Agenda item

This report informs the Committee of the work of the Fraud Section for the financial year 2012/2013.

The Committee received a report of the Head of Finance (Shared Services) informing Members of the work of the Fraud Section during the financial year 2012 – 2013.

The Fraud Manager drew Members’ attention to the checklist on page 109 of the agenda.  This advised that the statistic for fraud was £73 billion nationally, £2.2 billion of which could be assigned to local government; the highest level of fraud was associated with tenancy fraud.  He advised that the Council had been successful in obtaining funding for a fixed-term staff post to work at reducing illegal sub-letting.  It was hoped that this initiative would result in the recovery of approximately 20 properties by the end of the period of this post.  It was anticipated that when the post-holder left the Council good practice would have been established which could then continue into the future. 

In response to a query from Councillor Williams, the Fraud Manager advised that considerable costs accrued to the Council through funding for people to stay in Bed and Breakfast accommodation.  Under the post holder’s remit to identify fraud associated with subletting, it was anticipated that additional properties becoming available could be offered to those in the Bed and Breakfast housing. 

The Fraud Manager informed the Committee that the core aspect of the section’s work was benefit fraud.  He noted that 20 final penalties had been issued, there had been 190 interviews under caution and 556 referrals.  He also drew attention to the invoices for overpayments for fraudulent claims totalling over £700,000 at WBC.   He advised that data matching was essential and that the section worked closely with other agencies such as the Department of Work and Pensions. 

The Fraud Manager noted that Tenancy Fraud was an emerging risk, due in part to insufficient social housing; this was likely to lead to further problems.  It was hoped that the new staff post would have maximum impact in this area. 

The Chair commented on point 7 of the Checklist on page 109 of the report, Rising awareness of Fraud Risks: this had not been applied for agency staff.   The Fraud Manager advised that this was a matter which would be addressed in the future: agency staff would be trained prior to the start of their contract. 

Councillor Brandon considered that it was imperative that sufficient checks were provided for within Service Level Agreements for outsourced services. 

Councillor Khan asked if the recession had had an impact on the levels of fraud.

The Fraud Manager replied that there was now more diversity and more changes in circumstance in respect of claims.

Councillor Khan asked whether the backlog in dealing with changes in circumstance had been taken into account; he noted that fraud could arise through the benefits section not dealing with these changes sufficiently quickly.

The Fraud Manager agreed that the backlog had resulted in problems for his team as it was consequently difficult to verify all the facts. 

Replying to a query from Councillor Williams, the Fraud Manager advised that benchmarking in fraud issues no longer occurred in other councils in Hertfordshire.  He added that comparisons would necessarily be with councils in London which would not be accurate or analogous to Watford.   

Councillor Khan noted that a new regime for benefits would shortly be in place and asked whether there would then be the possibility of increased problems associated with fraud.

The Fraud Manager noted two significant changes: Universal Credit and the Council Tax Reduction.   He was not convinced that Universal Credit would come into force but advised that in the event that it was introduced, a system would be developed which would integrate risk management.  With regard to Council Tax Reduction, he believed that there would be risks comparable to those associated with benefit schemes since the scheme would be based on the same data. 

Councillor Khan asked how many referrals had been malicious and why 136 of the 556 referrals had been rejected. 

The Fraud Manager replied that approximately 20 per year were malicious.  With regard to the rejected referrals he advised that all referrals were risk assessed and that they must all meet certain criteria.  Some of those cases that failed risk assessment were in respect of individuals not in receipt of benefit; the informant would not know or be told that information. 

Councillor Khan noted the table at point 3.13 in the report and asked what constituted the ‘Other’ overpayments. 

The Fraud Manager said that as a consequence of investigations it frequently became apparent that the recipient was credited with further benefits through other agencies. 

RESOLVED –

that the report and the content referred to including the Audit Committee checklist at Appendix A be noted.