Agenda item

This report informs Members of matters relating to corporate fraud, including outcomes of investigations and fraud referrals received by Audit Services.

Discussion:

The Head of Audit and Counter Fraud presented a report which informed Members of matters relating to corporate fraud, including outcomes of investigations and fraud referrals received by Audit Services.

Noting that responsibility for the investigation of benefit fraud had transferred to the Single Fraud Investigation Service (SFIS), a Member suggested that SFIS be invited to attend a meeting of the Audit Committee on an annual basis to discuss trends and issues of common concern regarding fraud. It was felt that an ongoing dialogue between the Council and SFIS would be beneficial to both parties and was important given the Council’s responsibility to act as a guardian of public finances, including housing benefit. Other Members supported this and commented on the significant increase in housing benefit fraud over the last two years. Officers agreed to look into the suggestion that SFIS enter into a dialogue with the Committee and also advised that the increasing use of more real time information in recent years and recognition of trends had led to more frauds being discovered. It was expected that the figures would now plateau.

In terms of the total amount of fraud reported, a significant amount of the overpayments did not impact on the Council as they were state benefits handled by the Department for Work and Pensions (DWP). Officers were taking a proactive approach to maintaining a flow of information with SFIS and it was hoped that information could be provided to the Committee on the work SFIS had done, including the number of cases dealt with and the total figures involved. This proactive approach was welcomed by the Committee.

The Council’s threshold for prosecution were lower than the DWP’s. Where the DWP decided not to prosecute and issue an administrative penalty (effectively a fine) as an alternative sanction then the latter would need to be authorised by the Council. The Council would then take into account personal factors and if there was no possibility of the debt being recovered a debt would not be created.

A Member asked if the Council’s lower threshold for prosecuting fraud could lead to more low level fraud. The Committee were advised that where the Council decided not to issue an administrative penalty, the DWP would then prosecute, but in either case  action would still be taken to regularise claims. Where the DWP decided not to prosecute in cases of lower level fraud the Council still administered the benefits and it was for the Council to recover overpayments.

A Member asked for figures on the numbers of people who defaulted. Experience from Gravesham showed that most people had arrangements in place to repay administrative penalties. The Council did not breakdown housing benefit overpayments as a result of fraud as opposed to council or claimant error.

In response to a query from a Member about how fraud could arise in the case of discretionary housing payments, the Head of Audit and Counter Fraud commented that these payments could only be made where a person was in receipt of benefits. Her assumption was the fraud occurred in cases where a person had misrepresented their situation and was not entitled to benefits, and therefore was not entitled to the Discretionary Housing Payment. However, she undertook to look into this and provide more details to the Member.

In terms of what was done to prevent fraud and the causes of fraud, the Head of Audit and Counter Fraud advised that there were a number of measures in place including staff training, the fraud proofing reviews of systems conducted by her team and recommendations made though other audit and fraud work on how to improve controls where fraud had occurred. In addition, the Council’s digitalisation agenda would make it easier for claimants to provide correct information in the first place and this would therefore reduce errors. 

Decision:

The Committee agreed to:

a)        note progress in investigating fraud in accordance with the approved Anti-Fraud and Corruption policy and;

b)             invite representatives from the Single Fraud Investigation Service (SFIS) to attend a meeting of the Audit Committee on an annual basis to discuss trends and issues of common concern regarding fraud.