Audit Commission finds £229m lost to fraud

11 Jun 14

The Audit Commission’s National Fraud Initiative uncovered £229m of incorrect and dishonestly obtained payments across the UK public sector in the last two years, according to figures published today.


In its last report before the initiative is moved to the Cabinet Office next April following the abolition, the commission announced that £74m of fraudulent pension payments had been detected by comparing data held by a number of public sector bodies. Incorrectly claimed single person discount for the council tax, worth £39m, was also detected, as was £33m of Housing Benefit.

According to the new figures, the amount of fraud detected actually fell by £46m over last two years, but the number of cases of fraud, overpayment or error rose by nearly one-fifth. This was due to an increase in the range of public sector bodies involved in the scheme, which compares data across central and local government.

In 2012, only two Whitehall departments – the Department for Communities and Local Government and the Highways Agency – were actively involved in the initiative alongside local councils. However, there are now 13 central bodies taking part in the programme, and a new flexible data-matching programme has made it possible to undertake near-instantaneous matching of information.

Commission chair Jeremy Newman said: ‘We publish a report from the NFI every two years and continue to produce great results.

‘The national figure for identified fraud, error and overpayment, that would otherwise be lost to the taxpaying public, is down by £46m compared to the previous report although the number of cases has increased by nearly 20%. This is great news if, as we believe, it is due to improving detection rates.

‘However, we cannot be complacent. The more participants in the exercise, the richer the data for everyone involved and the harder it is for fraudsters to hide from detection.’

The NFI could help in the detection of everything from small-scale individual fraud or error to serious organised crime, Newman said. Fraudsters often target different organisations at the same time, using the same bogus identities. The NFI combats this threat by data matching information held by 1,300 different organisations.

However, the commission also raised concerns that Housing Benefit investigations could suffer as the NFI moves to the Cabinet Office. A decrease in the number of councils utilising an optional data match (Housing Benefit against student loans data) provides an early warning this could be the case, Newman added.

‘We know there are areas struggling to tackle fraud effectively, such as in the housing sector, and with only 35 housing associations participating in the exercise, we need greater involvement to get even better results in this area.’

Rachael Tiffen, the head of CIPFA’s new counter fraud centre that will take over the commission's counter fraud work, said the report showed the breadth of the challenge facing all levels of government.

‘It shows how those entrusted with the public purse are succeeding in doing more with less, continuing to clamp down on fraud despite stretched resources.

‘If we are to continue this success we now need to make sure that these vital staff have the right tools, training and resources to keep on tackling fraud wherever we find it. The new CIPFA Counter Fraud Centre will build upon this type of initiative to ensure that counter fraud specialists collaborate and that they have the capacity, capability and competence to tackle fraud in new and improved ways.’

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