Governance, Risk and Best Value
Committee
10.00am, Thursday, 13 November 2014
External Fraud Prevention and Detection –
Annual Report and Future Planned Activity –
referral report from the Finance and Resources
Committee
7.13
Item number
Report number
Wards
All
Executive summary
The Finance and Resources Committee on 30 October 2014 considered a report
detailing external fraud detection activities undertaken by the Council during 2013/14.
The report was referred to the Governance, Risk and Best Value Committee to address
a request for information on internal fraud investigations.
Links
Coalition pledges
See attached report
Council outcomes
See attached report
Single Outcome
Agreement
See attached report
Appendices
See attached report
Terms of Referral
External Fraud Prevention and Detection –
Annual Report and Future Planned Activity
Terms of referral
1.1 On 30 October 2014 the Finance and Resources Committee considered a report
detailing external fraud detection activities undertaken by the Council during
2013/14. From 1 November 2014, the Council would cease to investigate
Housing Benefit fraud and the staff that undertook this work would transfer to the
Department of Work and Pension’s (DWP’s) Single Fraud Investigation Services
(SFIS).
1.2 The transfer of the Council’s skilled Housing Benefit Fraud Team would potentially
impact on the Council’s ability to tackle other areas of external fraud. A structural
review was underway to develop a Corporate External Fraud Team and address
the need for consolidated fraud prevention activities.
1.3 The Finance and Resources Committee agreed:
1)
To note the annual report on external fraud activity for 2013/14.
2)
To note the creation of a new Corporate External Fraud structure.
3)
To refer the report to the Governance, Risk and Best Value Committee to
address a request for information on internal fraud investigation.
For Decision/Action
2.1
The Governance, Risk and Best Value Committee is asked to consider the
report containing information on internal fraud investigations.
Background reading / external references
External Fraud Prevention and Detection – Annual Report and Future Planned Activity
Carol Campbell
Head of Legal, Risk and Compliance
Contact: Veronica MacMillan, Committee Clerk
E-mail: veronica.macmillan@edinburgh.gov.uk | Tel: 0131 529 4283
Governance, Risk and Best Value Committee – 13 November 2014
Page 2 of 3
Links
Coalition pledges
See attached report
Council outcomes
See attached report
Single Outcome
Agreement
Appendices
See attached report
See attached report
Governance, Risk and Best Value Committee – 13 November 2014
Page 3 of 3
Finance and Resources Committee
10.00am, Thursday 30 October 2014
External Fraud Prevention and Detection – Annual
Report and Future Planned Activity
Item number
7.7
Report number
Executive/routine
Wards
All
Executive summary
To set out the annual report on external fraud prevention and detection activity for
2013/14. Thereafter, to provide an update on the work being undertaken to establish a
Corporate External Fraud activity following the transfer of responsibility for Housing
Benefit fraud prevention and detection to the Department for Work and Pensions
(DWP) Single Fraud Investigation Service (SFIS) on 1 November 2014.
Links
Coalition pledges
Council outcomes
Single Outcome Agreement
CO25 and CO26
Finance and Resources Committee
External Fraud Prevention and Detection - Annual
Report and Future Planned Activity
Recommendations
1.1
The Committee is requested to:
1.1.1 note the annual report on external fraud activity for 2013/14;
1.1.2 note the creation of a new Corporate External Fraud structure; and
1.1.3 refer the report to the Governance, Risk and Best Value Committee to
address a request for information on internal fraud investigations.
Background
2.1
This report details external fraud detection activities undertaken by the Council
during 2013/14.
2.2
From 1 November 2014 the Council will cease to investigate Housing Benefit
fraud and the staff that undertake this work will transfer to the DWP’s Single
Fraud Investigation Service (SFIS).
2.3
The transfer of the Council’s skilled Housing Benefit Fraud Team will potentially
impact on the Council’s ability to tackle other areas of external fraud. A
structural review is underway to develop a Corporate External Fraud Team and
address the need for consolidated fraud prevention activities. This is being
tackled on a phased basis, with the first phase focusing on peripheral benefit
and income fraud. The second phase will consider wider external fraud
prevention and detection activities across the Council.
Main report
3.1
The annual report on external fraud for 2013/14 is split into two sections:
Work Undertaken by the Council’s Benefit Investigation Team
3.2.1 The Council has a Benefits Investigation Team (BIT) dedicated to the
identification, investigation and prevention of benefit fraud. The BIT works with
the DWP, Inland Revenue and other public bodies to detect and prevent benefit
fraud. The following table outlines fraud sanctions that were secured during
2013/14.
Finance and Resources Committee – 30 October 2014
Page 2
Sanctions Secured 2012/13 and 2013/14
2012/13
2013/14
Actual
Actual
Caution / Penalty
101
46
Cases submitted to Court for
prosecution
115
61
Total
216
107
Sanction Type
3.2.2 There are a number of reasons for the large reduction in sanctions secured
since 2012/13 but the most significant factor was a 44% reduction in fraud
referrals received. This is a result of improvements at the benefits gateway,
including increased automation of change of circumstance notifications. This has
delivered improved business information and accurate process decisions,
therefore preventing fraud at the first contact. As a result of these improvements
Housing Benefit fraud has significantly reduced across the UK and therefore
there have been fewer referrals.
3.2.3 The BIT has widened its scope to undertake other fraud investigation including
Housing tenancy fraud, and positive results have been achieved. Tenancy fraud
occurs when social housing is used by someone who is not entitled to occupy
that home. It includes, but is not limited to, unlawful subletting, wrongful tenancy
assignment and succession, failure to use a property as a principal home and
use of false information in a housing application to gain a tenancy.
3.2.4 When investigating Housing tenancy fraud the BIT Team work closely with
Housing Officers from Services for Communities and Housing Associations,
Community Safety teams, the police and other third parties. In 2013/14 eighteen
sets of keys were returned and 91 referrals have been received, many of which
are still under investigation.
Work Undertaken by the Council’s Internal Audit Section
3.2.5 The Council operates a web based system that allows the public to report
suspected cases of fraud. The Internal Audit Section reviews the potential cases
each week and passes them to the appropriate sections to investigate. In
2013/14 450 reports were made by the public. Of these, 398 related to benefits,
Council Tax and/or single person discounts and tenancy issues, 29 related to
blue badges, 12 to HMO licences or landlord registration and there were 9
miscellaneous cases. The remaining two cases that were reported related to
areas for which the Council has no responsibility and were passed to the
relevant authority.
Finance and Resources Committee – 30 October 2014
Page 3
3.2.6 Following investigation of the benefit fraud related cases 10% were found to be
fraud proven. Where the benefit fraud allegation included other benefits these
allegations were shared with the DWP by the Council as part of ongoing joint
working initiatives.
3.2.7 As well as external fraud detection, in 2013/14 the Chief Internal Auditor, on
behalf of the Director of Corporate Governance, received three reports of
suspected internal irregularities. Of these three reports, one is currently under
investigation and two resulted in no further action being taken. The Council is
required to report any loss, which is expected to exceed £5,000 to Audit
Scotland in accordance with agreed fraud arrangements. No reports were made
to Audit Scotland for 2013/14.
Corporate External Fraud Team
3.3
The formation of a Single Fraud Investigation Service (SFIS), covering all
welfare benefit fraud, was announced by the Chancellor of the Exchequer on 5
December 2013. The new service is now operational and Council Benefit Fraud
detection staff will transfer to the national body on 1 November 2014.
3.4
In conjunction with this transfer of responsibilities the Council has created a
corporate fraud function that will investigate potential fraudulent activities that fall
out with the scope of the SFIS. The function is located within Income Service,
Corporate Governance.
3.5
The team will undertake non Housing Benefit fraud investigations, allowing the
Council to increase detection and enforcement activities and prosecute, where
appropriate. This will ensure that the Council has skilled professionals involved
in fraud detection and prevention.
3.6
The creation of this new function is being progressed on a phased basis and the
initial remit includes fraud investigation activities relating to:

Council Tax Reduction Scheme;

Discretionary Housing Payments;

Council Tax Discount and Exemptions;

Non Domestic Rates Discounts and Exemptions;

Scottish Welfare Fund;

National Fraud Initiative review;

Tenancy Fraud; and

Other emerging fraud activities relevant to Customer Services activities
3.7
The next stage of the review will assess the opportunities to consolidate related
fraud prevention activities across the Council.
3.8
As part of this work officers will review existing Council policies relating to fraud
prevention and detection to ensure they are comprehensive and consistent with
existing best practice.
Finance and Resources Committee – 30 October 2014
Page 4
Measures of success
4.1
The success of the new arrangements will be measured through:




improved service co-ordination to tackle fraudulent activities;
development of more sophisticated fraud detection methods;
identification of multiple infringements by individuals and organisations; and
more efficient service delivery and potential budget savings
Financial impact
5.1
Local Authorities and COSLA are currently in discussion regarding Benefit
Administration funding reductions as a result of staff moves to DWP SFIS. The
Corporate External Fraud team is funded as part of the Corporate Governance
(Customer Services) Improvement Programme.
Risk, policy, compliance and governance impact
6.1
The creation of a Corporate External Fraud team will promote an anti-fraud
culture within the Council to help ensure the highest standards of probity and
public accountability.
Equalities impact
7.1
There are no direct equality impacts as a result of this report. .
Sustainability impact
8.1
There are no direct sustainability implications as a result of this report.
Consultation and engagement
9.1
This report has been completed following consultation with the Chief Internal
Auditor.
Finance and Resources Committee – 30 October 2014
Page 5
Background reading/external references
Corporate Fraud and Corruption Policy – Annual Report – Governance, Risk and Best
Value Committee 15 August 2013
Policy on Fraud Prevention
Anti Bribery Policy
Alastair D Maclean
Director of Corporate Governance
Contact:
Neil Jamieson – Deputy Head of Customer Services
E-mail: neil.jamieson@edinburgh.gov.uk I Tel: 0131 469 6150
Cliff Dryburgh – Benefits Manager
E-mail: cliff.dryburgh@edinburgh.gov.uk I Tel: 0131 469 5001
Links
Coalition pledges
Council outcomes
CO25 – The Council has efficient and effective services that
deliver on objectives.
CO26 – The Council engages with stakeholders and works in
partnership to improve services and deliver on agreed
objectives.
Single Outcome
Agreement
Appendices
Finance and Resources Committee – 30 October 2014
Page 6