Protecting the Public Purse 2012

Transcription

1 Protecting the Public Purse 2012 ACFE Prague - 19 th March 2013 Alan Bryce Head of Counter Fraud, Audit Commission

2 Agenda The Audit Commission role in preventing and detecting fraud UK counter fraud environment Background to Protecting the Public Purse national reports Driving national improvement in fraud detection Driving local improvement in fraud detection Using fraud detection data and research to refocus detection activities nationally social housing fraud council tax discount fraud Fraud briefings helping individual councils locally Questions

3 A little bit about myself Head of Counter Fraud Qualified external auditor Accredited investigator Masters qualification in Counter Fraud and Counter Corruption Former police officer

4 About the Audit Commission and counter fraud Public sector regulator in England: over 200 billion of public expenditure focus on local government counter fraud no direct duty to prevent and detect fraud Instead assess arrangements to prevent and detect fraud in public bodies National study Protecting the Public Purse annual report annual survey collecting data on all detected fraud in local government All frauds over 10,000 and any act of corruption separately reported to Audit Commission (since 1860s!!!)

5 Local government in England: Has significant freedom and discretion in how to tackle fraud Influencing local government to improve counter fraud standards: 350 principle local authorities, different sizes, different services role of elected councillors should not be ignored how do you lever improvement?

6 Driving improvement in fraud detection National approach - greater transparency - changing how fraud detection is viewed - annual national report Protecting the Public Purse - significant media coverage (TV, radio and newspapers (national and local), publications, seminars/ conferences - increasing public support through key messages (cost/ harm/ ethical) Local approach (early stages) - tailored Fraud Briefings for individual councils

7 Nationally changing counter fraud environment in English local government since 2010 Over 25% decrease in local government annual funding in England Period of significant change/ transformation -new services and responsibilities External assessment of counter fraud standards in local government ceased in 2010 >30% reduction in number of counter fraud specialists in some parts of country in recent years Some counter fraud teams ceased completely QUESTION how do you leverage national improvement in fraud detection in these circumstances?

8 Protecting the Public Purse Detected fraud against councils: Re-introduced in 2009 Annual report, local government bodies Identifies and promotes good practice Unique survey fraud detection 100% of councils in England

9 Annual fraud and corruption survey in local government Defines fraud and corruption (civil definition) Mandatory requirement for local government: - completeness - authoritative commentary on results Establishes 18 sub-categories and definitions of local government fraud in England e.g. procurement Provides standard definitions for each subcategory of fraud: consistency comparability

10 Detected fraud levels depend on a number of factors: Level of fraud locally Effectiveness of prevention defences Resources applied to identify and investigate fraud Efficiency and effectiveness of fraud investigators Improved methods of recording fraud

11 The areas of greatest detection 2011/ million; 124,000 cases Other 41 million Council Tax Discounts 21 million Source: Protecting the Public Purse, Audit Commission Housing Benefit and Council Tax Benefit 117 million Increasing efficiency and effectiveness in detecting fraud

12 1990/ / / / / / / / / / / / / /12 Value ( million) Professionalising fraud detection, since 1990/ Detected nonbenefit fraud 0 Year Detected benefit fraud

13 So what has been achieved since 2009 Our message has been focus on frauds with greatest financial and social harm Increase in fraud detection trend not an accident: - value of fraud detected increased by 33% in last 3 years - number of cases of fraud increased by 5% in last 3 years >30% reduction in investigative capacity, we conclude: - increased efficiency and effectiveness in fraud detection

14 Key components of this improvement Positives: Transparency put more information into the public domain in the right way Increasing support from across local government public, elected councillors, central government and other key stakeholders Increased partnership working Identification and sharing of best practice, risks and fraud cases Fraud detection no longer widely regarded as a bad thing Be aware though: Little or no fraud detected does not normally mean strong fraud prevention Not looking for fraud/ not looking for fraud in the right way

15 National approach Research scale of specific types of fraud Publish results annually in PPP Identify good practice cases, approaches and local authorities Encourage local government to refocus activities, with significant results: social housing fraud council tax discount fraud

16 Social housing fraud (housing tenancy fraud) Definition: when people occupy social housing unlawfully, including: - subletting for profit - false information on housing application - wrongful tenancy succession Apparently did not exist until 4 years ago!!!!!! Myth problem only in London!!!

17 Properties Trend in total tenancy frauds detected: London and Non-London councils 2,000 1,750 1,500 1,250 1, / / / /12 Other councils London Boroughs

18 Since 2009 PPP report we have increasingly focused on tenancy fraud: Published information on good practice Provided regional analysis of tenancy frauds detected Undertook and published research on nature and scale of tenancy fraud (first ever study in UK) Provided evidence to challenged barriers and myths preventing action Identified nationally accepted means of valuing tenancy fraud: - 18,000 per property per year notional annual cost - 150,000 replacement cost

19 So what has happened as a result. By early 2013 the situation has changed significantly For first time a specific criminal offence of social housing fraud Recognised as single largest area of loss to fraud in local government in England ( 900 million per annum) Established 15 regional groups of social housing providers to tackle such fraud, share information and best practice BUT JUST TIP OF THE ICEBERG

20 Unequal performance in the fight against tenancy fraud Region 2011/12 No. of properties recovered 2010/11 No. of properties recovered East Midlands East of England London 1,209 1,337 North East 32 3 North West South East South West West Midlands Yorkshire and Humber TOTAL 1,748 1,778

21 2011/12 London Boroughs with housing stock. Properties recovered from fraudsters, and properties recovered as a percentage of housing stock Properties recovered Percentage of housing stock (0.)

22 2011/12 South East with housing stock. Properties recovered from fraudsters, and properties recovered as a percentage of housing stock Properties recovered Percentage of housing stock

23 Council tax discount fraud Locally collected tax 26 billion collected annually in England y local government Nationally 33% of all council tax payers claimed discount Highest was 48% at one council in 2009 Discounts available 25% discount if you live alone (Single Person Discount SPD) Up to 100% discount for students

24 Our approach to council tax discount fraud. In PPP we published: First ever research into the scale of such fraud: - found typically 4% to 6% of all single person discount (SPD) claims fraudulent Identified and quantified multi-year tax advantage to councils who tackle such fraud Created toolkit for public to check impact and potential scale of such fraud On line toolkit Compared actual level of claimants to our predicted level of discounts based on a few key indicators Difference could be due to fraud

25 Impact Re-focusing of local government activities to tackle such fraud. Doubling of detected cases in 4 years One council saved over 2 million in one year One council predicts saving 6 million over 7 years At one council, the number of claimants for the discount dropped from 48% four years ago to 39% this year!!! First evidence of disincentive for some councils to tackle such fraud

26 Detected council tax discount fraud cases and values for the last four years / / / /12 Cases (000) Value ( million)

27 % of total numbr of councils Percentage of authorities detecting council tax discount fraud by authority type / / / /12 London Boroughs Mets & Unitaries Districts

28 Detected value Detected value as % of CTAX income London council tax fraud detection by value, 2011/12 800, , , , , , , , Detected value Detected value as % of CTAX incom e -

29 Detected cases Detected value South East & East of England Districts Councils council tax detection 2011/ , , , , ,000 - Detected cases Detected value -

30 Fraud briefings- leveraging improvement locally PPP reports summarise annual national fraud detection Fraud Briefings: individually tailored to each council uses data collected for PPP national report identifies own council fraud detection performance compares and contrasts with neighbouring councils or benchmark groups presentation to audit committee/ elected councillors interpretation and communication of messages critical

31 Detected cases Detected values Total all frauds detected by councils in one region 2011/12 Total detected fraud -District Councils Councils in one region. Detected cases and detected values , Council A Council B 600, , , , , ,000 - Detected cases Detected value -

32 Detected value Average detected value per detected case Housing benefit fraud 2011/12, detected value and average detected value per detected case one region 700,000 7, ,000 6, ,000 5, ,000 4, ,000 3, ,000 2, ,000 1,000 - Detected value - Average detected value per detected case

33 And finally, some other trends and issues we have are noticing Average value of detected procurement fraud nearly 45,000 per case Under reporting social care fraud why? Schools fraud on the increase why?

34 Main areas of other detected non benefit fraud, excluding council tax discount and tenancy fraud Fraud type Value 2011/12 Value 2010/11 Procurement 8.1m 14.6m Payroll, pensions, expenses 3.5m 5.6m Abuse of position 5.6m 4.3m False insurance claims 2.1m 3.7m Social care 2.2m 2.2m Disabled parking concessions (blue badges) 2.4m 1.5m TOTAL 23.9m 31.9m Source: Protecting the Public Purse, Audit Commission

35 Detected employee fraud over the last two years The number of cases hardly changed more or less static barely 1% Shows honesty of LA employees 2011/ /11 Value 15.5m 19.5m Total detected 8.7% 10% Cases 1,459 1,581 Total no. of cases 1.2% 1.3% Average value of each fraud 10,624 12,333 Employee fraudsters detected as % of all LG employees 0.1% 0.1% BUT damage by internal fraud disproportionate!!

36 ANY QUESTIONS Protecting the Public Purse reports -