AUDIT, GOVERNANCE AND STANDARDS COMMITTEE

15 March 2021

 

Fraud and Compliance Team Update 2019-20

 

Final Decision-Maker

Audit Governance and Standards Committee

Lead Head of Service

Stephen McGinnes

Mid Kent Services Director

Lead Officer and Report Author

Sheila Coburn, Head of Mid Kent Revenues and Benefits Partnership

Classification

Public

Wards affected

All

 

 

 

Executive Summary

 

To update the Committee on work undertaken by the Revenues and Benefits Fraud & Compliance team for the financial year 2019-20.

 

Purpose of Report

 

Noting

 

 

This report makes the following recommendations to this Committee:

That the contents of the report are noted.

 

 

 

Timetable

Meeting

Date

Audit Governance and Standards Committee

15 March 2021



Fraud & Compliance Team Update 2019-20

 

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

 

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.

 

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.

Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership

Privacy and Data Protection

Accepting the recommendations will not increase the volume of personal data held by the Council. 

Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership

Equalities

The recommendations do not propose a change in service therefore will not require an equalities impact assessment

Sheila Coburn Head of Mid Kent Revenues and Benefits Partnership

Public Health

 

 

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 Mid Kent 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 along with Swale and Tunbridge Wells borough councils 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 systems.

 

2.7    With the value of discounts and exemptions estimated in excess of

         £16 million 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.

 

2019/20 Outturn

 

2.9    The focus of the 2019-20 financial year was on the new release of

         National Fraud Initiative data and small business rate relief accounts,

         whilst a new system was being implemented for the monitoring of single

         person discounts.

 

2.10  The New Homes Bonus project in October 2019 was a 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

        results of the exercise amounting to savings of £205,800.

 

2.11  In 2018-19 penalties were introduced where those residents who do not

        report changes or who fraudulently make claims for discounts are issued

        with a penalty of £70. The number of penalties issued increased in 2019-

        20.

 

2.12  Table 1 shows a summary of savings generated across the 3 authorities

         by the team for 2019/20.

 

         Table 1

        

Small Business Rate Relief

£257,954

Single Person Discount

£19,059

New Homes Bonus

£543,200

National Fraud Initiative (Council Tax Reduction and Single Person Discount)

£389,936

Housing Benefit Matching Service (HBMS)

£72,721

Penalties

£3,010

Other

£55,745

Total

£1,341,625

 

 

      

         2020-21 (so far)

 

2.13   In conjunction with the Kent Intelligence Network (KIN) software was

         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.

 

2.14  We were proposing to use this software in 2020-21 to further increase

         the savings that can be identified.

 

2.15  However, the amount of work the Fraud & Compliance team has been able

         to carry out this year has severely been disrupted by the COVID pandemic.

 

2.16  For the first 3 months of the financial year, all members of the Fraud &

         Compliance team were assisting in other areas of the Council in response

         to the pandemic.

 

2.17  For the rest of the year the team has been able to carry out limited

         projects with the annual New Homes Bonus showing favourable results.

 

2.18  Kent county Council has partly funded a debtor tracing tool (Retriever)

         which is used to trace the whereabouts of Council Taxpayers who have left

        their properties owing amounts of Council Tax.

 

2.19  This has been successful with over 400 Council Tax debtors being traced so

         we can contact them at their current address to recovery monies due.

 

2.20   Table 2 shows the progress so far for 2020-21

 

          Table 2

 

New Homes Bonus

£758,800

Retriever (Council Tax debt brought back into recovery)

£779,656

Penalties

£350

Total

£1,538,806

 

 

 

 

 

 

 

3.   AVAILABLE OPTIONS

 

3.1   Option 1 - The Council could decide not to have a Fraud and Compliance

   team but this is not recommended given 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

 

None

 

 

7.       NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION

 

None

 

 

 

8.        REPORT APPENDICES

 

        None

 

 

9.        BACKGROUND PAPERS

 

        None