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AUDIT GOVERNANCE AND STANDARDS COMMITTEE |
16 March 2020 |
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Fraud and Compliance Team update |
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Final Decision-Maker |
Audit Governance and Standards Committee |
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Lead Director |
Stephen McGinnes Mid Kent Services Director |
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Lead Officer and Report Author |
Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
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Classification |
Public/Private
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Wards affected |
All |
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Executive Summary |
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To update the Committee on work undertaken by the Revenues and Benefits Fraud & Compliance team.
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Purpose of Report
Noting
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This report makes the following recommendations to this Committee: |
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That the contents of the report are noted. |
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Timetable |
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Meeting |
Date |
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Audit Governance and Standards Committee |
16 March 2020 |
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Fraud & Compliance team update |
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1. CROSS-CUTTING ISSUES AND IMPLICATIONS
Issue |
Implications |
Sign-off |
Impact on Corporate Priorities |
We do not expect the recommendations will by themselves materially affect achievement of corporate priorities. |
Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
Cross Cutting Objectives |
None
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Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
Risk Management |
This report is presented for information only and has no risk management implications. |
Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
Financial |
The Fraud & Compliance team receives funding from Kent County Council of £136,620 (on expected 3:1 savings). The cost to Maidstone Borough for the service is £23k |
Section 151 Officer & Finance Team |
Staffing |
There are no changes to staffing proposed in this report
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Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
Legal |
· It is a function of the Audit, Governance and Standards Committee to monitor the effectiveness of Council's counter-fraud and corruption Strategy. · This report provides an update on the work undertaken by the Revenues and Benefits Fraud & Compliance team. · There is no statutory duty to report regularly to Committee on the Team’s performance. However, under Section 3 of the Local Government Act 1999 (as amended) a best value authority has a statutory duty to secure continuous improvement in the way in which its functions are exercised having regard to a combination of economy, efficiency and effectiveness. Reports on the Team’s performance assist in demonstrating best value and compliance with the statutory duty. |
Keith Trowell, Team Leader (Corporate Governance), MKLS |
Privacy and Data Protection |
Accepting the recommendations will not increase the volume of personal data held by the Council. |
Anna Collier Policy and Information Manager |
Equalities |
The recommendations do not propose a change in service therefore will not require an equalities impact assessment |
Anna Collier Policy & Information Manager |
Public Health
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No impact |
Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
Crime and Disorder |
No impact |
Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
Procurement |
No impact |
Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership |
2. INTRODUCTION AND BACKGROUND
2.1 The purpose of this report is to advise the Committee of the work undertaken by the Fraud & Compliance team within the Revenues and Benefits Partnership.
2.2 In 2016 the responsibility for investigating Housing Benefit fraud was moved from the Council’s Housing Benefit service to the Department for Work and Pensions (DWP).
2.3 The Council took the decision to continue with a shared fraud team as part
of Mid Kent Services using the team to investigate fraud and error within
Council Tax and Business Rates.
2.4 The localisation of Council Tax Support and reliance on Business Rates as
an income for the authority changed the financial risk to the Council and
preceptors. Whilst there had been some activity to address the risk
associated with single person discounts for Council Tax, the service had
historically focused its efforts on Housing Benefit.
2.5 The transfer of the Housing Benefit fraud function to the DWP created
both a risk and opportunity to the Council. With the administration of
Housing Benefit and Council Tax Support being directly linked the Council
had in effect been able to ‘police’ the two systems at the same time. With
the removal of Housing Benefit and the investigation resource that was
deployed with it, this had the potential to leave Council Tax Support and
therefore Council Tax exposed to fraud with no identified resource to
investigate or deter fraud.
2.6 The change also created an opportunity in releasing a team of experienced
specialist staff, with good local knowledge, to both manage the ongoing
risk within Council Tax Support and deliver capacity to expand their work
into other areas both within the Council Tax and Business Rates system.
2.7 With the value of discounts and exemptions estimated at £16million and
the risk of customer fraud high, agreement was reached with the support
of the precepting authorities to fund the current team on the
understanding that there would be a suitable return on investment.
2.8 The agreed business case set out a method of sharing the cost and
projected savings in line with the value to each partner based on their
level of precept.
2018/19 Outturn
2.9 The work programme for 2018/19 included activity aimed at addressing
fraud and error within the Council Tax system (single person discount),
Business Rate system (small business rate relief) and maximising the
income to partner authorities through new homes bonus.
2.10 Small Business Rate Relief is awarded businesses where businesses only
occupy one property with a Rateable Value under £51,000.
2.11 New Homes Bonus is a grant paid to councils by Central Government to
reflect and incentivise housing growth.
2.12 It is based on the amount of extra Council Tax revenue raised for new
homes, conversions and long term empty properties brought back into
use.
2.13 Table 1. Summary of savings generated 2018/19
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2019/20 Outturn (to date)
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2.14 The focus in the current year has been on the new release of National
Fraud Initiative data and small business rate relief accounts, whilst a
new system is being implemented for the monitoring of single person
discounts.
2.15 The team finished working on the New Homes Bonus project in October.
This has been a really worthwhile exercise for the team, with no
additional costs apart from postage and a few credit checks being
incurred. For Maidstone, 147 properties were found to be occupied. The
number of properties is multiplied by £1,400 to give the final results
of the exercise amounting to savings of £205,800.
2.16 Table 2. Summary of savings generated across the 3 authorities by the
team 2019/20 to date
Small Business Rate Relief |
£248,877 |
Single Person Discount |
£6,580 |
New Homes Bonus |
£543,200 |
National Fraud Initiative (Council Tax Reduction and Single Person Discount) |
£248,795 |
Housing Benefit Matching Service (HBMS) |
£54,597 |
Penalties |
£2,520 |
Total |
£1,104,569 |
2.17 In 2018-19 penalties were introduced where those residents who do not
report changes or who fraudulently make claims will be issued with a
penalty of £70. The number of penalties issued has increased in 2019-20.
2.18 In conjunction with the Kent Intelligence Network (KIN) software has
been partly funded by Kent County Council with a view to share
information with other authorities in Kent to help reduce fraud and error
in the county.
2.19 We are proposing to use this software in 2020-21 to further increase the
savings that can be identified.
3 AVAILABLE OPTIONS
3.1 Option 1 - The Council could decide not to have a Fraud and Compliance team and to leave any reviews of Council Tax and Business Rates discounts and reviews to the Revenues team. This is not recommended given that the team has demonstrated a return on the funding by Kent County Council by more than the required 3:1.
3.2 Option 2 - The Council continues to have a Fraud & Compliance team to
ensure it has a dedicated resource to address fraud and error.
4 PREFERRED OPTION AND REASONS FOR RECOMMENDATIONS
4.1 Option 2 is the preferred option for the reasons stated.
5 RISK
5.1 This report is
presented for information only and has no risk management implications.
6 CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK
6.1 None
7 REPORT APPENDICES
7.1 None
8 BACKGROUND PAPERS
8.1 None