A selection of case studies covering housing fraud; collaboration, strategies and policies; and identity checks.
Case Study 1: Housing Fraud
Background and context
The introduction of the Prevention of Social Housing Fraud Act 2013 criminalised the act of subletting. The investigation of offences under the Act was previously undertaken at small scale as an additional services delivered from the Housing Benefit Investigation Team. From February 2016 all these staff and resources transferred to the Department of Work and Pensions (DWP), leaving the council and the residents of the Manchester exposed to a risk of housing tenancy fraud with all the economic, social and reputational damage this can cause.
Issues, challenges and barriers
The primary challenge faced by the council was the lack of an investigatory framework in place to deal with these types of fraud and a lack of trained investigators with knowledge of this fraud area. Under the legislation councils have the authority to prosecute cases of housing tenancy fraud; some investigatory functions therefore fall on the council.
Additionally, there was both a lack of awareness as to what constituted housing tenancy fraud amongst registered providers and what action could be taken to address allegations. This lack of understanding was compounded by an understandable focus on rent collection and minimising arrears, with less focus on risks of sub-letting and other offences.
Outputs and outcomes
The project and Ministry of Housing, Communities and Local Government (MHCLG) funding enabled the further development of a specialist Counter Fraud and Irregularity Team within Internal Audit, trained to accredited counter fraud specialist standard to investigate and pursue housing tenancy fraud and right-to-buy fraud.
Liaison, workshops and tenancy fraud awareness training were rolled out with registered providers to raise the team’s profile and promote a shift in culture to acknowledge and tackle housing tenancy fraud, rather than just tolerate it.
A framework was established for referring and investigating allegations of housing tenancy fraud to a criminal standard from referral stage through to sanction and redress. With the registered providers that were more “mature” in relation to housing tenancy fraud, a collaborative approach has been adopted so that some of the evidence gathering and witness statements can be obtained prior to the team’s involvement.
New approaches with registered providers are being developed to aid their visiting and sign up procedures to improve the effectiveness of controls and help “fraud proof” current practices which will help their officers identify and report signs of housing tenancy fraud at the earliest opportunity.
Data sharing agreements have been rolled out with all of the major registered providers who manage/have social housing within the Manchester boundaries.
Impact
As a direct result of this work, between April 2016 and January 2019 the Counter Fraud and Irregularity Team have received 114 allegations of housing fraud (including tenancy and RTB fraud) for investigation. Of these cases:
- the keys to 20 properties have been returned with an associated notional saving calculated as £360,000 (£18,000 per property);
- Three successful prosecutions for housing tenancy fraud and one for a fraudulent application for right to buy discount have been achieved during the period.
- £2,000 has been raised in relation to unlawful profit orders.
- Investigation work has prevented 11 fraudulent applications for Right-to-Buy (RTB) discount, with a total value of £429,000 from being awarded.
In addition to the cost savings identified, the further value added by other extrinsic factors such as publicity and a zero tolerance approach act as a deterrent, as well as help ensure that homes are allocated to those in genuine need.
Case Study 2: Collaboration, Strategies and Policies
Background and context
Whilst Manchester City Council, Bolton Council and the Greater Manchester Combined Authority (GMCA) shared a Head of Service for Internal Audit and Risk Management, each organisation had its own resource, approach, systems and processes for addressing allegations of fraud and irregularity. The size of resource and maturity in terms of caseload, staff knowledge and experience in addressing fraud referrals varied between the authorities.
Management across the three authorities recognised that a consistent shared approach with a risk based resource allocation and good practice model across the three authorities could help raise further awareness of fraud risks, enable the use of intelligence to detect fraud and allocate specialist resource to investigate areas of concern. This was therefore agreed as an area in which to develop a collaborative approach to counter fraud.
Issues, challenges and barriers
The three authorities have their own individual cultures and approach to tackling fraud and irregularity. Equally whilst there were some similarities of fraud risks, there were variations in terms of exposure, volume of caseload, as well as the skills and experience of staff responsible for investigating allegations of fraud and irregularity. All three authorities were also going through significant organisational change with devolution and integration of health and social care, increased powers afforded to the GMCA as part of the Greater Manchester mayoral model and wider transformation and cost reduction programmes.
Outputs and outcomes
To maximise the resources and ensure the efficacy of working practices, internal audit staff from Manchester City Council worked with colleagues within both Bolton Council and the GMCA to standardise, where possible, the counter fraud framework. This has resulted in consistent policies; there are common themes within the counter fraud strategies along with a standard approach to addressing fraud and irregularity as defined within consistent whistleblowing, anti-money laundering and anti-bribery policies.
In common with many public sector authorities, Manchester City Council (for a number of years), along with Bolton Council and the GMCA have made reference to the work of Protect (a leading whistleblowing charity - https://www.pcaw.org.uk) and provided their contact details within whistleblowing policies.
Protect were commissioned to provide additional support to the three authorities in relation to whistleblowing with specialist training provided to officers responsible for handling whistleblowing concerns in Internal Audit, Human Resources and Legal Services. The training focused on the effective handling of whistleblowing concerns and roles and responsibilities in terms of the Public Interest Disclosure Act and allowed for acquisition of knowledge but also promoted sharing of good practice, pitfalls and cross organisational dialogue and discussion.
An independent desk based review of the whistleblowing policy was undertaken and the recommendations from this have been incorporated in the policies across the authorities, again ensuring a standard approach. Protect have recently provided the three authorities with independent, dedicated advice lines for members of staff who may wish to discuss their concerns outside of the authorities, which will help provide staff with guidance on how best to raise concerns, especially in more complex cases. This is helping to further promote transparency and a positive ‘speak-up’ culture and has strong support from the authorities’ members, including the Audit and Standards Committees.
In addition to the work with Protect, a single counter fraud e-learning module relevant for each organisation was identified and procured. This has been procured and implemented within Manchester City Council and work is currently underway to introduce this within Bolton Council.
Impact
The introduction and development of a collaborative approach across the authorities has increased resilience across teams and maximised the sharing of learning and best practice. The development of a standardised framework and approach helps the counter fraud and irregularity staff to work in an agile manner across the authorities whilst maintaining consistent standards. It has minimised the time and cost of negotiating separate arrangements for the three authorities and ensured consistently high standards in the approach being taken. It has taken longer than originally anticipated to be able to ensure a consistent approach to communications and to secure approaches that work but, in 2019, as all of these arrangements go live we expect that this will be a further step to highlighting the risks of fraud across three authorities that together employ over 12,000 staff.
Case Study 3: Identity Checks
Background and context
Councils have a responsibly to verify and validate the authenticity of identity documents on a daily basis. This could be in relation to a number of applications or services, including, but not limited to:
- Applications for Housing Benefit and Council Tax Support;
- Rehousing;
- Licenses, including premise and taxi license; and
- Employment with the Council.
Changes to the Immigration Act saw the introduction of right to rent and right to work checks as well as new offences and penalties for failing to adhere to the legislation. The Act required more rigorous immigration checks on applicants on their immigration status and right to work restrictions by landlords and employers alike (including the issue of licenses). There was also an emphasis on the verification of documents provided by citizens’ service requesting services or entitlements, such as Council Tax Support, to confirm that the applicant had a right to public funds.
The authorities face significant reputational risk should it be found and reported that they have had failed in their duty and issue licenses or employ staff who do not have the right to work or be in the UK.
Issues, challenges and barriers
The verification of identity documents has historically been conducted manually by employees undertaking a visual review of the document, review of the identity features under UV light and review of security features contained within the document.
With identity documents being wide and varied (from type of document, country of origin and date of document), without extensive training, validating these documents can be problematic. There is a risk of false documents being accepted as a genuine document thereby granting an individual access to either a service/license they would not otherwise be entitled to.
The council had identified this as a fraud risk and an area for improved efficiency, so undertook an options assessment to find a solution that would improve the quality of review and hopefully reduce costs to the authorities.
The choice of solution was important as the council wanted the functionality to minimise the burden of review and basic decision making from employees; leaving them to focus on high risk or doubtful documents. The chosen solution was piloted in Manchester to ensure it met the requirements of services and this is now being replicated in Bolton.
Outputs and outcomes
To aid compliance with the Immigration Act, Manchester piloted the use of an ID scanner system to check customer identity documents provided as part of an application process.
The scheme was initially used within the customer service centre by the taxi licensing service to confirm the validity of the identity documents provided to ensure that applicants had the right to work.
Use of the devices was then extended so that the customer service centre officers could verify identity documents for applications for housing benefits and council tax support to ensure that applicants had recourse to public funds. This was further extended to human resources for use on right to work checks for individuals seeking to gain employment with the council.
Given the positive impact and response to the introduction of the machines and the overall deterrent effect, work is being undertaken to introduce the ID scanner and software across the same services within Bolton Council.
The solution provides assurance to management - firstly that there is a proactive, pragmatic approach to dealing with identity documents and secondly that recruitment, the award of a benefit or service, or the issue of a license, is line with the Immigration Act and is correctly awarded therefore reducing the councils’ exposure to loss and reputational damage.
Impact
Following the introductory period whilst staff were being trained, the implementation of this system has allowed for increased efficiency and effectiveness in the processing of identity documents. This scanner and software automatically read the security features within the document presented and provide a “pass” or “fail” so that the processing officer knows whether to accept the document or not. Checks are also made simultaneously against the Amberhill database. Reports can be produced to explain the output and documents can be referred automatically to the system provider for further documentation analysis if required.
Once scanned a report, including a scan of the identity document and its security features are retained on file. Departments have benefited from the implementation of the scanner to such effect that the Licensing Team and Human Resources department have purchased additional scanners for use across their services.
The solution will also act as a deterrent to individuals who wish to provide counterfeit, forged or fraudulently obtained documents as publicising this solution may deter them from attempting to apply for a service / employment, preventing potential fraud rather than just detecting it.
Since implementation in July 2017, council officers from Internal Audit, Revenues and Benefits, Licensing and Human Resources have scanned a total of 14,568 documents. Should the implementation of this solution save council worker two minutes of time per document, this equates to approximately 486 hours of time saved in which officers can carry out other duties.
Our reporting shows that 41 documents have failed the checks and as a result were not accepted resulting in either further requests for alternative identification documents to review or the denial of the application/service. A further 981 documents were referred for further scrutiny to ascertain authenticity.
Size of grant
Overall, for the three case studies, a grant of £187,000 was received and savings of £253,000 identified in the first two years, yielding a RoI of 1.4.
Contact details
Tom Powell, Head of Internal Audit and Risk Management, Manchester City Council, [email protected], 0161 234 5273