This report provides an account of fraud related activity undertaken by the Corporate Anti-Fraud Service from 1 April 2016 to 31 March 2017.
Andrew Hyatt, Head of Fraud, presented the report on fraud related activity undertaken by the Corporate Anti-Fraud Service between 1 April 2016 and 31 March 2017. He noted that case summary one in appendix one of the report should have stated that the employee in question was a member of staff at a local school and was dismissed following the outcome of the investigation.
Councillor PJ Murphy, referring to 1.4 of the report, noted that proceeds of crime cases awarded a total of £662,073 to the Council but only £310,551 had been recovered. He asked if there was a business case there to have more staff to enable to service to recover more of this money. In response, Andrew Hyatt said the majority of the money awarded was compensation for losses the Council had incurred through fraud which had been recovered through the investigations. Having more staff was not guaranteed to increase the amount of money recovered but the team was looking at other improvements - such as hiring an additional financial investigator and bringing in a housing specialist to investigate illegal sub-letting.
Councillor Guy Vincent noted that the amount of proven fraud in the borough was increasing (table 1.5 of the report) and asked whether there genuinely were more incidents of fraud or if the Council was simply getting better at detection. Andrew Hyatt said the overall level of fraud seemed to be the same but the team had more resources this year and that had improved output. For example; Right to Buy was an area of growth because the team had become a part of the applications process – allowing them to vet and challenge applicants.
Councillor Ben Coleman asked if the team should take on more staff to increase output further. Andrew Hyatt said the team was currently carrying some vacancies, as they were finding it hard to recruit experienced investigators. He was looking to bring the team up to full complement first then looking at what could be achieved with a larger team. It was also noted that the fraud values, other than proceeds of crime figures, in the report were notional values used for benchmarking, such as the previous Audit Commission’s assessment of the impact of subletting – the team was working on determining actual cashable values to more accurately represent the position in the borough.
Councillor Vivienne Lukey, referring to 4.3 of the report, asked how the team was enhancing the culture of fraud identification and prevention within the Council. Andrew Hyatt said the team wanted to be more proactive in this area and would be going into departments to do classroom-based fraud awareness training for staff to help them recognise and report suspected fraud to the team.
Councillor Michael Adam, asked how much money had been recovered from business rates relief for vacant properties fraud. Andrew Hyatt said he would provide that information after the meeting.
ACTION: Andrew Hyatt
Councillor Michael Adam noted that the Council seemed to have detected very few illegal sub-lets in the borough – despite the issue being endemic in central London. Andrew Hyatt responded that it was a major issue in the borough and one of the services major risk areas. He said the problem with detection was that all of the most obvious cases had been investigated, leaving the more difficult cases where tenants were complicit in the fraud and perpetrators were far better at disguising their fraud. The team was trying to use data to better focus resources. An added layer of difficulty in these cases was that the team had to run two sets of legislation in parallel – civil and criminal cases – which slowed the process. Andrew said he was aiming to have more officers focused on tenancy fraud in the near-future.
Councillor Michael Adam asked what ability the Council had to source data on who was actually living in flats vs who was registered at the address. Andrew Hyatt said his team used credit reference agency data National Fraud Initiative data collated by the Cabinet Office data primarily but that was only useful as intelligence, it wasn’t admissible in court or sufficient by itself to prove fraud. Officers needed to obtain hard evidence, often by visiting residences unannounced outside of office hours.
Councillor Nicholas Botterill asked if the observations of other residents were used to identify properties where illegal sub-letting was taking place. He added that one of the residents in his ward had phoned the Council on a number of occasions to discuss one of their neighbours but felt they were not taken seriously. Andrew Hyatt said his team did take any information from residents very seriously and they did follow those leads up. Evidence like this was often used in civil cases – but in criminal cases residents would have to make a statement and appear in court which some were reluctant to do. Councillor Botterill asked that officers gave residents who did supply leads with a formal response letting them know that the issues raised were being investigated and that the Council appreciated their help.
Councillor Nicholas Botterill asked how the service put a value on things like Blue Badge fraud. Andrew Hyatt said in that area they relied on old data from the National Fraud Authority (closed by the Government in 2014) as they carried out the last full assessment of how much fraudulent Blue Badges were being used. Since then a lot had changed – there had been cases of Uber drivers using them for example – and he expected the figure would be lower today. Councillor Botterill felt that there was a danger of missing the full impact of some fraud by simply assigning a monetary value.
Councillor PJ Murphy, returned to the point about the team finding it difficult to recruit new staff. He asked for some background on why that was (skills shortage, pay etc.). Andrew Hyatt explained that the primary reasons went back to May 2015 when the Department for Work and Pensions transferred across a significant number of local government officers who had investigated benefit fraud. The relatively attractive work environment and benefits in the civil service made it difficult to hire them back into local government. However, the service had been running a successful apprenticeship scheme and was reviewing the role requirements to ensure that highly motivated staff could be recruited to take on the challenge of tackling fraud in the borough.
NOTE: Councillor Mark Loveday entered the meeting at 7.39pm
Councillor PJ Murphy supported that approach and said the team should look at their person specification to ensure it was as attractive as possible to the widest range of applicants – including those returning to work.
Councillor Donald Johnson asked whether the level of employee fraud was comparable to other authorities. Andrew Hyatt said it was around the same as any other authority. There were a higher number of employees that lived in the borough as compared with many London councils so it was fractionally more likely that they would be involved in tenancy fraud.
That the committee noted the report.