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Case Studies

London fraud report

Is your local council finding a lot of fraud? That could be a good thing, suggests a first report, Protecting the London Public Purse, commissioned by the London Boroughs’ Fraud Investigators’ Group (LBFIG).

Councils that detect the most fraud are often among the most effective at fraud prevention and deterrence, the report suggests. It’s a myth that little or no fraud detected implies that little or no fraud is happening, the report says. Given London has such high house prices, and demand for social housing, the city has fraud risks from tenancy, right to buy and ‘no recourse to public funds’ (NRPF) frauds, the report says. For example: sub-letting, or selling the key. NRPF fraudsters might be claiming family status with children who aren’t theirs; or claiming in different boroughs with the same ‘family’. LBFIG suggests that some boroughs have yet to look for such fraud. One borough, concerned about the potential fraud risk, changed the application process. All new NRPF applicants are now subject to both identity document scans and credit checks. About one in ten withdrew.

London is the most proactive region in England in tackling fraud. In recent years London has consistently detected proportionately more fraud than the rest of English local government, according to the study. London by value of fraud detected in 2014-15 (not including tenancy fraud) saw a rise over the previous year, from £49.9m to £73.1m, though the number of cases detected fell from 21,606 to 19,513 (again, not including tenancy fraud). The explanation: the value of those frauds rose.

In the capital, the number of detected cases of housing benefit and council tax benefit fraud fell by more than half to nearly 2700, while their value fell by almost 17 per cent to nearly £23.5 million. This decline was expected as boroughs prepare for the Single Fraud Investigations Service (SFIS) by shifting focus to corporate fraud risks (such as procurement, charities, abuse of position and payroll), rather than fraud of state benefits. To recap, SFIS means benefit fraud investigators from councils, the Department for Work and Pensions and HM Revenues and Customs are going into a single fraud investigation service. The group suggests this is welcome, though in the immediate term boroughs have to make sure that investigators have the necessary skills to tackle new sorts of fraud.

London boroughs detected fewer housing tenancy frauds in 2014-15, but they report that they continue to disproportionately recover more council homes from tenancy fraudsters than the rest of the country. In particular, some 1618 tenancy frauds were detected, a greater than 10 per cent decrease on the previous year; and nearly two thirds of tenancy frauds in London are illegal sub-letting for profit, the reverse of the situation in the rest of the country. Most London boroughs have a corporate fraud team; elsewhere that’s not the norm.

As generally in local government, London sees wide difference between what council fraud departments do. While one London borough detected more than 2400 cases of non-benefit frauds, worth £8.9m, five London boroughs each found fewer than 20.

For the full 40-page report visit the LBFIG website: http://lbfig.org.


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