Councils urged to fight fraud

Tens of thousands of council and housing association homes are being occupied by people with no entitlement to them, the Audit Commission said on Monday. And hundreds of millions of pounds are being lost to council tax and housing benefit fraud.

But the recession means that both the risk and cost of fraud are likely to rise unless councils remain deeply committed to combating it, the public spending watchdog said.

Resources for tackling fraud could be constrained, with local authorities already "squeezed on all sides" by falling income and rising demand, even ahead of likely cuts in central government support after the next election.

"The distress caused by the economic downturn may increase the incentive for some people to attempt to commit fraud," the commission said in a report on protecting the public purse.

At the same time, "the opportunity to perpetrate fraud may be increased if reduced staff numbers lead to weakened internal control", it added.

The commission acknowledges that authorities have done a better job of tackling fraud in recent years. But housing benefit fraud is on the rise again after a fall that coincided with the scrapping four years ago of an incentive scheme allowing council fraud teams to be partially or fully self-funding.

There is also evidence that direct payments to individuals to arrange their own social care have been subject to fraud.

In what it claims is a conservative estimate, as many as 50,000 council and housing association homes may be occupied by individuals not entitled to them, including people sub-letting illegally.

Such fraud by tenants deprives those entitled to a permanent home at a time when the queue for social housing has increased by 50 per cent in the past six years, the commission said. Tenancy fraud also pushes up the bill for temporary accommodation.

In addition, some councils have seen a significant rise in the numbers claiming a single person's 25 per cent discount on council tax, the commission said. It estimates local authorities could be losing almost £100m a year on fraudulently claimed single person's discounts.

Vigilance is also needed over recruitment to ensure that people are who they say they are, it added. One local authority offered a permanent post to a contractor who turned out to be a convicted fraudster using a false identity. He then set up a fake company and paid himself for £2m of work, although much of that money was recovered.

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