Contact your Parish Council


AUDIT GOVERNANCE AND STANDARDS COMMITTEE

16 March 2020

 

Fraud and Compliance Team update

 

Final Decision-Maker

Audit Governance and Standards Committee

Lead Director

Stephen McGinnes

Mid Kent Services Director

Lead Officer and Report Author

Sheila Coburn

Head of Mid Kent Revenues and Benefits Partnership

Classification

Public/Private

 

Wards affected

All

 

Executive Summary

 

To update the Committee on work undertaken by the Revenues and Benefits Fraud & Compliance team.

 

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

16 March 2020



Fraud & Compliance team update

 

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.

 Keith Trowell, Team Leader (Corporate Governance), MKLS

Privacy and Data Protection

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

Anna Collier Policy and Information Manager

Equalities

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

Anna Collier Policy & Information Manager

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 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 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 system.

 

2.7     With the value of discounts and exemptions estimated at £16million 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.

 

 2018/19 Outturn

 

2.9     The work programme for 2018/19 included activity aimed at addressing

          fraud and error within the Council Tax system (single person discount),

          Business Rate system (small business rate relief) and maximising the

          income to partner authorities through new homes bonus.

 

2.10   Small Business Rate Relief is awarded businesses where businesses only

          occupy one property with a Rateable Value under £51,000.

 

2.11    New Homes Bonus is a grant paid to councils by Central Government to

          reflect and incentivise housing growth.

 

2.12    It is based on the amount of extra Council Tax revenue raised for new

          homes, conversions and long term empty properties brought back into

          use.

 

2.13   Table 1. Summary of savings generated 2018/19

 

 

Small Business Rates Relief

£41,848

Single person discount

£82,779

Charities

£17,870

New homes bonus

£562,800

National Fraud Initiative (Council Tax Reduction)

£57,066

Penalties

£280

Total

£762,643

 

 

 

2019/20 Outturn (to date)

 

 

2.14    The focus in the current year has been on the new release of National

  Fraud Initiative data and small business rate relief accounts, whilst a 

  new system is being implemented for the monitoring of single person

  discounts.

 

2.15    The team finished working on the New Homes Bonus project in October.

           This has been a really 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 final results

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

 

2.16    Table 2. Summary of savings generated across the 3 authorities by the

           team 2019/20 to date

 

 

Small Business Rate Relief

£248,877

Single Person Discount

£6,580

New Homes Bonus

£543,200

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

£248,795

Housing Benefit Matching Service (HBMS)

£54,597

Penalties

£2,520

Total

£1,104,569

 

 

 

 

 

 

 

 

 

 

 

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

           report changes or who fraudulently make claims will be issued with a

           penalty of £70. The number of penalties issued has increased in 2019-20.

 

2.18     In conjunction with the Kent Intelligence Network (KIN) software has

           been 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.

 

2.19     We are proposing to use this software in 2020-21 to further increase the

           savings that can be identified.

 

 

 

3   AVAILABLE OPTIONS

 

3.1     Option 1 - The Council could decide not to have a Fraud and Compliance team and to leave any reviews of Council Tax and Business Rates discounts and reviews to the Revenues team. This is not recommended given that 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

 

6.1        None

 

 

 

7         REPORT APPENDICES

 

7.1  None

 

 

8         BACKGROUND PAPERS

 

8.1     None