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LOCAL GOVERNMENT CRACKS DOWN ON FRAUD

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Detections of fraud in local government have doubled over the last two years following a crackdown on fraud by the ...
Detections of fraud in local government have doubled over the last two years following a crackdown on fraud by the Audit commission and local authorities, a report released today by the Audit Commission revealed. But more still needs to be done to prevent and detect fraud.

Detections of fraud have increased in value from £34m in 1993/94 to £69.5m in 1995/96 and the number of cases has doubled from 83,000 to 166,000. 99% of this is perpetrated against local government, rather than by it, with growing evidence that local government is being increasingly targeted by organised groups of fraudsters who attack a range of benefits across a number of organisations.

The commission has been working together with a number of local authorities in using information technology to detect fraud. A data matching scheme developed by the commission allows authorities to identify multiple claims and improve intelligence gathering to prevent fraud. Pilots of the scheme in London and Manchester have led to detections of fraud worth over £4m.

The commission's survey of local authorities confirms that fraud within the benefits system remains a key issue for local government. 97% of all cases of discovered fraud identified by the study involved fraud of the benefits system, and the amount of benefit fraud has risen 37% to £55m over the last year.

Other systems have also been found to be vulnerable:

-- student award fraud increased from £1.3m to almost £5m

-- fraudulent claims for renovation grants increased by a third to £1.2m

-- cheque fraud, where the details on cheques are illegally changed remains a problem and security needs to be increased

As part of a national fraud initiative the commission would like to see the use of data matching systems to identify people making multiple fraudulent claims implemented by all local authorities by 1997.

To assist local authorities the commission will also strengthen the work of its anti-fraud unit, maintain and update its anti-fraud manual which gives guidance on how to prevent fraud, and is working with the National Audit Office on a joint study into housing benefit fraud.

Further recommendations include:

-- providing incentives to encourage local authorities to detect fraudulent student awards

-- the establishment of audit committees within local government

-- establishing procedures for employees to report back on areas vulnerable to fraud

Commission controller Andrew Foster said:

'Protecting public funds from abuse and fraudulent activity remains a key objective for those in local government.

'Deterring and detecting fraud is central to our work. We share that objective with local authorities and will continue to pursue it relentlessly'.

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