Agenda item

Report of the Deputy Chief Executive (Place)

The Committee considered a report of the Deputy Chief Executive (Place) which provided a summary of the Council’s anti-fraud and error activity during the financial year 2018/19 to date.

The Committee noted that fraud in the public sector has a national focus through the publication of “Fighting Fraud and Corruption Locally – The Local Government Counter Fraud and Corruption Strategy”.  Whilst the national strategy states that the level of fraud in the public sector is significant, the current trends in fraud activity includes areas which the Council does not have responsibility for, such as social housing, and the levels of identified / reported fraud against the Council are at relatively low levels, in terms of both numbers and values.

The Internal Audit Service was responsible for leading on the Council’s response to the risk of fraud and error.  The work of the team focussed on four main areas during 2018/19, namely council tax; National Fraud Initiative; referrals and investigations considered through the Council’s Fraud and Corruption Strategy; and proactive work. 

In relation to Council Tax, work had focussed on reviewing Council Tax Exemptions and Discounts.  This work had resulted in 90 exemptions being removed as the customer had failed to report a change in circumstances.  Given that on an individual basis, the amounts involved were not sizeable, these had been treated as an error rather than a fraudulent application to obtain an exemption they were not entitled to.  Revised bills amounting to £104,000 had been issued of which £58,000 had been repaid to the Council to date.  The outstanding balances were being recovered through agreed payment instalment arrangements or the Council’s standard recovery arrangements.

In addition, the Council received referrals from both internal and external sources linked to concerns around the payment of Council Tax Support or Council Tax Exemptions / Discounts.  In total, 22 referrals had been received.  The report indicated that, whilst most of these were passed to the Department of Work and Pensions to investigate under agreed arrangements, 10 concerns had been validated.  Whilst the majority of these cases were linked to the payment of Council Tax / Council Tax Support, 3 cases were related to the payment of Housing Benefit where, in light of the circumstances, it was more appropriate for the Council to take action directly.  In total, the 10 cases had resulted in revised bills / overpayments of around £23,000 being issued, of which £17,000 had been received to date.

With regards to the National Fraud Initiative (NFI), the exercise was led by the Cabinet Office and took place every two years, matching electronic data within and between public bodies with the aim of detecting fraud and error.  The work in 2018/19 has been focussed on collating and submitting datasets for the next exercise.  This was completed in early October 2018, with 12 datasets submitted.  It was expected that matches would be released for investigation in February 2019.

From time to time, the Internal Audit Service received referrals or were asked to assist with investigations relating to employment misconduct and other fraud against the Council involving external individuals.  During 2018/19, 15 referrals had been received to date, 5 of which had led to full investigations.  It was noted that there were various reasons for referrals not leading to investigations including, for example where an initial assessment / fact finding does not find evidence to support the allegations; appropriate action has already been taken; and the nature of the event means it is impractical to pursue further.

In addition to the 5 investigations for 2018/189, a further 5 investigations were carried forward from 2017/18.  Of these 10 investigations, 6 were still on going.  Of the remaining four, one case the officer involved received a written warning; one case the officers left their post during the disciplinary process; one case was linked to a Council supplier and was being dealt with as a contract management issue; and one case linked to Council Tax, action was taken to correct the council tax liability on 4 accounts.  This case related to a wider fraud involving two high street banks where the individuals fraudulently applied to become liable for council tax in order to provide proof of identity / address.

The Council’s response to fraud also considered an element of proactive work to ensure that all key fraud risks were considered.  In 2018/19 this work has included a review and update of the Council’s Fraud and Corruption Strategy; a fraud awareness e-learning tool being made available to staff along with some face to face sessions planned for February 2019 with staff from Adult Social Care in relation to Direct Payments; and as part of a group of West Midlands authorities, the Council took part in a pilot data matching project run by the Cabinet Office to detect fraud and error in Business Rates.  The project resulted in revised bills being issued in 9 cases, totalling £21,000.  Given the value of the individual cases, these were classed as an error.

As part of the work carried out by Internal Audit linked to fraud and error, consideration was given as to whether control improvements can be made to prevent further incidents from occurring in the future.  During the period April to September 2018, this has included an annual review form for Disabled Persons Relief in respect of Council Tax which has resulted in an amendment to ask for confirmation that the individual is still resident in the property; and awareness being raised with staff in Council Tax regarding attempts to obtain liability for Council Tax and the need to remain alert for this moving forward.

RESOLVED that the Audit and Procurement Committee note the anti-fraud and error activity undertaken during the first half of the financial year 2018/19.