Minutes:
The Head of Customer and Financial Services introduced this item and provided background information. The presentation (attached at appendix 1) covered the future of fraud investigation within the local authority and the Single Fraud investigation Services (SFIS) together with the options available to the Council going forward. The aim was to give Members a better understanding of the changes which the Council would be subject to in order to assist with what action it would want to take moving forward.
The Government had announced the introduction of a new Integrated Single Fraud investigation Service in 2010, which would be solely responsible for investigating all welfare benefit fraud across the DWP and HMRC and local authorities (housing benefit). Pilots had commenced in 2012 with a national roll out from April 2013, due to delays the DWP extended the pilot schemes and the rollout commenced in October 2014 and was due to be completed in March 2016.
The Senior Fraud Investigation Officer covered the following areas within the presentation:
· Staff potentially affected by the changes – the DWP had confirmed that local authority staff that had been assigned primarily to investigating housing benefit fraud should be transferred to the new service.
· Funding – both Redditch Borough and Bromsgrove District Council received an administration grant from DWP to cover Council Tax Reduction Scheme administration, with approximately £38,000 allocated to Bromsgrove.
· The impact on local authorities – including investigation of housing benefit and residual council tax benefit fraud moving to SFIS. It was highlighted that a large amount of work would remain with the Council.
· Transfer of information to SFIS – including staff and the reduction in housing benefit administrative grant.
· Impact on the Council – for example a reduction in the identified Housing Benefit overpayments, no resource to protect the Council Tax Reduction Scheme.
· The cost to the Council – SIFS will only investigate historic council tax benefit cases and not local council tax discount schemes, which would suggest that only 5% of fraud committed against the local authority would be identified.
· There was a significant amount of work which would remain with the local authority including compliance and risk based verification, Council Tax Reduction Scheme investigation and police requests for information/liaison.
· Areas of investigation – including council tax empty property discounts, and council tax discounts, it is estimated that 32% of properties received the single person’s discount. The Audit Commission estimate a 6% error rate for this.
· By having a fraud resource within the Council there is the possibility of expanding in future to cover other areas within the Council such as procurement and employee fraud for example.
Officers advised Members that there were a number of options open for consideration by the Council following the changes:
· Transfer all the staff working with the Fraud team to SFIS – the impact of this would generate a staff cost saving, but would leave the Council at greater risk of fraudulent activity and loss of revenue, which would be countered by a reduction in the administration grant. This would also mean there would be no capacity to undertake investigations or prosecutions relating to fraud within the local authority and no resource to ensure compliance within benefits and revenues.
· The option was available to retain all officers in house and create a corporate fraud team that would focus initially on protecting and maximising income by undertaking thorough investigations for Council Tax discount fraud, housing benefit compliance and other areas of fraud within the Council. The team would be responsible for protecting the public purse, deterrence and investigation of fraud, corruption and bribery. In the future there would be the potential to expand such a team’s role by investigating other areas of fraud.
· The third option would be to have a mixture of both, retaining some members of the team to do the essential work. However, it is felt it would reduce the overall effectiveness of the team in protecting the public purse as its work would be solely compliance based and not focused on crime prevention, detection or punishment.
Following the presentation Members discussed the following areas in more detail:
· The impact on the Council, including the financial implications of the removal of the grants.
· Whether the funds which the team recovered covered the costs of the actual team.
· What income other areas of investigation would bring in to the Council, should the team expand as suggested in option 2.
· The incorrect classification of properties and the impact on the receipt of funding from for example, New Homes Bonus.
RECOMMENDED that during the budget process the Cabinet consider the option for the Council to create a Corporate Fraud Team.
RESOLVED that the Future of Fraud Investigation presentation be noted.