Councils identify £178m of fraud but detection remains ‘patchy’

The Audit Commission has published its annual report into fraud against local authority highlighting that £178m worth of cases were detected last year.

The Commission was quick to caution that while the amount was reason for celebration, three quarters of the £178m had been detected by just 25% of councils. Commenting on the report, Jeremy Newman, chairman of the Audit Commission, said: “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”.

The report, Protecting the Public Purse 2013: Fighting Fraud against Local Government, found that local government had detected some 107,000 cases of fraud during the year. The average value of a fraud has increased by 15% in 2012/13 while the total number of detected cases has fallen by 14 per cent.

This is the first year the Commission has required local authorities to separately identify detected frauds against maintained schools. Councils reported 191 cases of fraud in schools with a total worth of £2.3m.

——————————————————————————————————————————————————–

Ealing Council’s, director of resources, Ian O’Donnell, who chairs the Fighting Fraud Locally strategic board, commented for Room151 on the news and the wider issue of resources required by councils require to help tackle fraud: 

The Audit Commission’s report acknowledges that councils are getting better at preventing and detecting fraud, and the leading councils are innovating and performing at a level that the sector can be proud of.  However, some councils have been slow to acknowledge their fraud risk and have been focused upon meeting the many other challenges facing local government.  Fighting Fraud Locally, the counter fraud strategy for local government, encourages councils to acknowledge their fraud risk and take appropriate measures both to prevent fraud and pursue detected fraudsters to recover losses.

Councils need to resource the fight against fraud properly, but some current issues are getting in the way.  The DWP’s decision to implement a Single Fraud Investigation Service (SFIS) for benefit related fraud will transfer hundreds of benefit investigators from councils to DWP.  The loss of this capacity to investigate fraud will undoubtedly have a significant cost in fraud losses.  Councils have already experienced some of this capacity loss as they have not recruited to vacancies in fraud teams in anticipation of the transfer.  The National Fraud Initiative data matching service currently run by the Audit Commission will transfer under the Local Audit Bill to Cabinet Office, and there are concerns that its focus will shift towards servicing central government needs rather than the needs of councils.  The future of the other tools (such as the annual fraud survey and Protecting the Public Purse) developed by the Audit Commission to help councils has not yet been decided.  Also, the expected demise of the NFA as it is subsumed into the new NCA has resulted in a reduction in support for councils from the Home Office, with no future plans to support councils on the table.

Despite the negative impact of some of the changes outlined above, there are encouraging signs that the government is beginning to recognise the value that can be gained from investing in counter fraud measures in local government, and will work with councils to develop more capacity and shape a response for the sector that is joined up and uses the latest technology, but these good intentions need to be reinforced with actions.