Staying single

Posted by: Jules Birch

20/05/2010

Question: what is the single biggest fraud in housing? 

The latest annual report from the Audit Commission’s National Fraud Initiative suggests that the answer is not what you (or at least I) might expect - or at least it is in the sort of fraud investigation covered by its datamatching methods.

The fraud investigators recovered £32.3m in housing benefit overpayments and £7.6m from housing fraud (unlawful subletting and wrongly awarded right to buy applications) in 2008/09. But those figures were dwarfed by the £62.3m recovered from people wrongly claiming the council tax single person discount. 

Detected housing benefit fraud was up 37% on two years ago and housing fraud up 14% but they actually fell as a percentage of total fraud that was up 50%. In contrast, single person discount fraud quintupled. 

In total, councils stopped payment in 22,000 cases - the largest number for any fraud. Salford found one case where a taxpayer had been receiving the discount since 2001 despite having a live-in partner. As a result of that and other cases it now expects to raise £1m in council tax.

As for fraud as a whole, you may find some of the other results surprising as well. 

The single biggest detected fraud (£72m) was in public sector pensions - either through pensioners dying and their relatives not letting on, or through pensioners returning to work and wrongfully avoiding pension deductions. 

And the second and third biggest numbers of people involved were the 21,500 who had their concessionary travel permits cancelled and the 16,500 wrongful holders of blue badges for their cars.

None of this downgrades the importance of detecting housing benefit fraud and unlawful subletting - or of benefit fraud investigation outside of the datamatching methods employed by the initiative. But it does make the point that fraud is not always committed by the obviously undeserving people that get all the headlines.

Among the future priority areas identified are false claims for empty property discounts and using housing waiting list data to prevent people not entitled to a tenancy from getting one. The 2008/09 report also covers a period before the new initiative on social housing fraud introduced last year. 

However, the initiative may still only be scratching the surface of the problem. Part of the reason detected single person discount fraud rose so much was that submission of the required data was only made mandatory in 2008/09 and the number of councils taking part doubled.

It should go without saying that tackling fraud should be a top priority for all organisations - it costs an estimated £30bn a year in the UK at a time when we are preparing for draconian cuts of £6bn in public spending.

Except that it doesn’t seem to be a top priority everywhere. The annual report reveals that the recommendations of a government fraud review in 2006 have not been implemented. No government department, and only one government agency, took part in the initiative in 2008/09 because the government has not exercised its statutory power to require them to do so. The report does not say how many housing associations took part - but the Audit Commission is still trying to persuade more of them to do so. 

And the government should also be asking how housing fraud measures up to housing tax evasion. With capital gains tax about to increase, how many second homes will be flipped to avoid it? And how many will suddenly become holiday lets to qualify for the lower business rate?