detected in 2011/12, which had a total value of £179m.

This overall fall meant the average value of detected fraud increased by 15%.

However, Audit Commission chair Jeremy Newman highlighted that detection rates were patchy. If the total number of cases had been the same as in 2011/12, total identified losses would have been far greater, he said.

‘We should be celebrating that local government has detected some 107,000 fraud cases with a value of £178m in 2012/13,’ Newman said.

However, most of the non-benefit fraud was identified by the top quarter of councils, he added.

‘This shows what can be achieved and we encourage all councils to play their part and do as much as they can to detect fraud. If the other 75% of councils had found as much, we would see much higher overall rates of fraud detection.’

In particular, the commission found significant regional variations in fraud detection. Significantly lower levels were detected in most regions outside London, compared with the previous year, with annual falls ranging from 6% to 46%. Seventy-nine district councils detected no fraud that was not related to benefits in the year.

By contrast, London boroughs increased both the number and value of fraud detected by more than one third ­­(36%) over the year.

Newman said it was difficult to isolate the reasons for the variations, as it was influenced by factors including the actual levels of fraud available to detect, differences in the services provided by councils and their local approach to prioritising and tackling fraud.

However, for such a large number of authorities to not detect a single case of non-benefit fraud does ‘raise concerns about the priorities and resources in those councils’, he added.

‘I would urge all councils to review their local policies to ensure they are doing all they can to detect and record fraud cases. Our report has many examples of what can be achieved by councils who acknowledge the scale of the problem and apply appropriate and proportionate resources to tackle fraud.’

Today’s annual report was also the first time the commission required local authorities to separately identify detected frauds against maintained schools.

Overall, councils reported 191 cases of fraud in schools, worth a total of £2.3m. Of these, 86 – worth £1.9m – involved internal fraud.

This suggests schools may have fewer supervisory checks and controls than larger organisations, such as councils, Newman said, potentially exposing them to higher risk of internal fraud.

Responding to the report, Peter Fleming, chair of the Local Government Association's improvement and innovation board, said: ‘We have worked hard to ensure councils share knowledge and the best ways to tackle fraud and the good work being done across the sector, such as with social housing fraud, highlights this.

‘Local authorities firmly believe it is important to account for every penny of public money and as a sector we are resolute in our determination to stamp out fraud.’


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