"Data sharing can prevent local government fraud"

Every time a criminal defrauds a local authority, not only is he or she stealing from the public purse, but is also diverting resource away from someone who really needs it. At a time when the pressures on local authority funding are already severe - and increasing as a result of the recession - fraud losses just make matters worse. It therefore follows that, if fraud can be prevented, local authorities will have more resource available to bolster their local communities and for those individuals who really qualify for benefits.

So what are the fraudsters up to? Essentially, the frauds themselves aren't rocket science, but professional fraudsters are good at what they do. Organised criminals, for example, use false identities when dealing with local authorities, and opportunistic individual fraudsters use lies - in both cases to secure services or benefits to which they have no right. Fraudsters tend first, but not exclusively, to prefer benefits with higher value, and therefore target, for example, housing benefit or council tax benefits (such as fraudulently claiming a single person's discount). Typically, fraudsters include those who:
• work but also claim benefits to which they have no right
• claim that they are single when they are in fact living with a partner
• claim from an address other than their own
• lie about their status/income/savings, etc, when claiming benefits
• do not qualify for the benefit they are claiming for some other reason.

In doing so, fraudsters also target local authorities by making false insurance claims (for injuries after tripping over, etc), and fraudulent applications for: housing grants, adaptations to homes, blue disabled badges, licences and permits, bus passes, concessionary travel, concessionary rates on evening courses and free school meals.

But what can local authorities do to prevent fraud? Many of them already do a great deal, employing teams of investigators and initiating prosecutions where they can, even recovering stolen monies where possible. But this kind of investigation work requires considerable resource. There are other solutions that could support this kind of activity, or provide an alternative, depending on any authority's appetite and funding regime. These involve the legitimate sharing of fraud data through a Specified Anti-Fraud Organisation (SAFO) as designated within The Serious Crime Act 2007.

One such SAFO is the National Fraud Initiative (NFI). The NFI already helps to identify fraud for local authorities, but this takes place once every two years, detecting fraud after it has occurred. Its 2006/2007 Report identified housing benefit fraud and overpayments in excess of £24m. In respect of individuals fraudulently claiming council tax single person discounts, the Report also refers to one Council that worked closely with the NFI on this, identifying a scale of abuse that, when rectified, would lead to an increase in the Council's revenue in excess of £3m. These examples are just the tip of the iceberg.

Another SAFO is CIFAS - The UK's Fraud Prevention Service. During 2008, by sharing fraud data through the CIFAS database, its 260 member organisations reported that they prevented fraud losses of £848m. The database is available 24 hours a day, 7 days a week, 365 days a year for members to prevent fraud and it works in a different way from the NFI. It prevents fraud before it occurs. And, so far as the public sector is concerned, not only could local authorities benefit from membership, but also central Government departments. At present, all CIFAS members are from the private sector, although a number of public sector organisations are preparing to join. They acknowledge that fraudsters do not discriminate - the same fraudsters who attack the private sector also attack the public sector, so the same protection is required.

Local authorities could use a SAFO like CIFAS to prevent financial losses through fraud in a number of ways. They could, for example, search the database to verify applications for housing benefit, council tax benefit, council tax single person discounts, etc. In doing so, they might find that an application for housing benefit was being made by someone using a false name, or that in a previous application for a loan (from another member organisation), that individual had quoted a much higher income, thus alerting the authority to the likelihood of fraud. If any of the addresses provided by an applicant was linked to a fraud on the database, for example, a local authority could look more closely at the details, enabling them, after a full investigation, to determine whether the application was genuine and valid, or fraudulent. This would help them to ensure that benefits reach those in real need, and not criminals and opportunists.

Source htp Dave