Councils detected frauds worth £188m in England in 2013-14, the highest level in 25 years, the Audit Commission has said.
In its final Protecting the Public Purse report before its closure on 31 March, the commission said there was a 6% increase in detected fraud on the previous year.
Commission chair Jeremy Newman said: “By allowing councils to make peer comparisons, the commission’s work has helped councils to benchmark their individual performance against local and national figures.”
The commission first published its fraud reports in 1990, starting a process it said had helped to demonstrate that the benefits of identifying fraud outweighed the costs of doing so.
This approach had encouraged investment by local authorities in counter-fraud capability, it said.
Councils had stopped their earlier practice of viewing frauds related to housing tenancy and illegal subletting as a low priority and were “doing well in turning the tide”, with a near six-fold increase in the number of council homes recovered from tenancy fraudsters in the past five years by councils outside London.
But the commission said it was “disappointing” that 39 councils – all but four of them districts - had failed to detect any case of non-benefit fraud, although this is down from 88 recorded in the previous year.
The commission said the past two years had seen a substantial increase in the number of Right to Buy frauds detected, reaching 193 for 2013-14 after government increases to the discounts offered were introduced in 2012 to encourage use of the scheme.
In the two years between April 2012 and March 2014, detected Right to Buy frauds had increased by over 400%.
There was also a notable increase in frauds in schools, which increased by 6% to 206 cases, worth £2.3m in all, most perpetrated by staff.
Mr Newman urged the government to make it mandatory for councils to provide fraud data after the commission closes and its counter-fraud work move to the Chartered Institute of Public Finance and Accountancy.
Claire Kober, chair of the Local Government Association’s resources board, said: “The record success identified by the Audit Commission is a testament to local authorities’ commitment to tackling fraud. Councils’ track record continues to surpass that of central government.”
But she warned that the transfer of benefit fraud measures to the government’s Single Fraud Investigation Service “is likely to mean councils will have fewer resources with which to tackle other types of fraud.
“While government has announced one-off funding to help local authorities in the short-term, this needs to be made permanent to ensure councils have adequate funding to carry out this important work in the years to come.”