Agenda item

The Council takes its responsibilities to protect the public purse very seriously and is committed to protecting the public funds it administers. This report provides an account of fraud-related activity undertaken during the financial year 2023/24 to minimise the risk of fraud, bribery and corruption occurring within and against the Council.

This item includes an appendix that contains exempt information. Discussion of the appendix will require passing the proposed resolution at the end of the agenda to exclude members of the public and press

Andy Hyatt (Head of Fraud) introduced the report which provided an account of fraud-related activity undertaken during the financial year 2023/24.  He highlighted the following:

• It was reassuring to have received high number of referrals from the National Fraud Initiative (NFI) data matching exercise which had helped reduce overpayments by tackling the cases earlier.
• The Economic Crime and Corporate Transparency Act 2023 (the “Act”) had inadvertently included local authorities due to its catchment criteria. Nevertheless, the Act and the defence available provided opportunities for the Council to strengthen its policies and procedures to prevent employees committing fraud offences benefitting the council, and to roll out fraud awareness across the Council.
• On tenancy fraud, while 18 properties had been successfully recovered, there were another 16 cases due to be heard in court. An action plan was put in place with colleagues from housing and legal services with a view to moving them forward and recovering properties for reallocation to people in genuine need.

Councillor David Morton said he ran a small Housing Association of 140 flats and noted there was a current trend for young people to live with their parents. He remarked that because of the legal requirement in passing the social housing tenancy once, a young adult living with the second parent who had succeeded the tenancy would become homeless if that parent also passed away.   He asked if the Council could change the rule.

Andy Hyatt said as he understood, LBHF could award discretionary secondary succession based on the merits of each case to ensure appropriate tenants would not lose tenancy.  He agreed to confirm and provide more detailed information on this after the meeting.

ACTION: Andy Hyatt

Noting notional values helped quantify the financial benefits of counter-fraud efforts which had incurred resources, Councillor Florian Chevoppe-Verdier asked about the “optimisation point” beyond which no additional fraud cases could be recovered even with more investment.  Andy Hyatt said, in his opinion, LBHF had not reached there yet. At a recent meeting with the Chief Executive and Executive Director of Finance and Corporate Services, there was a discussion on the level of resources required to yield the most return on investment on anti-fraud activities and a business case was under preparation.  He then shared with members how the appointment of experienced officers from within the council greatly benefitted the service bringing their different perspectives tackling various types of offences. 

As regards research and study, David Hughes (Director of Audit, Fraud, Risk and Insurance) noted that before its disbandment, the Audit Commission used to do an annual counter-fraud survey.  It was estimated that nationally about 3% to 5% of social housing tenancies were being fraudulently sublet.  Such  fraudulent practice was likely to be more prevalent in London.  He agreed that the more resources being deployed effectively and appropriately, the more properties could be recovered.

Councillor Chevoppe-Verdier noted the numbers of cases for each fraud types set out in paragraph 1.5 of the report (page 107) and asked about the corresponding numbers in the previous year. Andy Hyatt expected that in tandem with the slight increase in the service’s headcount, there was a slight increase in terms of the processing of cases including NFI’s investigated matches.

Councillor Adrain Pascu-Tulbure sought breakdown information on the reasons accounting for the closed cases, for example, no fraud had taken place, difficult to prove fraud had taken place, potentially losing the legal challenge and so on.  Andy Hyatt noted from the case management system that some cases could not move forward due to the lack of evidence . Andy added that some of the closed cases particularly those from the previous year might have exhausted all lines of inquiry but could be re-opened if new information came to light. He agreed to provide the requested information after the meeting.

ACTION: Andy Hyatt

On Councillor Pascu-Tulbure’s further question on benchmarking, Andy Hyatt said that as this Council had invested for a bigger team in deterring and tackling fraud, LBHF had a slightly higher case turnover when compared to the other two councils.  

Councillor Rowan Ree (Cabinet Member for Finance and Reform) thanked the excellent work of the Anti-fraud team which had brought about a notional value of over £1 million as well as the savings achieved through preventive actions.  He highlighted that every penny recovered or saved could be invested in delivering quality services to vulnerable residents.

Responding to the Chair’s enquiry about the recent trend of moonlighting which was prevalent during the pandemic, Andy Hyatt noted there was a downturn of moonlighting across London because London boroughs had been tackling it.  He expected that some cases might come to surface by the next NFI data matching exercise which would involve local authorities outside London.  While the next NFI data would be taken in September for the matching exercise to be carried out in March next year, the tri-borough Fraud Hub could fill the gap by comparing the payroll data across London more regularly to deter or identify moonlighting.  He added that examining specific tax codes might also help uncover such practice.

Councillor Chevoppe-Verdier recalled previous discussions on the need to strike the delicate balance between sharing fraud information and sharing too much personal data without the subject’s consent when exchanging data with other local authorities/ organisations.  With reference to the four objectives under the Anti-fraud and Corruption Strategy 2024/27 in Appendix 2 (page 117), i.e. Govern, Understand, Prevent and Respond, he asked whether the three boroughs could pool the resources to strengthen the fraud signals/networks and review existing solutions before resorting to matching NFI data.

In response, Andy Hyatt stressed that the NFI data matching was empowered by the Secretary of State and that was why the Fraud Hub with power deferred from the Local Government Act was moving to use the NFI platform for the assurance of the protection it provided. He added that data subjects were notified under a declaration on the Council’s webpages and privacy notices about their data being shared.

Andy Hyatt detailed a case whereby departments disagreed to share the data leading to a council property remaining empty. Councillor Chevoppe-Verdier considered LBHF, while ensuring democratic control, should also develop and uphold an internal ethical function. He asked whether the case mentioned earlier was resident-led.

David Hughes assured that before data sharing, the local authorities concerned would enter into data sharing agreement after conducting a data privacy impact assessment and consulting the legal advisors.  Andy Hyatt added that the London Boroughs Fraud Investigators Group, a partnership across London, could also seek independent opinion to provide further assurance.

Referring to the Anti-Fraud & Corruption Strategy 2024/27, Councillor Pascu-Tulbure considered the successes by 2027 under each objective (page 119) were qualitative ones easy to achieve.  He asked for the quantitative successes which could reflect the priority of “being ruthlessly, financially efficient” under the Council’s vision.  Andy Hyatt said he was happy to take that away.  It was in the plan to give the matter a deeper dive and provide information on the team’s performance against each individual area at future meetings.

ACTION: Andy Hyatt

RESOLVED

That the Committee noted the report and the Anti-Fraud & Corruption Strategy 2024/27.