Agenda item

This report presents the Council’s Annual Counter Fraud Report for the financial year 2023-24.

Darren Armstrong, Deputy Director Organisational Assurance & Resilience, introduced a report presenting the Council’s Annual Counter Fraud Report for 2023-24, which summarised the counter fraud activity undertaken across multiple fraud types (including internal fraud, housing tenancy fraud, external fraud and proactive work) and had been designed to support the Committee in obtaining assurance on the robustness of the Council’s counter fraud arrangements.

In considering the report the following key issues were noted:

·                The high priority identified in terms of counter fraud activity given the inherent and significant level of risk posed by fraud to the Council, with the Council having established a well developed approach towards tackling fraud and corruption based on a combination of reactive and proactive prevention and detection activities in line with best practice.

·                The Annual Counter Fraud Plan had been designed to ensure that resources were being effectively targeted and deployed to prevent and detect fraud, underpinned by the Council’s Anti-Fraud and Bribery & Whistleblowing policies.  A summary of all reactive and proactive counter fraud activity undertaken in 2023-24 had been detailed within the Annual Counter Fraud Report attached as Appendix 1 to the report.

·                The amended format introduction as part of the Annual Counter Fraud Report, which included the following specific sections:

o      Internal Fraud Activity & Outcomes – including a breakdown of the main types and volume of referrals (including whistleblowing).  Members were advised that of the 20 cases concluded during the reporting period 10 had resulted in a degree of fraud and/or irregularity being identified involving either theft, misappropriation of funds; conflicts of interest; recruitment; external offences/breaches and/or conduct of staff.

o      Tenancy & Housing Fraud – with the total number of fraudulent housing cases concluded over the reporting period being 16 and total notional value (based on an estimate of £42k per property recovered or Housing application stopped) being £672k.

o      External Fraud – including (but not limited to) cases involving Blue Badges, Direct Payments, Council Tax and Business Rates, Insurance, Finance, Concessionary Travel and grant applications with 300 cases opened during the reporting period compared to 224 for the previous year.  Members were advised this included 213 successful outcomes where fraud was detected relating to Blue Badge, representing a significant increase compared to the previous year with 38 prosecutions and 126 cautions/warnings issued, again representing an increase over the previous year.

o      Proactive and other activity – including a broad range of work including National Fraud Initiative (NFI) data matching reviews, fraud workshops, targeted operations and other planned fraud risk reviews which had resulted in significant cost savings being generated for example, through the NFI Council Tax Single Person Discount (SPD) review and participation in the NFI London FraudHub.

·                The outline of the Counter Fraud Plan, which had also been included as Appendix 2 of the report, which summarised how resources would be deployed and targeted to achieve the aims and objectives within the Council’s anti-fraud policies developed based on previous outcomes, stakeholder engagement, known and emerging risks.  Members were advised this also included development of a Fraud Awareness Plan.

The Chair then invited the Committee to raise questions on the report, with the responses summarised as follows:

·                Confirmation was provided that any costs awarded as a result of counter fraud activity would be to the relevant authorities, including the Council.

·                In response to a query regarding the vetting process for officers involved in commercially sensitive procurement negotiations, members were assured that, whilst not falling directly within the scope of counter fraud activity, the Council had well established and robust arrangements in place relating to recruitment and employment checks for staff and whistleblowing/referral arrangements should any concerns be identified in relation to staff conduct.

·                In noting the summary of numbers and types of internal and external fraud referrals for 2023-24, members sought further details on trends identified.  In response, Darren Armstrong advised that whilst the volume and type of internal fraud related referrals remain consistent with previous years the trend in terms of external fraud cases had increased (with blude badge fraud  accounting for 75% of new referrals) and resources being allocated and prioritised based on the fraud types detailed within the Counter Fraud Plan.

·                In recognising the broad range of proactive counter fraud activity being undertaken, further details were sought on the mandatory data matching process under the National Fraud Initiative (NFI).  In response, members were advised this had included 88 data matching reviews and three Blue Badge related proactive exercises with the scheme running over a two-year period and involving a wide range of data sets.  In response to a further query relating to the outcome of the NFI review on Council Tax Single Person Discount (SPD) members were advised this had involved a cross match of SPD caseload data with that held by the Revenues Service.  Whilst not felt to reflect an issue regarding the accuracy of source data, the matching review had resulted in the removal of 6.3% of SPD cases from the borough caseload, on which members requested further details following the meeting.

·                In terms of a query on the notional value identified in relation to Tenancy and Housing counter fraud activity, members were advised this remained a high priority for the Council given the positive impact on the temporary accommodation budget and housing supply.  Whilst the team had previously utilised and reported an average notional saving value of £93,000 per property recovered (consistent with the formulae used by the Cabinet Office) it had been agreed, following review, to adopt a lower notional figure of £42,000 from 2023 -24 onwards which was better felt to reflect the notional savings generated from tenancy recovery and had followed extensive national research by the Tenancy Fraud Forum (TFF) in partnership with the London Boroughs’ Fraud Investigators’ Group (LBFIG), supported by the Cabinet Office’s National Fraud Initiative, CIPFA, CIFAS, the Chartered Institute of Housing and the G15 group of housing associations.

·                In recognising the robust nature of both reactive and proactive counter fraud activity members advised they were keen to explore the breakdown in allocation of resources between both types of activity with an outline provided in response on the way resources were being allocated across key fraud types within the Counter Fraud Plan.  For 2024-25 members were advised these included priorities in relation to Housing, internal/whistleblowing, external as well as proactive counter fraud activity with a dedicated and intelligence led resource having been provided to focus on more proactive activity.

·                Noting the continued high level of referrals relating to Blue Badge Fraud, the Committee queried the impact this continued to have in relation to the allocation of resources and focus in being able to tackle other type of fraud risk. In recognising the significant level of resource and time allocated to this activity, members were advised this remained a priority given the negative impact associated with the theft, fraudulent supply and use of blue badges and increasing nature of the problem being experienced across London, with a majority of prosecutions relating to badges issued by other local authorities.  As a result, the Council continued to work in collaboration with a range of internal and external partners in maintaining a zero-tolerance approach to all types of blue badge fraud supported by changes introduced to streamline the referral and triage process in order to mitigate the impact on resources.  Councillor Chan (as Vice Chair) also took the opportunity to update members on a Member Enquiry submitted to the Healthy Streets and Parking Team regarding the possible introduction of a virtual blue badge scheme which it was felt would make the badges less vulnerable to theft and fraudulent use.  Members were advised that these proposals continued to be developed in collaboration with other partners, with details on a final scheme and timescale currently awaited and which would be provided for the Committee, once available.

·                In response to a further query regarding Housing and Tenancy Fraud, confirmation was provided that the counter fraud activity did not include i4B or FWH Ltd tenancies.

·                In recognising the benefits associated with the proactive activity being undertaken in relation to data matching, members also felt there was a need to consider what more they could do individually to address the financial pressures and risks under which the Council was continuing to operate which included the use of local knowledge to identify potential underutilised or empty properties and support counter fraud activity in relation to Housing and Tenancy, Business Rates and Council Tax fraud supported by provision of the relevant data sets, which members were advised would be fed back to the relevant teams in Housing, Property and Revenues.

As no further comments were raised the Chair thanked Darren Armstrong and his team for their hard work in relation to the ongoing delivery of Brent’s Counter Fraud Activity and it was RESOLVED to note the report, including the annual opinion from the Head of Internal Audit.