New fund to help councils fight fraud

Eric Pickles announces support for councils ready to take on fraudsters.

Local Government Secretary Eric Pickles today (2 July 2014) announced a new multi-million pound fund to help councils claw back the taxpayers’ money lost every year to fraud.

Mr Pickles is also urging Town Halls to “turn idle assets into money” to protect front line services. The government is allowing councils to use money raised from the sale of assets, such as empty buildings and redundant brownfield land, to help pay for the costs of improving local services and to keep Council Tax down.

In a speech to council finance chiefs, the Local Government Secretary challenged councils to use innovative financial management to address fraud, surplus assets and Council Tax collection. Taking such an approach would help local authorities make the sensible savings needed over the next few years to help reduce the deficit inherited from the last administration.

The Secretary of State pointed out that even though Council Tax collection rates remain high, the billions that go uncollected each year, much like the money lost to fraud, places an unfair extra burden on honest, hard-working taxpayers.

Councils are invited to bid for a share of the £16 million fund, which opens today, but to be eligible they must demonstrate how their proposals will recoup money owed or tighten safety nets to prevent criminals ripping them off. Official figures show councils are losing £2 billion a year to fraud and error.

The fund will give councils 2 years of support to step-up how they tackle unnecessary losses from non-benefit related fraud, such as Council Tax fraud, blue badge fraud or theft of grants.

Speaking at the Chartered Institute of Public Finance and Accountancy’s annual conference today, Eric Pickles said:

Fraud costs hardworking taxpayers £2 billion per year. We are supporting councils to go further in catching fraud felons, and today I am proud to commit £16 million over 2 years to ridding this scourge. This challenge fund will be allocated to the most innovative local authorities who plan to generate the most-effective savings.

Councils should also be channelling their energies into getting idle assets off of their books. With £220 billion worth of assets, and £2.5 billion of that earmarked as surplus, it is time to start asking: ‘what good is that empty, mothballed office block to the taxpayer?’

Communities Minister Baroness Stowell, who is leading the department’s push against local government fraud, said:

We cannot afford to waste public sector money by not preventing fraud. In assembling bids, I am keen for councils to generate new and energetic approaches, work together and consider shared services and other ways to maximise savings, whether their focus is on procurement, Council Tax or social housing fraud.

The move is a further call to arms for councils to do more on fraud, which follows the £19 million I announced in April to help councils catch tenancy cheats and free up precious housing for those who need it.

Rob Whiteman, Chief Executive officer at the Chartered Institute of Public Finance and Accountancy, said:

This funding is hugely welcome, it will put resources into protecting taxpayer’s money at the front line and every pound saved increases the amount that can be spent serving communities across the country.

Public services across the UK are striving to meet rising demand while dealing with on-going financial pressures. The Chartered Institute of Public Finance and Accountancy’s new Counter Fraud Centre will work with them to ensure that they have the tools they need to continue to protect the public purse while continuing to deliver front line services.

Further Information

The Counter Fraud Fund applies to councils in England only. Successful bids must demonstrate an innovative approach to tackling fraud, encompassing detection, prevention and deterrence from genuine additional activities to achieve financial savings through counter fraud activities. All bids will be judged against the potential financial savings and benefits on offer, as well as additional criteria such as partnership working, sustainability, feasibility and innovation. Deadline for bids is 5 September 2014 and successful bids will be announced shortly after.

The purpose of the Counter Fraud Fund is to support local authorities during the implementation of the Single Fraud Investigation Service and increase the capacity and capability of local government to tackle losses from non-benefit fraud. The fund will help individual local authorities establish an investigative capacity over the 2 years. Overall this government is investing £35 million to improve councils’ ability to identify and tackle fraud.

Earlier this year, ministers asked the Chartered Institute of Public Finance and Accountancy to set up a national Counter Fraud Centre, which will take over existing public sector counter-fraud functions from the Audit Commission.

The Department for Work and Pensions will continue to tackle housing benefit fraud as part of a single approach announced in the Autumn Statement.

The Council Asset Programme has made up to £40,000 available to individual local authorities to kick-start savings and build more homes and jobs through better use of assets. This extra support now means councils can to go further and faster modernising services through new finance flexibilities on the use of £200 million capital receipts from the sale of property assets in 2015 to 2016 and 2016 to 2017.

In addition the transparency code will require councils to publish a list of all owned assets so the taxpaying public can see what they have on the books.

In April, the department announced £410 million in funding to help councils transform the way they run local services to put the user first. A major package of incentives was unveiled to reward authorities that cut duplication and build services around the needs of local people. This included the £320 million Transformation Challenge Award, which is available to areas with ambitious plans for improving services including integrating health and social care; getting the unemployed back to work; or early intervention to get children ready for school.

The National Fraud Authority has estimated that councils could save £2.2 billion a year by cracking down on fraud and improving their prevention, detection and recovery of council fraud. Source: National Fraud Authority’s 2012 Annual Fraud Indicator.

The total cumulative amount of uncollected Council Tax still stood at almost £2.4 billion in 2012 to 2013. Source: DCLG statistical release.

The value of assets designated as surplus by councils stands at £2.5 billion, out of a total of £220 billion assets. Source: DCLG statistical release.