Agenda item

This report summarises key anti-fraud activities and achievements for the first half of 2025/26, highlighting measures taken to reduce fraud risk to the Council.

Andy Hyatt (Head of Fraud) gave an overview of the report. He referred to para. 1.8 of the report (page 25) and highlighted that when Corporate Anti-Fraud Services (CAFS) counter-fraud activity intervened and stopped fraud, CAFS would estimate the value of the losses that had been prevented going forward. This involved applying specific methodologies to calculate values according to the fraud type that would have been lost if the fraud had continued unchecked.  For example, for a tenancy fraud costing the local authority £1,000 a week to keep someone in temporary accommodation, the future savings based on the guess estimated period that the fraud would continue before the authority intervened could then be worked out, Andy remarked that valuing counter-fraud efforts helped demonstrate the financial benefits of this activity, underlining the importance of fighting fraud, and showing possible savings achieved through prevention work.

Councillor Rowan Ree (Cabinet Member for Finance and Reform) remarked that putting the prevention figures was hugely important to give a proper perspective on the value of the services. He said that the anti-fraud report had always been the highlight of the year, reflecting CAFS’ creative ways in holding people involved in wrongdoings and/or malpractices guilty and/or accountable. Councillor Ree referred to the recent use of Artificial Intelligence to launch the Fraud Recovery and Error Detection (FRED) programme which went through various data sets the council held for each individual and bring up the red flags committing potential fraud. The case of tenancy fraud – succession (case #2, appendix 1, page 31) whereby the late tenant had been receiving Single Person Discount was identified by FRED.

Noting from the tables under paras.1.4 and 1.8 (page 25) that there was a higher percentage of internal fraud (staff, contractor and agency) being proven than that for housing-related fraud, Councillor Lisa Homan sought elaboration.

Andy Hyatt explained that the housing-related fraud cases received contained quite raw information that required a lot of intelligence before they could go into live investigations.  For internal cases, the managers or human resources colleagues had already identified the wrongdoings before referring the case for further actions and hence led to higher returns.

On Councillor Homan’s further questions on whistleblowing, Andy Hyatt confirmed that there was none in the recent two years.  He remarked that a lot of whistleblowing cases received by the independent hotline were not fraud cases in the public interest but grievances or internal matters due to, for example, restructuring. Responding to Councillor Homan’s suggestion, Andy said the CAFS did work with the gas teams to verify residency during gas checks or upon their  referrals and recalled a couple of such cases highlighted in the last end of year report.

Charlotte Moar (Independent Member) appreciated the report which gave a lot of assurance, in particular the new estimated costings on the amount potentially lost to life along with the amount recovered. She sought information on the trend data, and the benchmark for fraud referrals.  

Andy Hayatt remarked that the trend could be observed through the types of referrals received directly and the intelligence gathered from local authority networks/anti-fraud peers across London. The CAFS would assess whether it needed to be alert to anything in the identified trend.  He added that as the recovery from tenancy fraud cases allowed more families to have access to affordable homes, they had remained CAFS’ focus for a long time and together with other housing-related fraud, they accounted for 75% of all investigation cases.

On benchmarking, Andy Hyatt referred to the first survey conducted recently by the National Anti-Fraud Network, of which he was an executive board member, that looked at figures of anti-fraud activities across some 300 councils across the UK.   Among the 129 responded councils, there was on average 17 recoveries from tenancy fraud per council for the surveyed year.  Subject to the size and nature of the responded councils, LBHF was in a relatively good position of having recovered 14 tenancy fraud cases under this half-yearly report. Andy expected the National Anti-Fraud Network would conduct the survey regularly and hoped to get more responses from the councils with a view to giving rise to useful insights.  He undertook to share the survey findings with the Committee after the meeting.

ACTION: Andy Hyatt

Charlotte Moar asked about full risk assessment around internal frauds to look at the controls and control awareness as she noticed such fraud cases might be committed through the collusion of external and internal people with certain behaviour, for example, did not take holiday leave.

Andy Hyatt referred to one of the four pillars of the Anti-fraud Corruption Strategy to help staff stay aware of the red flags, i.e. “understand and educate”. He said that the Strategic Leadership Team had given green light to refresh and rescind colleagues’ fraud awareness e-learning, with a particular focus on the red flags in respect of internal fraud and polygamous working (formerly known as “moonlighting”) in addition to the independent whistleblowing hotline. Andy said he was finalizing the training to ensure compliant for implementation in the second half of the year.

Councillor Adrian Pascu-Tulbure noted that there was a decent amount of tenancy fraud which in his opinion might be emerging through some sort of implicit whistleblowing.  He asked about the estimated number of undetected cases, if any and the resources allocated to tackle them.

Andy Hyatt highlighted that the Chief Executive was very supportive of the CAFS work and ensured sufficient resources was allocated to tackle housing-related fraud.  She was keen for the CAFS to continue to work closely with the Housing teams to verify residency door by door while the housing colleagues could take the opportunity to check the conditions of the property.  Nevertheless, the CAFS was aware of the need to contain the workload within the staff strength and decide to let the matter evolve naturally and slowly.

Andy Hyatt pointed out that there were delays in civil courts across the UK at the moment and the Director of Legal had spoken with local courts about reducing the waiting time.  Instead of having lots of tenancy-fraud cases awaiting to be heard, CAFS had focused its efforts on investigation and presentation of solid evidence to the individuals to the point that they opted to return the keys to the property rather than going through the lengthy trials. For those cases involving court hearings, Andy, in reply to Councillor Callum Nimmo’s enquiry, confirmed that the legal fees had not been factored onto the prevention and loss amounts but might do so going forward if the CAFS was unsuccessful in recovering the legal cost from the individuals concerned.

Councillor Nimmo sought elaboration on the prevention of £5,000 of a proved press release activity (para. 1.8, page 25). Andy Hyatt noted that it was a press release in a police report. The notional figure had been worked out based on different research areas by identifying the positive impact of the press release of having the deterrent of being caught. 

Councillor David Morton recalled that a void property had been let for six years incurring a loss of revenue to the Council amounting to some £100,000 and asked if the incurred loss was reflected in the prevention and loss amount.

Andy Hyatt confirmed that the CAFS had taken on board his point and factored the void costs in terms of income loss during the void period into the notional value of the estimated loss of proven cases.

RESOLVED

That the Committee noted the report.