Whitehall plans to create a single fraud investigation centre in the Department for Work & Pensions will strip councils of hundreds of staff and could risk driving a “substantial increase” in local authority losses from scams.
Council fraud busters have been alarmed by a letter circulated to council chiefs by the DWP last month which revealed plans to establish a fraud investigation organisation “owned” by the department.
All staff would be “employed under a single set of terms and conditions”, according to the letter from Joanne Bradshaw, the department’s director for fraud, error and debt programme.
This could see the transfer of hundreds of council-based housing fraud investigators to the DWP-controlled unit.
A department project team is working with human resources and legal experts “to understand the impacts on people currently working on [local authority] welfare benefit fraud”, the letter said.
The DWP had already initiated discussion with the Treasury about funding the new fraud centre, it said.
Local government sources expect an announcement in the autumn statement.
Ian O’Donnell, chair of Fighting Fraud Locally, the local government anti-fraud strategy, said: “Fraud losses will go up substantially if hundreds of fraud investigators are taken away.
“It doesn’t make sense to structure the fight against fraud in departmental silos.
Benefit fraudsters may also be illegally subletting a council house and claiming council tax discounts they aren’t entitled to.”
The District Councils Network this month sent a strongly worded letter to work and pensions secretary Iain Duncan Smith. Peter Fleming (Con), welfare reform lead at DCN and chair of the LGA’s improvement and innovations board, said centralised fraud investigation” would have a particularly negative effect on districts.
“The important local, regional and national link will be irrevocably broken”.
The DWP said the plans would provide a single “effective, professional service”.
“It will, of course, be of massive importance for [the Single Fraud Investigation Service] to work closely with councils and we are looking to draw up protocols around data sharing to make this happen,” it said.