Fraud costs local government £684m per year – National Fraud Agency

The National Fraud Agency (NFA) has estimated that fraud costs local authorities £684m per year, far above previous estimates produced by the Association of Chief Police Officers and more than twice that suffered by the National Health Service.

In total, the public sector was the victim of 58% of fraud in England and Wales with a total value of £17.6bn. Including the private sector, the total fraud bill for England and Wales in 2008 was £30.5bn. Within the public sector, the tax  system was biggest target for fraud, with an estimated cost of £15.2bn, followed by the benefits system (£1.1bn), local government, central government (£356m) and the NHS (£263m).

The total figure for local government was extrapolated from reported fraud cases at 24 London boroughs and excludes housing benefit fraud, which costs a further £260m per year, the single biggest target for fraudsters within the benefits system.

The biggest proportion of fraud against councils was in relation to council tax and, in particular, abuse of the single person discount which costs local authorities £90m per year. After council tax, the main areas of local government fraud were public liability insurance fund fraud (£17.7 million), Blue Badge scheme abuse (£14.3 million), personnel management (£4.3 million), theft of assets or funds (£1.7 million) and the exploitation of assets and information (£1.1 million).

The NFA, the government's strategic lead agency on fraud, claims that the figures, derived from fraud losses identified during 2008 by a wide range of private and public sector organisations, are more accurate than previous attempts to measure the annual cost of fraud, which have under-estimated the scale of the problem. ACPO's most recent estimate – which only used publicly available sources of information - was published in 2007, and identified fraud losses of £13 billion during 2005. The NFA  says that the new figures will enable the organisation – which was set up last year as part if the UK Attorney General's Office - to maximise and prioritise the allocation of resources to combat the issue.

The Smarter Government white paper, published in December 2009, called for the setting up of a cross-Government task force to tackle public sector fraud. The NFA has since been appointed to lead this task force. The NFA has also recently launched Action Fraud, the UK's first national fraud reporting centre. The service is a single point of contact for fraud victims, where they can both report a fraud and seek guidance and advice.

The full report can be read here: http://www.attorneygeneral.gov.uk/nfa/GuidetoInformation/Documents/NFA_fraud_indicator.pdf