Record levels of fraud being detected by English councils, report finds

22 Oct 14

English councils’ fraud detection rate is the highest in 25 years, according to the Audit Commission.

The commission’s final report on fraud in local government ahead of its abolition stated English councils have detected the highest value of fraud since it turned the spotlight on local authorities 25 years ago.

In 2013/2014 fraud valued at £188m was detected by England’s councils, up 10% since 1990.

The report, Protecting the Public Purse 2014: Fighting Fraud Against Local Government, is the final one before the Commission closes at the end of next March.

It looks at the landscape of fraud against councils and how this has changed since 1990, when the Audit Commission started the reports.

There has been close to a six-fold increase in the number of council homes recovered from housing tenancy fraud, such as illegal subletting, in just five years by councils outside London, the report says.

For all English councils, the number of social homes recovered from tenancy fraudsters increased by 15% in the last year to 3,030, nearly doubling in the last five years.

However, the commission added that it was ‘disappointing’ there were still 39 councils, almost all district councils, which did not detect a single case of non-benefit fraud, although this had dropped by more than half compared to last year.

Commission chair Jeremy Newman said that the reports had helped make local government more transparent and accountable.

‘I believe it also encouraged the sector to develop a real passion for fighting fraud - a passion that has ensured that £188m of fraud was detected by English councils in 2013/14, the highest total value we have recorded, and a 6% increase on the result we reported for 2012/13,’ he said.

He said that the reports had also pinpointed emerging areas of fraud. Over the past two years, the commission has reported a substantial increase in the number of Right to Buy fraud cases detected, currently at 193 cases for 2013/14.

In the two years between April 2012 and March 2014, following significant increases in Right to Buy discounts, detected frauds in the area have increased by over 400%.

The commission is also calling for schools to review their governance arrangements after finding a 6% increase in fraud in maintained schools this year, mainly perpetrated by staff.

However, the commission also warned that councils’ attempts to address fraud were under threat from continued financial pressure, while changes in government policies such as Right to Buy and social care choice could unintentionally heighten fraud risks.

Newman urged the government to continue to mandate the provision of fraud data from all local authorities after the commission’s closure.

‘This would help preserve the high levels of transparency and accountability that English councils currently exhibit in their approach to countering fraud and prevent those councils that are not yet playing their part in the fight against fraud, from avoiding public scrutiny,’ he said.

The Audit Commission’s counter-fraud team will move to CIPFA when the Commission closes next March.

Responding to the report, communities minister Lord Ahmad of Wimbledon, who leads on the area the Department for Communities and Local Government, said catching fraudsters must be a priority for town halls.

‘This government is investing millions of pounds into helping councils to do this and thereby clamp down on cheats who are, simply put, ripping off taxpayers,’ he said.

Claire Kober, the chair of the LGA’s Resources Board, said the report’s findings were testament to local authorities’ commitment to tackling fraud and showed how councils’ track record surpassed that of central government.

However, she called for a commitment towards continued resources for local authorities.

‘The transfer of responsibility for tackling benefit fraud to government’s new Single Fraud Investigation Service is likely to mean councils will have fewer resources with which to tackle other types of fraud,’ she said. ‘While government has announced one-off funding to help local authorities in the short-term, this needs to be made permanent to ensure councils have adequate funding to carry out this important work in the years to come.’

Did you enjoy this article?