East Sussex Counter Fraud Hub
Fraud Strategy
Contents
Purpose of the Strategy
3
Aims and Objectives
3
Risks and Risk Management
4
Approach
6
Outcomes
8
Monitoring Performance
8
2
Purpose of the Strategy
The purpose of the Fraud Strategy is to:
1. set out the aims and long term vision of the East Sussex Counter
Fraud Hub (ESCFH)
2. outline the approach of the Hub; and
3. outline the expected outcomes along with
a. how we intend to achieve this.
b. how we intend to monitor this.
The Strategy is supported by the ESCFH Policy Statement and ESCFH Work
Plan.
The document also sets out the current position with regards to areas of
strength and opportunities for further development, as well as key
external factors impacting on the risk of fraud occurring. It also identifies
key fraud risk areas and the proposed direction and key areas of focus for
the Hub Service over the coming five years.
Aims and Objectives
The overall aim of the ESCFH is to protect the participating Councils’
resources and have a shared approach to fraud across the District,
Borough and County Councils.
The Strategy sets out the core objectives for ESCFH. Its aim is to ensure
the best use of resources for maximum gain, both in performance and in
achieving value for money, to deliver a fairer future for all in East Sussex.
This strategy also aligns to the National Fraud Authority’s Strategy1 for
fighting fraud locally, the core principles of which are:
•
•
•
Acknowledge
Prevent
Pursue
1 The NFA Fraud Strategy – Fighting Fraud Locally Published 2012.
Acknowledge
Local government must acknowledge
and understand its fraud risks if it is to
tackle fraud effectively.
Prevent
• Assess current and future risks
• Needs to be cultural change
• An increase in fraud awareness
• Annual fraud report and central
collection of fraud data
• Improved sharing of fraud threats,
information and intelligence
• Fraud proofing of policy and processes
3
Preventing fraud is the most efficient
way to reduce fraud loss. Local
government can do more to stop fraud
happening.
Pursue
Not all fraud can be prevented. Where
fraud does occur, local government
must be better equipped to punish
fraud and recover losses.
• Prevention on application and
verification of circumstances
• Staff and supplier vetting
• Sharing knowledge of known fraud
• Better use of data and technology to
prevent and detect fraud
• Need a more consistent and
supportive police response
• Local Authorities must have the
capacity and capability to investigate
and prosecute fraud
• Need a consistent and more effective
response for dealing with fraud cases
• Stronger powers for investigating and
sanctioning fraud
These principles have been focused towards key objectives for the ESCFH
which are:
•
establish a hub drawing on the extant fraud teams in each of the
partner authorities to share data and develop a joint work
programme;
•
develop a comprehensive training programme to ensure appropriate
expertise in new areas of work and leading to professional
accreditation where not already held;
•
share software and hardware to enhance data analysis and data
sharing;
•
develop a joint communication and publicity strategy, including
internal and external fraud awareness campaigns;
•
establish links with other potential partners across the county and
build on the work of the Sussex Tenancy Fraud Forum;
•
provide additional resources for authorities where necessary, within
funding limitations.
Risks and Risk Management
Some of the key fraud risk areas2 across the public sector have been
identified as follows:
Council Tax fraud - The most prevalent occurrence in respect of Council
Tax is in respect of fraudulent discounts and exemptions being obtained,
4
and income therefore being lost. The most frequently obtained are Single
Person Discount (SPD), second home ownership, student occupancy, nonoccupancy, new builds and properties deemed unfit for habitation.
Council Tax Reduction Fraud – This occurs when somebody makes a
false statement on their claim form or has fails to report any changes in
their circumstances
Non Domestic Rate Fraud – Fraud is committed by a business when
they falsely claim mandatory or discretionary rate relief or empty property
exemptions. Or fail to declare occupancy of a property. Or falsely claim
insolvency status to evade payments and do not disclose relevant
information about the company to gain rate relief.
Housing Tenancy fraud - Housing tenancy fraud is the use of social
housing by an individual who is not, or is no longer entitled to it, including
submission of a false housing application, unlawful sub-letting, right to
buy fraud, assignment fraud and tenancy succession fraud. Abandonment
of properties will be investigated.
Procurement fraud – This area covers all aspects of the purchasing of
goods and services, including the tender and contractor selection process,
through to fraud occurring during the lifetime of the contract. This will
also consider changes to bank details, as an emerging risk for the
payment process.
Grant fraud - A number of grants are paid to individuals, businesses,
charities and not for profit organisations, as well as grant in aid to Non
Departmental Public Bodies, with differing levels of risk associated with
the types of organisation receiving funds.
Blue Badge Fraud – There are two categories of fraud in this area Abuse of badges: This includes using a counterfeit badge, using a lost or
stolen badge and using the badge of a deceased person. Misuse of
genuine badges: This means using the badge when the holder is not
present.
Personal Budgets – Whilst recognising the benefits that may be realised
from introducing packages tailored to the needs of the individual, there
needs to be robust assessment and monitoring mechanisms in place to
ensure that vulnerable individuals are not subject to fraud.
Payroll and Recruitment fraud - Payroll frauds can include
unauthorised changes to payroll systems, such as creation of false payroll
records, changing bank details or overtime and allowances to be paid to
an individual. Recruitment fraud occurs when an individual submits false
information in order to gain employment, either through providing false
5
references, qualifications, employment history or right to work in the UK.
New and emerging fraud risks are considered on an ongoing basis through
liaison with operational management, Internal / External Audit within
each organisation, relevant partner organisations and colleagues in other
public sector organisations, as well as through reference to relevant
publications.
2
Protecting the Public Purse 2014
Approach
The approach undertaken by ESCFH will incorporate both proactive and
reactive anti-fraud work. The key action areas as regards proactive and
reactive work are set out below and elaborated in the table below:
Proactive
•
•
•
•
Reactive
Culture
Awareness
Deterrence
Prevention
Area of Action
Culture
•
•
•
•
Approach
•
•
•
•
•
Awareness
Detection
Investigation
Sanction
Recovery
•
promote ethical behaviour
and raise fraud awareness.
promote a zero tolerance
approach towards fraud
which ensures dishonesty is
dealt with firmly and
consistently across the
county.
promote efficiencies through
collaborative, partnership
and regional partnership
working to tackle fraud.
ensure that staff have a safe
and trusted environment in
which to raise concerns with
management.
raise citizen awareness of
the social and financial costs
of fraud and encourage
them to use reporting
hotlines.
share information and good
practice between ESCFH,
Proposed Outcome
•
increased reporting of
cases.
increased awareness of
processes and
procedures throughout
the organisation.
•
increased levels of antifraud awareness.
•
6
•
•
Deterrence
•
•
•
Prevention
•
•
•
Detection
•
•
Investigation
•
Sanction
•
•
within statutory guidelines,
in the interest of preventing
and detecting fraud. This
will include continuing to
undertake statutory data
matching.
develop a joint
communication and publicity
strategy, including internal
and external fraud
awareness campaigns
communicate activities to
promote anti-fraud
awareness.
publish that the Authorities
within East Sussex will not
tolerate Fraud and will work
together to actively deter
potential fraudsters.
develop and deliver fraud
awareness training to all
employees of participating
councils
work together to create and
implement robust pro-active
and re-active fraud drives to
mitigate opportunities for
fraud and corruption on an
ongoing basis
introduce intelligence
gathering and sharing
across authorities
undertake joint working and
shared resources
constantly keep under
review key fraud risks so
that fraud exposure is
minimised.
minimise fraud risk across
the County through the
effective provision of advice
and support
develop a comprehensive
training programme
conduct professional
investigations in line with
the changing statutory
environment and
requirements.
share resources within Hub
each authority to conduct
•
reduced elapsed time for
identification of fraud.
•
reduction in fraud, error
and corruption
throughout the County.
•
reduced losses per case
through the timely
detection of instances of
fraud.
•
successful use of
sanctions and/or
prosecution.
•
achievement of recovery
7
•
Recovery
•
management reviews of
each investigation to
determine appropriate
sanctions.
ensure that each authority
has access to the full range
of sanctions available
against fraudsters
enhance the efficacy of the
Hub through maximising
and reinvesting losses
recovered.
•
targets.
Sanctions as a
percentage of cases
investigated.
•
recovery of fraud losses
increased.
•
Fraud losses recorded
with a percentage
reinvested in the Hub
where applicable.
•
Outcomes
The Hub estimates the levels of financial savings as follows: (Based on Table 3:
Protecting the Public Purse 2013 - Estimates annual loss to fraud in local government –
Protecting the Public Purse 2013)
Description of financial
saving
Estimated financial saving (£,000)
2015/16
2016/17
2017/18
2018/19
2019/20
Procurement fraud
500
1,000
750
750
500
Social Housing tenancy fraud
500
1,000
750
750
500
Right to Buy fraud
75
150
75
75
75
Council Tax Reduction fraud
50
100
75
75
50
Council Tax Discounts fraud
100
200
150
150
75
NNDR fraud
50
100
75
75
50
Grant fraud
5
10
7
7
5
Blue Badge fraud
10
20
15
15
10
Total financial savings
1,290
2,580
1,897
1,897
1,265
Monitoring Performance
The work on this Strategy and overall performance of the ESCFH will be
monitored against the outcomes set out. Reporting on performance will
8
be made to Senior Management and the Audit and Governance
Committee within each Authority and DCLG.
As part of continuous improvement programme, targets will be revised
on an annual basis. An annual review of the strategy and work plan will
be made. The Hub will then be able to spend more time proactively
looking for fraud rather than working mainly on referrals. The Hub will
also be able to work alongside the Internal Audit function to identify and
remedy weaknesses in controls and processes.
9