Agenda item

This report provides an account of fraud-related activity during the past year to minimise the risk of fraud, bribery and corruption occurring within and against the Council.

Andy Hyatt (Head of Fraud) presented the report which provided an account of fraud-related activities during 2022/23 to minimise the risk of fraud, bribery and corruption occurring within and against the Council.  He highlighted the following:

·       The Corporate Anti-Fraud Service (CAFS) identified 154 positive outcomes with a total notional value of over £857,000, recovering 36 properties by detecting the tenancy fraud (Council and registered providers).  CAFS was able to recover 14 more properties than last year by focusing resources on detecting tenancy fraud;

·       The ongoing lack of affordable housing and the cost-of-living crisis meant individuals taking more risk than before to look for additional income from subletting or via moonlighting (working at a second job) which, though still rare due to effective controls in place, was on the rise.  The two cases reported had come to light due to the effective operation of management controls; and

·       The Council's Anti-Fraud & Corruption Strategy covering 2020/23 was based on five key themes: i) Govern, ii) Acknowledge, iii) Prevent, iv) Pursue and v) Protect.

Councillor Paul Alexander noted that under some tenancy fraud, the original tenant who signed the tenancy agreement was not a resident in the property. Andy Hyatt echoed his observations that of the 36 property recoveries, some were unlawful sublets while others were abandonment (where the original tenant no longer lived in the property and there were suspicions of unlawful subletting).   He also noted that in 9 out of 10 cases, the sub-tenant and the original tenant had used the same address to apply for housing benefits or the Council Tax Relief Scheme, hence alerting officers to investigate further.  Andy Hyatt advised that local authorities no longer had a jurisdiction over housing benefit fraud which was controlled by the Department for Work and Pensions (DWP) but could still consider issues relating to fraud under the Council Tax Relief Scheme.  

Councillor Florian Chevoppe-Verdier welcomed the report which brought about more positive outcomes than the past years.  He was keen to find out whether the Council was investing more to get greater returns. Andy Hyatt said that in arriving the aforesaid notional value, the Council’s actual spending in housing a family’s temporary accommodation was taken into account, instead of adopting the cost of buying a new unit which was ever-increasing.  On staff cost, Andy Hyatt noted that the cost of his team was in the region of half a million per year.  He highlighted the resource-intensive investigative work, with staff working in pairs at odd hours in order to track down unlawful sublettings.  David Hughes (Director of Audit, Fraud, Risk and Insurance) noted that of the 36 recoveries, 24 involved the return of keys which was a much quicker and cheaper process to re-possess the unit for reallocation without the need for lengthy and costly legal action.

Councillor Chevoppe-Verdier asked about the working mechanism of the London FraudHub.  Andy Hyatt noted that the London FraudHub is a data matching exercise.  The Council used that data in a range of areas, for example, to detect fraudulent moonlighting. In another example, following the monthly upload of DWP’s deceased list onto the Hub, the Council was able to recover properties whose former tenants had passed away without the Council being notified. Andy Hyatt highlighted that work was underway to take all Council data into one place for use by all the departments across the Council. For example, an applicant on the waiting list for social housing might be found out by this internal system having had a property already.

Responding to Councillor Chevoppe-Verdier’s enquiry, Andy Hyatt noted that mobile phone and email addresses were useful tools in combating frauds via data-matching and IP address checks.  The initial matching helped CAFS move forward in the investigations.

Noting two instances of “moonlighting” were identified, the Chair asked if they involved the same employment agency.  Andy Hyatt said no and noted that one instance was tracked down by data-matching against the Council’s payroll. He added that sometimes, consultancy staff used limited companies to receive wages making it hard to detect anomalies.  The Council had also matched payroll data to Companies House.

On the Chair’s further enquiry about the Council’s whistleblowing policy, Sharon Lea (Chief Executive) noted that the Council’s whistleblowing policy continued to be the primary support route for staff reporting concerns. The Monitoring Officer had also encouraged all staff members to report any relevant issues anonymously.

In reply to Councillor Adrian Pascu-Tulbure’s question, Andy Hyatt noted that there were 46 and 42 identified fraud cases of the Business Grants and Interruption Fund (COVID support) in 2021 and 2022 respectively. 

Noting that the notional value of 5 Right to Buy frauds proved cases amounted to a notional value of £133,200, Councillor Ashok Patel sought an account for this and the number of prosecutions involved. Andy Hyatt remarked that fraud-related activities were undertaken to intervene, deter and disrupt fraud.  He said it was prudent to keep the notional values of frauds identified at a realistic level.  The values were determined by the information and evidence provided by the individuals concerned and if applicable, the value of any property recovered, discounting the administrative and ongoing staff costs.  He hoped the figures reflected a genuine saving for the Council.

Andy Hyatt confirmed there had been no prosecutions in the last year due to the lag from the pandemic. Nevertheless, the service had a large number of cases in the pipeline with legal services. On cost incurred, Andy Hyatt noted that the valuation of the property for Right to Buy cases, was payable by the Council.

Councillor Patel noted the case description in Appendix 1 and expressed concern that some tenants were staying abroad while their properties were being repossessed by the Council.  Andy Hyatt explained that these tenants were not going abroad for a short time, evidence showed that they had left the country for a long period of time and had no intention of coming back.  He assured that the CAFS did not receive any complaints from the tenants in the process.

Addressing Councillor Chevoppe-Verdier’s concerns, Andy Hyatt said that the innocent sub-tenant in the repossessed property would be given a grace period to move out and provided with housing solutions services.

Councillor Alexander quoted two scenarios relating to succession and assignment of tenancies. Andy Hyatt referred to the criteria of tenancy succession and said the Council could trace whether the claimant had resided with the late tenant for 12 months before death. Assignment, on the other hand, was harder to verify and housing colleagues would ask a number of questions during investigations.  Addressing Councillor Alexander’s further concerns, Andy Hyatt said that the Council, in implementing a succession policy, sought to protect the community and its own stock, while recognising the housing associations in the borough had their own succession criteria which might differ to the Council’s.

RESOLVED

That the Committee noted the report.