Assessing your risk from tenancy fraud David Hughes Head of Internal Audit and Counter Fraud London Borough of Lambeth 1
What the papers say …. b 2
What the government says… “It’s time to get tough and take on the fraud cons. At a time when we need to cut the national deficit and government waste, cleaning up fraud could save the taxpayer over £2 billion in recovered cash currently being fraudulently stolen or lost to tax cheats. Better prevention, detection and recovery of fraud will help reduce the financial pressure on councils and help protect frontline services. Today I am publishing the top ten plays for cracking down on council finance fraud.” (May 2011) b 3
The Pickles Plan: Ten ways to tackle council fraud and recover £2bn a year 1. Measure exposure to fraud risk; 2. More aggressively pursue a preventative strategy; 3. Use data analytics and credit reference agency checks to prevent fraud; 4. Adopt tried and tested methods for tackling fraud in risk areas; 5. Follow best practice to drive down Housing Tenancy and SPD fraud; 6. Pay particular attention to high risk areas: e.g. procurement and grant awards; 7. Partnership working to tackle organised fraud across local services; 8. Maintain specialist fraud investigative teams; 9. Vet staff to a high standard to stop organised criminals infiltrating key roles; 10. Implement national counter fraud standards developed by the Chartered Institute of Public Finance and Accountancy. b 4
The National Agenda • DCLG: Funding made available to local authorities to tackle tenancy fraud • Subletting now a criminal offence (Prevention of Social Housing Fraud Act 2013) • Audit Commission: Protecting the Public Purse 2013 • National Fraud Authority: Fighting Fraud Locally • HCA: Regulatory Framework for Social Housing in England 2012 • CIH: How to Tackle Tenancy Fraud b 5
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What the Audit Commission says … • Over £2 billion of fraud every year against local government • 2,642 homes were recovered from tenancy fraudsters in 2012/13 (up 51% on 2011/12) • Estimated cost of tenancy fraud to Councils - £845m (£1.8bn for all social housing – NFA) • 4% of housing stock in London, 2% outside • 98,000 social homes in England are subject to some form of tenancy fraud • Right to Buy fraud up 392% on 2011/12 (Protecting the Public Purse 2013) b 7
More PPP …. • 51% more homes recovered by social housing providers than previous year • Councils finding tenancy fraud up to 107 (from 90 in 2011/12) • 58% of all tenancy frauds detected in London (0.35% of housing stock) • Report highlights guidance issued by CIH b 8
Impact of tenancy fraud nationally • At least 4% of social housing stock in London (2% outside London) is typically subject to some form of tenancy fraud • This means 98,000 social homes nationally • NFA estimates national average loss to the public purse of £18,000 per property • Cost of building a social housing unit from new is £150,000 b 9
About Lambeth … • One of the most densely populated inner London boroughs - population c300,000 • 130,000 households • 44,000 households on benefits • 14th most deprived borough in England • 40% of residents are graduates • 38% of population are from ethnic minorities (7 th highest in London) • Annual turnover around £1.2bn b 10
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Social housing in Lambeth • 130,000 households (2/3 in social/ private rented accommodation) • Transient population – 10%+ turnover • Local authority stock – 25,000 (managed by ALMO and TMOs) • Council leaseholders – 9,500 • Housing associations – 25,000 • Temp accommodation – 1,350 families • Council waiting list – 20,000 b 13
Fraud investigation at Lambeth • Internal Audit and Counter Fraud Service • Counter Fraud Team – 15 staff • Team investigates tenancy, housing benefit and internal fraud • Funding from Housing Revenue Account, General Fund, DWP and MoPAC • Annual work plan and targets agreed with Audit Committee • Regular reporting on performance and outcomes to Members b 14
What Lambeth’s investigators have achieved since April 2011 • 650 investigations completed • 190 properties recovered • 90 recommendations to recover in progress • 80%+ of recommendations are recovered • Estimated total recoveries: 260 (over 1% of our stock) • 40% success rate on all referrals (highest rate = proactive exercises) b 15
Lambeth’s fraud exposure …? Cut the Queue Project (August 2011 to March 2013) • 2,000 tenancies checked • 48 properties recovered already • 18 properties being recovered • 12 still under investigation • Estimated fraud rate = 3.9% (c1,000 Council properties) b 16
Learn the benefits of assessing the risk of tenancy fraud to your organisation • Understanding what you need to do to tackle fraud and the extent of the problem • Build the case for appropriate resources to tackle tenancy fraud – specialist team and resources • Work with housing management colleagues – helping them to meet their objectives and outcomes b 17
Learn the benefits of assessing the risk of tenancy fraud to your organisation • Policies, procedures and practices can be improved to prevent fraud • Fraudsters don’t operate in discreet geographical areas and don’t just commit one type of fraud • Moving from a reactive only service to tackle reactive referrals and carry out proactive exercises b 18
Estimating the effects of tenancy fraud • impact on local citizens e.g. waiting list, anti- social behaviour • temporary accommodation costs increase (rise in B&B usage over past 2 years) • impact of length of tenancy fraud – our early research • impact on “genuine” subtenants who believe they are legitimate tenants (housing need, deposits lost, sudden eviction etc) b 19
Strengthening the response to tenancy fraud • Senior management/elected member buy in • Appropriate resources (reactive/proactive) • Targeted effort – proactive exercises • Data matching • intelligence-led visiting and investigations • Partnership working with ALMO and HAs • Joint operations with enforcement teams • Joined up approach to fraud investigation (benefits and housing) b 20
Our approach • Taking ownership of handling/receiving referrals • Working closely with our ALMO – training/awareness, regular reporting/liaison • Local intelligence/experience of housing officers • Targeted intel checks and visiting in blocks • Training/awareness for housing maintenance staff/contractors – spotting and reporting fraud • Data matching – cross-referencing intelligence with credit reference data • Engaging support from Members and tenants in identifying sublet properties b 21
What do we cover? • Sub-letting • Right to Buy (vetting applications) • Housing Applications (Register and Homelessness cases) • Transfers, Assignments, Successions • Non-occupation b 22
Working with partners • ALMO and TMOs • Legal team (prosecutions and civil action) • Other Council enforcement and intervention teams • DCLG funding for two posts working with two HAs with 5,000 Lambeth properties • Providing investigations on a full cost recovery basis to registered providers • Met Police LAPO scheme b 23
Lessons learnt … • Getting our data right • Risk assessment is an art not a science? • Listening to housing officers and tenants • Be proactive • Knocking doors gets results • Joined up approach pays dividends • Regular reporting on successes b 24
Any Questions? David Hughes Head of Internal Audit and Counter Fraud Finance & Resources Lambeth Town Hall Brixton London SW2 1RL Phone: 0207 926 9892 Mail: dhughes@lambeth.gov.uk b 25
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