The huge scale of social housing fraud

A good news story in Sunday's papers was that as many as 160,000 social housing tenants in London alone may be subletting their properties.

Why is this good? This blog has argued that social housing fraud is the wickedest form of welfare fraud. There's more than the financial dimension: there isn't enough social housing available, so every detection gives a poor family in temporary accommodation a better life..

Freeing up sub-let properties would be the cheapest and quickest way to make more social housing available. There are 8 million council or housing association homes in England and 1.8 million households on the waiting list. If (improbably) 20% of these homes right across the country proved to be sublet, that would free up 1.6m homes.

So this news is potentially massive.

Where do these figures come from? It's our old friend data matching again - still much underused. HJK fraud investigators matched 27,000 tenants – the entire tenant roll of two councils and four housing associations – against mortgage and credit databases.

They found "indications of fraud" – such as the tenants having mortgages, utility bills or active credit at other addresses – in 5,300 cases. That's almost 20%. Yet the government's official estimate is that less than 1% – 50,000 properties in the whole country – are fraudulent.

• In 2,120 cases (8% of the total) HJK found "red" indicators of fraud, where the registered tenant had a mortgage, bank account, active credit or utility bills at another residential address. 
   
• In 3,180 cases (12%) they found "amber" indicators of fraud – active credit, bank accounts, Sky TV or utility bill records held by a person with a different surname at the tenancy address, but no such activity there by the registered tenant. (The "amber" figure excludes, as far as possible, legitimate residents with different surnames, such as live-in partners and family members from previous relationships. HJK excluded such people from its totals by data-matching them with the registered tenants.) 
   
• Mr Kleinberg of HJK said that there was also a third category of properties where the tenant could never be contacted by the council or where neighbours or maintenance men had reported suspicions. If these were included the figure of suspect tenancies could be nearer 25% in some areas. 

The government said in August it might make sub-letting social housing a criminal offence and has now opened a consultation exercise, with replies invited by 4 April. Labour's John Healey had already proposed this back in March 2010.

In addition to these measures, local councils would be given more powers to investigate incidents where such fraudulent behaviour is suspected through an increased amount of access to data from banks and utility companies. As it is, councils can request data but organisations can refuse to provide it. However, if these new measures were indeed put in place, then organisations would have to comply with council requests.

So what needs to happen?

1. The coalition must criminalise sub-letting of social housing fast. It should be uncontroversial and it's well overdue.
    
2. As well as having a deterrent effect, that will make it quicker and cheaper for councils to reclaim sublet social housing and rent it to those at the top of the housing list.
    
3. Once central government has belatedly fulfilled its part of the bargain, councils must get aboard this particularly immoral fraud. Indeed, the government has committed £19 million to tackle the problem of tenancy fraud, but Mr Kleinberg says the money was not ring-fenced and some councils have not spent a penny of it on tackling the problem.

Update: The Mail has picked up the Telegraph story this morning.