Agenda item

To present the report of the Head of Audit and Risk.

The report of the Head of Audit and Risk setting out the Council’s current outcomes in respect of the National Fraud Initiative (NFI) 2022/23 exercise was presented for the Committee’s consideration.

The Head of Audit and Risk provided an overview of the NFI exercise process and purpose which is a data matching exercise conducted every two years by the Cabinet Office that aims to detect and prevent fraud and error. The Council along with other local authorities and public sector bodies is mandated to participate. Participants submit data to a secure NFI website at the end of the designated calendar year after which the NFI system matches data in and between public sector bodies to identify anomalies. Potential anomalies called matches are reported to participants to review, investigate, and record outcomes which are then collected and reported on nationally by the Auditor General. Data matches do not in themselves indicate fraud or error but rather identify cases which may require further analysis. For the 2020/21 NFI exercise seven service areas generated almost 97% of the £6.5m of fraud and error identified for Wales with Council Tax discounts (£2.6m) and Blue Badges (£1.4m) being the foremost of those. As part of the 2022/23 NFI exercise, the Council submitted data in relation to Housing, Taxi driver licences, Payroll, Creditors payment history and standing data, Council Tax Reduction Scheme and Council Tax and the Electoral Register. Additionally, the DWP submitted benefit recipient details and the Blue Badge Digital Service submitted Blue Badge Holder details.

Between January and March 2023 the Council received a total of 66 separate reports which contained a total of 2,638 individual matches. To date 8 days have been invested providing the data to the Cabinet Office, analysing, and evaluating matches and working with services to investigate the matches and improve their processes. The report sets out the reports which Internal Audit has analysed and/or co-ordinated the evaluation of which and the service areas to which they relate. The outcomes of that work are detailed in Appendix 1 including the monetary savings made as with duplicate creditor payments (£13,343.21) or estimated as with Housing Waiting List fraud (£4,283) and Blue Badges not cancelled (£194,350). With regard to the latter, following discussions with the senior officer responsible for Blue Badge administration all the 299 NFI matches for this category were identified as examples of a lack of communication between services with Blue Badges not having been closed on the system because the team had not been informed of the permit holder’s death. It was noted in this regard that a further complication is that deaths are registered in the county in which they occur meaning that deaths in Ysbyty Gwynedd including those of Anglesey residents are registered in Gwynedd County. However, that information is not necessarily passed onto the Council in Anglesey through the Gwynedd Tell Us Once process or otherwise with the result that Blue Badges then remain open on the system after the permit holder has passed away.

Due to a combination of competing priorities and insufficient resources, the Revenues Team has yet to analyse matches in relation to Council Tax reduction and Housing Benefit and the Council Tax Single Person Discount. The Team intends to use an external provider to conduct a managed bulk review of their discounts and exemptions before the end of 2023/24. Whilst it is considered that the NFI exercise has provided a good return on investment, there are apparent weaknesses in the formulas used by the NFI to calculate outcomes e.g. the inflated value of a Blue Badge remaining in circulation and lost income to the Council. However, the opportunity to identify internal control weaknesses and to discuss ways to strengthen processes with management is one unquantifiable benefit of the exercise that is not reflected in NFI financial outcomes. Ways of improving the process of analysing matches to ensure greater efficiency and effectiveness will be discussed with Heads of Service and Senior Management moving forward so that future exercises provide a greater return on investment.

In considering the report the Committee discussed the following –

·      The distortion of the outcomes report and income lost to the Council by the Blue Badge errors and its reflection on the Council especially if the badges have not been misused. The Committee particularly noted the challenges and complications arising for Blue Badges and potentially for other services as well as a result of the Council’s not being informed of deaths that occur outside its boundary, most obviously in Ysbyty Gwynedd. The Committee further noted that it places the Council at a disadvantage in relation to processes such as the NFI exercise.

The Committee was advised that management has provided assurance that internal control processes will be strengthened to ensure that Blue Badge administrators are able to proactively cross reference permit holders’ details with deceased records, ensuring that the badges are cancelled promptly. Additional work is also being undertaken to establish a direct communication process between Social Services and Contact Môn.

·      The recovery of monies which the NFI exercise indicate may have been lost to fraud e.g. in relation to the Council Tax Single Person discount and whether loss/non-collection of Council Tax income is accounted for in drawing up the budget.

The Committee was advised that the external provider engaged by the Council to review Council Tax discounts and exemptions seeks to verify sole occupancy in the case of Single Person Discount claimants and if there is evidence to suggest that a claimant does not live alone then the account is adjusted accordingly and a new Council Tax bill is generated and sent to the claimant which may result in the Council Tax being paid or the claimant providing proof of sole occupancy. The Council has increased the debit raised by cancelling claims that were not valid. The Committee was further advised of the process for setting the Tax Base, as well as the collection rate and the factors involved including the number of discounts and exemptions granted. In a normal year approximately 97% of Council Tax income is collected in-year and 99.3% over three years.

It was resolved to note the NFI Outcomes report and to confirm that the Governance and Audit Committee takes assurance from the contents of the report that the Council is seeking to actively embrace opportunities provided by the National Fraud Initiative to use data analytics to strengthen both the prevention and detection of fraud.