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Annual cost to local government of fraud estimated at £2.2 billion

The Government's Annual Fraud Indicator makes the following estimates regarding local government:

Fraud against local government is committed against all types of local authority spend including on payroll, goods and services; as well as against the local taxes and benefits or services administered at a local level.

The current estimate of fraud against local government is £2.2 billion.

In parallel to fraud against central government this figure comprises;

  • estimates of loss due to grants (£41 million), procurement (£890 million), payroll (£153 million), and pension fraud (£5.9 million);
  • supplemented by estimates of loss due to housing tenancy fraud (£900 million), council tax discounts and exemptions (£131 million), and blue badge scheme abuse (£46 million).

During 2011 research was conducted by the NFA to improve the estimate of fraud loss against local government due to the abuse of council tax discounts and exemptions.

This is a higher estimate than previous years but, of course, this could be that it is more realistic rather than that fraud has increased. More could be done to reward councils for stopping benefit fraud. There could also be more data sharing between local government and central government.

In the strategy document, Fighting Fraud Locally, the leader of Sevenoaks District Council, Cllr Peter Fleming says:

At Dartford and Sevenoaks we have merged our fraud teams which has given us improved resilience, improved quality of work, and shared good practice and skills sets. The merging of our teams has improved knowledge between the areas and has resulted in new fraud being uncovered.

I am proud to say that we have been at the forefront of efforts to work in partnership using innovative methods to tackle fraud. By working collaboratively Dartford and Sevenoaks have saved over £191,000 in fraudulent benefit overpayments and £70,000 on operating costs. But more could be saved if we shared data more widely, within and between councils and with other bodies, especially central government.

Birmingham City Council has saved £10 million a year through data matching with housing associations and neighbouring councils.


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