Council tax abuse tops local government fraud figures

Levels of local government fraud are falling, largely because of a crackdown on fraudulent housing claims, although this still accounts for three quarters of the £253m fraud figure

Local authorities in the UK detected or prevented approximately £253m of misuse of public funds inn 2018/19, averaging roughly £3,600 per fraud case, according to the CIPFA annual fraud report, down 17% from 2017/18 when there was an estimated £302m of fraud with a similar average of £3,600 per case. 

CIPFA said the decrease in the total value is largely attributed to the successful work by public authorities in housing, which has seen a year-on-year reduction in the total number of unlawfully sublet properties and false right to buy applications.

Councils reported that approximately 71,000 instances of fraud had been detected or prevented in 2018/19, which is lower than the approximate 80,000 reported by CIPFA in 2017/18. Council tax fraud represents 78% of these identified instances of fraud with an estimated value of £30.6m followed by disabled parking concession (Blue Badge scheme) and housing frauds representing 10% and 5% of the total cases of UK public sector fraud, respectively.

The survey reveals that UK local authorities identified and/or prevented 55,855 cases of council tax fraud in 2018/19, down from 57,894 cases in 2017/18. This included 44,051 cases of single person discount (SPD) fraud and 8,973 cases of council tax reduction fraud, where individuals fail to inform a council about changes to their financial circumstances.

The area that has grown the most in the last year is council tax single person discount fraud with an estimated increase of £3.6m since 2017/18. The three highest perceived fraud risk areas for 2018/19 remain unchanged from the previous iteration of this survey: procurement, council tax single person discount and adult social care respectively.

However, this year’s report also showed that the estimated loss to councils from business rate fraud decreased to £8m from £10m the previous year. Overall, business rate fraud represented only 2% of the total number of fraud cases detected or prevented in 2018/19.

Rob Whiteman, chief executive, CIPFA, said: ‘Fraud continues to be a critical issue for local authorities. Many councils have worked diligently to implement new counter-fraud strategies, and the figures tell us those efforts are working.

‘The unlawful diversion of funds away from local authorities only adds further stress on vastly underfunded public services. The sector is moving in the right direction, but only a greater focus on collaboration and preventative measures will help to create long-lasting change.’

2019 CIPFA Fraud and Corruption Tracker

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