National Fraud Initiative

Standard estimates of benefit fraud are around £700m annually. The 2006/7 report on the National Fraud Initiative (NFI), published last month, detected fraud and overpayment of £140m. Why does that suggest that the overall £700m estimate is too low?

The NFI is an exercise in comparing databases which is run every other year by the Audit Commission, a body that audits the £180bn spent by local public bodies - no fewer than 11,000 of them.

The £140m reflects only items detected. The report points out that a number of bodies apply zero tolerance to fraud while "others have not yet exploited to the full the information NFI provides to stamp out fraudsters". What the Audit Commission have done is to highlight a few startlingly positive results, leaving us to draw conclusions about the scope for further savings.

The Taxpayers' Alliance castigates the Audit Commission for not naming and shaming poorly performing councils and agencies "to spur the improvement that is so sorely needed". In practice the list would probably have been very long by comparison with the case studies highlighting excellent practice.

Auditors will be "asked" to "monitor" bodies' performance at investigating matches during the next round of NFI. This slow pace of progress towards some sort of adequacy of performance across the board will cost taxpayers a lot of money.

Future posts in the benefit fraud blog will look in more detail at individual examples of good practice (the second post is now up). We will then draw them together here and suggest why the figure of £700m -which is shocking enough - must be too low.

Benefit fraud and the national fraud initiative

A couple from Chalfont St Giles who fraudulently claimed more than £29,000 in benefits were sentenced to 12 weeks in prison. The housing benefit overpayment was £10,262.03 and council tax benefit overpayment was £2,795.19. The rest was DWP benefits.

They were shopped.

The fraud originally came to light as a result of the Edwards winning a Paradigm Housing gardening competition for best garden.

Photographs of the competition winners were displayed in the district council's offices in Amersham - and on November 8 2006, a member of the public anonymously told the council they believed the couple were both claiming benefits while working.

Following a joint investigation by Chiltern District Council and the DWP, it was confirmed the couple were both working whilst claiming benefits.

A Shenley woman has been convicted of benefit fraud totalling over £90,000. She had been claiming income support and housing benefit since 1999 on the grounds that she was a single parent with three children. But a civil action taken to evict her from one of her properties led the DWP to investigate her claim. They discovered that she had four properties, and undeclared bank accounts containing large amounts of money.

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More on fraud prevention at local authorities. Cannock Chase District Council has announced that it will be taking part in the National Fraud Initiative (NFI), "a biennial data matching exercise run by the Audit Commission to identify fraudulent and erroneous payments from the public purse".

Cannock Chase District Council will be providing council tax single person discount and electoral register data to the Audit Commission for cross-system comparison for the prevention and detection of fraud

- apparently they can't run this check themselves; why not?

The council reports that

A trial of this pilot exercise undertaken by the London Borough of Hillingdon identified £1million in savings.

The cost of the data matching would have been trivial. So why is this not going live nationally now?

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The Audit Commission's summary of the NFI for 2004/05 (yes, I know, but this is the state sector) reveals that the number of participating public sector bodies contributing data was just under 1,300. Detected fraud was £111m. It's not all benefit fraud, but it found housing benefit overpayments of more than £22m.

Despite these successes, the NFI team’s site visits established that many sites had missed the opportunities this new area offered by failing to review the reports containing these matches. The sequence and structure of the NFI reports has now been revised and in NFI 2006/07 the reports will be placed more prominently alongside the other key housing benefit reports. In addition NFI communications and guidelines will emphasise the importance of these matches.

In these days of databases, this must be one big way forward for fraud detection. But is it being used as fully as possible? Come on, Mr Plaskitt!