The Benefits and Financial Assessments Manager reported on the activity undertaken from 1 November 2015 to 31 March 2017 with regard to Council Tax Reduction (CTR) fraud investigations.  She also summarised the activities undertaken and the results achieved during 2016/17.

She reported that the Government had create a single fraud investigation service (SFIS) with statutory powers to investigate and sanction all benefit and tax credit offences combining the resources across DWP, Her Majesty’s Revenue & Customs (HMRC) and local authorities.  Investigation staff from all local authorities had now become civil servants within the SFIS and on 1 November 2015, Bridgend’s Fraud Manager and 2 investigation staff joined the SFIS, resulting in the transfer of investigation work for Housing and Council Tax Benefit.  Prosecutions for these benefits were now dealt with by the Crown Prosecution Service.  Cases of fraud in CTR did not form part of the SFIS remit and in order to maintain effective and functioning counter-fraud activities for CTR, the Benefits Service retained a Fraud Investigator primarily to undertake the following:

·         Investigate allegations of CTR fraud and single person discount discrepancies

·         Risk based intervention activities

·         Assist SFIS in the provision of information and/or documentation

·         Provide awareness and training for staff in relation to fraud, abuse and financial loss

The Benefits and Financial Assessments Manager reported that during the initial few months following the transfer to SFIS, the remaining Fraud Investigator concentrated on establishing new protocols and processes for the administration of CTR investigations, and developed a contact network with other CTR fraud officers within neighbouring authorities.  This network widened across Wales and officers now met quarterly to discuss CTR fraud matters and share best practice.  Fraud awareness training sessions remain to be undertaken for Benefit, Homelessness, Council Tax and Customer Service staff and with outside agencies.  Fraud awareness also forms part of the induction process for all new benefit staff. 

The Benefits and Financial Assessments Manager also reported on a summary of the sources of fraud referrals between November 2015 and 31 March 2017.  She stated that CTR investigations were undertaken based on information received as a data match or in the form of a specific allegation regarding the claimant’s circumstances and 41% of the fraud referrals were initiated through claim reviews.  These are cases where it appeared that the claimant may have not declared a change in their circumstances, where earnings had remained unchanged over a significant period of time.  31% of referrals were received as a result of the DWP’s Real Time Information (RTI) initiative, which is an earned income and occupational pension data match with HMRC and indicated undeclared earnings or pensions, as well as highlighting significant variations in the amounts declared.  Fewer than 2% of CTR referrals were received via the public; the majority of referrals from the public relate to DWP benefits or Housing Benefits, which are forwarded to the SFIS to investigate.  Fraud referrals were normally forwarded to the SFIS in the following circumstances:

·         The referral relates to the entitlement to a DWP benefit such as Income Support, Jobseeker’s Allowance or Employment and Support Allowance; or

·         The Housing Benefit overpayment is expected to exceed £4,000 (the DWP’s threshold for prosecution); or

·         It is in the public’s interest that a prosecution should result.

The Benefits and Financial Assessments Manager summarised a breakdown of the types of allegations which had been referred during the period 1 November 2015 to 31 March 2017.   

The Benefits and Financial Assessments Manager reported that the majority of investigations undertaken relate to earnings and savings; which is as a result of being unable to investigate cases where a DWP benefit may be affected.  During the period November 2015 to March 2017, 91 cases were closed and she highlighted the closure categories.  The number of fraud proven cases represented 82% of the closed cases, which is attributed to the quality of the initial referral.  The Benefits and Financial Assessments Manager informed the Committee that savings of £136,750 had been achieved as a result of fraud investigations concluded during 2016/17.  

The Benefits and Financial Assessments Manager reported that once a case had been closed as fraud proven and the CTR adjustment (known as an excess reduction) was calculated, the case was referred to the Head of Finance or Benefits and Financial Assessments Manager to determine whether a sanction is appropriate. The sanctions available to the Council are prosecutions, issuing a financial penalty or a fine and she highlighted the levels that may be imposed.  Penalties and fines issued in 2016/17 totalled £20,546 and in addition, the Fraud Investigator had also raised administration-penalties and a compensation fine, totaling £6,523, following DWP investigations into Housing and Council Tax Benefit claims.

The Committee questioned the threshold of £4,000 being exceeded for prosecution for Housing Benefit overpayment.  The Benefits and Financial Assessments Manager informed the Committee that the threshold of £4,000 was set by the DWP, which would shortly be increased to £5,000.  She stated that prosecutions can be instigated for lower amounts than the DWP threshold and fines could be levied for any value.  She indicated that there is the potential for overpayments to mount up very quickly.     

The Committee questioned whether savings derived equated to recovery.  The Benefits and Financial Assessments Manager stated that the number of people who pay the penalty is quite high as it is an alternative to prosecution.  Payments of fines can be made by instalments and attachments of earnings orders can be made.  She stated the Department had a good rate of recovery on fines. The excess reduction amounts are recovered via the person’s council tax account; again, recovery rates are high.

The Committee requested detail on the process for using the NFI Service for Council Tax prosecutions.  The Benefits and Financial Assessments Manager informed the Committee that it was hoped that matches would be a lot better for Council Tax than for Housing Benefit.  There had been time delays in using the data matching service with little gain for the work undertaken. 

The Committee questioned the outcome of cases where fraud had been proven.  The Benefits and Financial Assessments Manager informed the Committee that work was being concluded on some of the cases where fraud had been proven.  There were some cases where sanctions were not pursued, for example due to an individual’s health.  The Committee questioned whether a sanction was offered or did the Council proceed immediately to prosecution.  The Benefits and Financial Assessments Manager informed the Committee that a fraud officer will prepare a case, which is then reviewed by her or the Head of Finance, each case is considered on its merits before a decision regarding a sanction is made.                 

RESOLVED:            That the Committee noted the content of the Council Tax Reduction Fraud Investigations: November 2015 to March 2017.