£50m local government fraud uncovered

The level of fraud was revealed in a report from the Audit Commission, which highlighted the success of its biennial national fraud initiative.

By matching data from NHS payrolls, private sector pension funds and council rent records with other local councils, the Commission was able to uncover £50m in housing benefit fraud, pension scams and other frauds.

But the Commission has warned that some councils were slow in providing data and slow to act on matched information, exposing them to further fraud.

Set up in 1996, the national fraud initiative has uncovered £110m in fraud and overpayment using data-matching techniques which allow public sector agencies to cross-match information.

Sir Andrew Foster, controller of the Audit Commission, claimed the net was tightening around those attempting to defraud the public purse. ‘By sharing information, public bodies are helping shine a spotlight on areas un-investigated in the past,’ he said.

The NFI forms part of the statutory external audit process for councils, police and fire authorities in England and Wales.

Audited bodies and other participating organisations supplied data for cross-referencing between financial systems to identify fraud.

According to the NFI, most councils made good use of the information generated, but some could get more out of the process.

The report said: ‘Some councils could improve results by submitting better quality data, prioritising investigations more carefully and using the guidelines provided.’

The vast majority of fraud and overpayments involved either benefit or occupational pension fraud.

The NFI 2000 report revealed that out of the £50m of fraud uncovered, there was £24m of benefit fraud and a similar amount for pension fraud.

In one case a tenant of Westminster city council claimed housing and incapacity benefit as well as income support while in full-time employment as a driver for an NHS Trust. The fraud was discovered following a match between Westminster’s housing benefit records and NHS payrolls.

The report also identified the increasing number of ‘pension abatement’ cases where local government workers took early retirement and then returned to work for another public sector body.