Audit Commission concern over transition to Single Fraud Investigation Service

The Audit Commission has expressed concern that housing benefit investigations “will suffer as responsibilities shift” during the transition to the new Single Fraud Investigation Service (SFIS).

The SFIS will eventually investigate all welfare fraud perpetrated against the Department for Work and Pensions, HM Revenue and Customs and local authorities.

Warning of the impact of the transition, the Commission said: “A decrease in the number of councils utilising an optional data match (housing benefit against student loans data) provides an early indication that this could be the case.”

It added that the Commission’s National Fraud Initiative (NFI) was working closely with the Department for Work and Pensions “to mitigate, where possible, negative impacts that result from this change in policy”.

Establishment of the SFIS proved controversial in some quarters. In October 2013 Craven District Council hit out at the plans, warning of a loss of local expertise and suggesting that local authorities’ benefit fraud teams could cease to exist.

In December last year, the Government announced that it would make £16.6m available to fund an additional 270 fraud investigators for local government over the next two years.

The Audit Commission’s concerns were expressed as it reported that the national figure for identified fraud, error and overpayment had fallen by £46m but the number of cases was up by nearly 20%.

According to the NFI – which will transfer to the Cabinet Office in March 2015 – a further £229m of fraud, overpayment or error has been identified in England, Scotland, Wales and Northern Ireland since it last reported in May 2012.

The highest value categories identified in England continue to be pensions (£74m), followed by council tax single person discount (£39m) and then housing benefit (£33m).

The Commission said it believed the lower total value for cases, despite the increase in their number, indicated that participants in the NFI were increasingly effective at the early detection of fraud, overpayment and error.

Jeremy Newman, chairman of the Audit Commission, said: “This is great news if, as we believe, it is due to improving detection rates. However, we cannot be complacent. The more participants in the exercise, the richer the data for everyone involved and the harder it is for fraudsters to hide from detection.

“We know there are areas struggling to tackle fraud effectively, such as in the housing sector, and with only 35 housing associations participating in the exercise, we need greater involvement to get even better results in this area.”

The Commission said a new service, NFI Flexible Data Matching, made it possible for participants to undertake near-instantaneous data matching at any time and this may have contributed to the changes in the data.

The latest report also revealed that in England through the NFI:

• 86 properties had been recovered for social housing;
• 120 people employed without the right to work in the UK were identified and as a result were dismissed or asked to resign;
• 571 people had been prosecuted;
• 2,394 false applications had been removed from housing waiting lists; and 
• 21,396 blue badges and 78,443 concessionary travel passes, identified as invalid, were cancelled.

The Commission said 13 central government bodies were now involved with the NFI, compared to just two in 2012 (the Department for Communities and the Highways Agency).