BACKGROUND
1
Fraud is a
significant risk to the public sector. The government estimates
that the taxpayer loses up to £51.8 billion to fraud and
error in public spending every year.
Financial loss due
to fraud can reduce a council’s ability to support public
services and cause reputational damage.
2
Veritau delivers a
corporate fraud service to the council which aims to prevent,
detect and deter fraud and related criminality. The counter fraud
team investigate allegations of fraud, plan and take part in
counter fraud campaigns (eg the National Fraud Initiative),
undertake fraud awareness activities with staff and the public, and
maintain and update the council’s counter fraud framework and
associated policies.
3
The purpose of this
report is to update the Committee on counter fraud activity up to
31 October 2022.
FRAUD MANAGEMENT
4
The counter fraud
team raised awareness of whistleblowing on World
Whistleblowers’ Day in June. It is important that workers are
aware that they should raise concerns that are in the public
interest and that there are protections in place if they do. It is
equally important that managers respond to whistleblowing concerns
in the correct way.
5
In October
information was released to members of staff to mark cybersecurity
awareness month. The material focussed on mandate fraud (also known
as payment diversion fraud) a form of cybercrime that has been
increasing in terms of sophistication, frequency, and success over
the past 12 months. Staff were updated on the latest tactics and
tools used by criminals to commit this type of fraud as well as
warning signs to look out for. Earlier in the year bespoke and more
in depth training was provided to the Creditors Team as they are
most likely to be contacted by people committing this type of
fraud. Two attempted mandate frauds have been identified and
prevented this year.
6
Fraud awareness
training has also been provided to staff working within adult
social care, housing management, housing options and parking
enforcement in 2022/23.
MULTI-AGENCY WORK
7
The National Fraud
Initiative (NFI) is a large-scale data matching exercise that
involves all councils and other public sector bodies in the UK. The
work of the NFI is overseen by the Cabinet Office and the exercise
runs every two years. Data from a range of council areas has been
gathered for the upcoming 2022/23 exercise. The counter fraud team
have assisted the council to format and securely send the data. In
addition checks have been made to help ensure that the council
meets fair processing requirements. Results of the datamatching
exercise are expected to be released in February 2023.
8
The council are
required to respond to requests for information from the Department
for Work and Pensions (DWP) who investigate Housing Benefit fraud.
In cases where council tax support is in payment, the counter fraud
team can jointly investigate with DWP counterparts. The team have
responded to 27 requests for information to date.
INVESTIGATIVE WORK
9
In 2022/23, the
counter fraud team has received 191 reports of suspected fraud.
These cover areas including adult social care, social housing,
council tax, council tax support, internal fraud, parking, and
business rates.
10
Up to 31 October
2022, the team has helped the council to achieve £116k in
savings and £7k in Covid-19 related savings. The team has
completed 75 investigations and there are currently 29 ongoing
active cases. To date, formal warnings have been issued to 21
people. Two council properties have been recovered. Two internal
investigations have been completed. Payments were blocked following
two attempts to commit mandate fraud against the council. In
addition, the team has helped the council verify 28 applications
relating to applications for Right to Buy.
11
A summary of
investigative work can be found in appendix A, below.
APPENDIX A: SUMMARY OF INVESTIGATIVE WORK 2022/23
The table below shows the
success rate of investigations and levels of savings achieved
through counter fraud work in 2022/23.
|
|
2022/23
(As at
31/10/22)
|
2022/23
(Target: Full
Yr)
|
2021/22
(Actual: Full
Yr)
|
|
Amount of
actual savings (quantifiable savings - e.g. repayment of loss)
identified through fraud investigation
|
£116,386
|
£200,000
|
£205,328
|
|
Amount of
savings identified relating to Covid-19 grant related
fraud
|
£7,037
|
n/a
|
£60,000
|
|
% of
investigations completed which result in a successful outcome (for
example payments stopped or amended, sanctions, prosecutions,
properties recovered, housing allocations blocked)
|
53%
|
30%
|
47%
|
Caseload figures for the period
are:
|
|
2022/23
(As
at 31/10/22)
|
2021/22
(Full
Year)
|
|
Referrals
received
|
191
|
381
|
|
Number of
cases under investigation
|
69
|
69
|
|
Number of
investigations completed
|
75
|
133
|
|
Number of
verification cases completed
|
29
|
94
|
The chart below shows the
proportion of different case types under investigation as at 31
October 2022.
|
Activity
|
Work
completed or in progress
|
|
Fraud detection and
investigation
|
The service promotes the use of
criminal investigation techniques and standards to respond to any
fraud perpetrated against the council. Activity to date includes
the following:
·
Housing fraud
– Thirteen investigations of
housing related fraud have been started in 2022/23 to date. Eleven
investigations are ongoing. The team has helped to verify 28 Right
to Buy applications this year. The team have completed eleven
investigations into housing fraud resulting in two council
properties being recovered. An investigation found that a council
tenant was living in another part of the country while maintaining
a CYC property for the benefit of their family. The tenant returned
their keys after the council took court action to recover the
property. Another tenant also handed back their keys after they
were found to have abandoned their council property.
·
Internal
investigations – Two internal
investigations have been completed. There are three ongoing
investigations.
·
Covid-19 related
fraud – Investigative work into
Covid-19 related grants and payments is now winding down. The team
are currently investigating three cases relating to grants to
businesses and two relating to Test and Trace Support Payments made
to members of the public. The team have completed 17 investigations
in 2022/23 to date resulting in seven written warnings being
issued, one referral to the police, and one application being
blocked before payment was made.
·
Adult Social Care
fraud –
The team has
completed five investigations in this area and eight are ongoing.
Savings of £46k have been made by the council as a result of
investigations in this area. There have been six new referrals in
2022/23.
·
External (or
third party) fraud – Three referrals relating
to external frauds against the council have been reported in
2022/23. These included cybercrime attacks and an attempted theft
from the council. Seven investigations have been completed and one
is ongoing. Two attempted mandate frauds (payment diversion frauds)
have been prevented in 2022/23.
·
Council Tax fraud
– Eleven investigations have been
completed in this area and thirteen are ongoing. Two people have
been issued with formal warnings relating to false or incorrectly
claimed single person discounts; errors were detected in a further
four cases. Invoices totalling £5k have been issued to five
people as a result of investigations this year.
·
Council Tax
Support fraud – The team has completed
five investigations into council tax support fraud. Two people
received a formal warning about their conduct. Work in this area
has resulted in £30k being repaid to the council in 2022/23
to date.
·
Business rates
fraud – A business was found to
be incorrectly claiming small business rate relief. Its owners were
billed over £4k and were issued a written warning. Invoices
issued in the previous financial year have resulted in payments of
£12k being made to the council in 2022/23.
·
Parking
fraud – Thirteen investigations
into parking fraud have been completed. Six people were issued with
warnings following misuse of a disabled blue badge.
There has been an
increase in reports of fraud relating to parking permits being used
for holiday accommodation (generally relating to property owners
offering properties for let via accommodation websites). Two owners
of holiday accommodation have been invoiced for loss and issued
with formal warnings following investigations. It was found that
residential parking permits were being used instead of more
expensive business parking permits. Work in this area has resulted
in £7k of savings for the council this year.
There are currently
18 investigations ongoing.
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