£8m of fraud and overpayments detected in Wales through National Fraud Initiative

Monday, October 12, 2020 - 5:26pm

Latest review uncovers extra £2.7m compared with previous round

The latest National Fraud Initiative (NFI) exercise has uncovered £8 million of fraud and overpayments across public services in Wales, compared with £5.4 million in the previous exercise. The Auditor General’s report, published today, reveals that more than £42.9 million of fraud and overpayments have been found in Wales since the NFI began in 1996.

NFI is carried out every two years, matching data between organisations, systems and across national borders to help public bodies identify potentially fraudulent or erroneous claims and transactions. Data submitted by Welsh bodies for the 2018-2020 NFI exercise helped other organisations in other parts of the UK identify 94 cases of fraud and error amounting to £125,000.

The additional £2.7m found in fraud and overpayments in the 2018-20 round was mainly due to several local authorities being more proactive in reviewing matches between the council tax single persons discount and the electoral register. This information was then used to cancel ineligible claims.

The report also highlights that the COVID-19 pandemic has significantly increased the risk of fraud as public bodies have needed to urgently process COVID-19 support payments in very difficult circumstances. The Auditor General is working with the Cabinet Office to identify, develop and promote data matching facilities to help address some of this increased fraud risk. Facilities to allow councils to carry out additional checks on bank accounts and company status in relation to business support grants have been made available to Welsh NFI participants. The Auditor General has included data-matching COVID-19 business support grants paid by local authorities as part of the 2020-2022 NFI to help Councils identify fraudulent applications for support.

Although most Welsh NFI participants display a strong commitment to counter fraud and to investigating NFI matches, the report highlights that some participants could be far more proactive. Some local authorities reviewed very few of the matches they received, and as a consequence did not do sufficient work to address potential frauds.  

There are seven main areas which generated almost 98% of the fraud and overpayments identified these include; council tax discount, blue badges, housing benefit, pensions, waiting lists, residential care homes and council tax reduction schemes. The report highlights three case studies which focus on some of these areas from a number of local authorities.

The COVID-19 pandemic has brought significant challenges for public sector organisations who continue to deliver services for individuals, communities and businesses in an extremely difficult time. So identifying £8 million in this latest NFI exercise is an important contribution to public service funding across Wales. It is more important than ever that organisations have sound governance and controls in place to help protect vital services from the risk of fraud at this time of crisis.

Adrian Crompton, Auditor General

Notes to Editors:

  • The National Fraud Initiative (NFI) is a counter-fraud exercise which takes place biennially across the UK public sector and aims to prevent and detect fraud. The NFI uses data sharing and matching to help confirm that services are provided to the correct people. The Auditor General, Cabinet Office, Audit Scotland and the Northern Ireland Audit Office lead the exercise in Wales, England, Scotland and Northern Ireland respectively.
  • The Auditor General undertakes the National Fraud Initiative in Wales under Part 3A of the Public Audit (Wales) Act 2004 which empowers him to conduct data matching exercises for the purpose of assisting in the prevention and detection of fraud in or with respect to Wales and to publish the results of any such exercise. 
  • The 2018-20 NFI exercise has identified £244.7 million of fraud and overpayments in total across the UK. The cumulative total of NFI outcomes across the UK since it began in 1996 is now £1.93 billion.
  • The Auditor General is the independent statutory external auditor of the devolved Welsh public sector. He is responsible for the annual audit of the majority of the public money spent in Wales, including the £20 billion of funds that are voted on annually by the Welsh Parliament. Elements of this funding are passed by the Welsh Government to the NHS in Wales (over £8 billion) and to local government (over £4 billion).
  • The audit independence of the Auditor General is of paramount importance. He is appointed by the Queen, and his audit work is not subject to direction or control by the Welsh Parliament or government. 
  • The Wales Audit Office (WAO) is a corporate body consisting of a nine member statutory Board which employs staff and provides other resources to the Auditor General, who is also the Board’s Chief Executive and Accounting Officer. The Board monitors and advises the Auditor General, regarding the exercise of his functions.
  • Audit Wales is the umbrella name for the Auditor General for Wales and the Wales Audit Office. Audit Wales is a registered trademark, but it is not a legal entity in itself.