9 - (01) 2024 10 31 - The NFI in Scotland 2024
North Ayrshire Council · 31 October 2024
Back to Audit and Scrutiny Committee — 31 October 2024 and its agenda
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OFFICIAL INFORMATION OFFICIAL INFORMATION NORTH AYRSHIRE COUNCIL 31 October 2024 Audit and Scrutiny Committee Title: National Fraud Initiative (NFI) in Scotland 2024 Purpose: To provide the Committee with an overview of the NFI 2022/23 exercise outcomes. Recommendation: That the Committee notes the outcomes of the exercise. 1. Executive Summary 1.1 Audit Scotland has published its most recent biennial National Fraud Initiative (NFI) report. The report is provided in full at Appendix 1. 1.2 North Ayrshire Council’s participation in the NFI exercise is coordinated by the Corporate Fraud Team, with matches investigated by appropriate teams across the Council. 1.3 Investigation of the 2022/23 data matches was concluded earlier in 2024. 2. Background 2.1 The NFI is a major counter fraud exercise carried out across the UK every two years. Participating bodies provide sets of data and, following matching of data provided by various public sector bodies, anomalies in the data are provided for investigation. 2.2 The exercise is coordinated across the UK by the Cabinet Office, and in Scotland is delegated to Audit Scotland through the powers in the Criminal Justice and Licensing (Scotland) Act 2010 and incorporated in Part 2A of the Public Finance and Accountability (Scotland) Act 2000. 2.3 The NFI exercise in Scotland is well established and remains the most comprehensive detective and preventative scheme in which vast amounts of data across numerous public bodies can be compared and matched using dedicated software. A data match does not necessarily mean there is fraud or error present, but highlights that further investigation is required in order to make a determination. Outcomes are recorded on the system and collated for each public body in order to arrive at a total value of recoveries across the whole of Scotland. 2.4 110 public bodies across Scotland participated in the 2022/23 NFI exercise, and matches are recommended for investigation across the country. Most matches are
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OFFICIAL INFORMATION OFFICIAL INFORMATION categorised into risk priority to enable resources to be focussed on the matches with the most likely outcomes and recoveries. 2.5 The value of fraud and error identified across Scotland in 2022/23 was £21.5m, resulting in cumulative outcomes of £180m since the NFI first launched in 2006/07. 2.6 The majority of the NFI results arise from the following key match areas: • Payroll • Council tax discounts • Blue badges • Pensions • Housing benefit • Housing tenancy • Council tax reduction • Housing waiting lists • Creditors 2.7 Whilst the national report does not include the outcomes of each individual body included in the exercise, consultation with Audit Scotland confirmed that for North Ayrshire Council NFI outcomes totalled £0.474m. It should be noted however that this includes a notional saving of £0.342m relating to 526 Blue Badge matches, where the badge holder has been identified as deceased. These badges have since been cancelled. 2.8 External audit also carried out an assessment of the Council’s planning and progress with the NFI and makes recommendations for improvement where appropriate. North Ayrshire Council was assessed as Satisfactory. 2.9 Audit Scotland continues to work with the Cabinet Office in developing new ways to prevent and detect fraud. This includes piloting new data matching opportunities, and where pilots achieve matches that demonstrate a significant level of success these are extended nationally and included in the main NFI exercise going forward. 3. Proposals 3.1 It is proposed that the Committee notes the content of the Audit Scotland report on the National Fraud Initiative in Scotland 2024. 4. Implications/Socio-economic Duty Financial 4.1 None. Human Resources 4.2 None.
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OFFICIAL INFORMATION OFFICIAL INFORMATION Legal 4.3 None. Equality/Socio-economic 4.4 None. Climate Change and Carbon 4.5 None. Key Priorities 4.6 The work of the Corporate Fraud Team, including participation in the NFI, helps to support the efficient delivery of the strategic priorities within the Council Plan 2023- 2028. Community Wealth Building 4.7 None. 5. Consultation 5.1 No consultation has been required in the preparation of this report. Mark Boyd Head of Service (Finance) For further information please contact John McCallum, Senior Manager (Audit, Fraud, Safety, Risk and Insurance, on 01294 324607. Background Papers None.
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Prepared by Audit Scotland August 2024 The National Fraud Initiative in Scotland 2024
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2The National Fraud Initiative in Scotland 2024 Contents Key messages 3 Recommendations 4 1. Introduction 5 2. Overall outcomes 7 3. NFI delivery 11 4. Specific match areas 14 5. Pilot exercises and future developments 25 Appendix 26 Accessibility You can find out more and read this report using assistive technology on our website www.audit.scot/accessibility. Audit team The core audit team consisted of: Tim Bridle, under the direction of Cornilius Chikwama.
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3Key messages Key messages Key messages Key messages 1 Fraud against the public sector costs the taxpayer money and can undermine both confidence in government and the delivery of public services. The proactive detection and prevention of fraud using the National Fraud Initiative (NFI) remains vitally important to public sector financial management as public bodies continue to recover from Covid-19 and to deal with the impact of the cost-of-living crisis. 2 NFI savings and outcomes have increased from £14.9 million in 2020/21 to £21.5 million in 2022/23, with increases across most data match areas. However, savings from council tax single person discounts are slightly reduced and additional outcomes in some areas are attributable to changes in estimation methodologies. Overall, it is not clear whether underlying levels of fraud have increased since 2020/21. 3 NFI governance and follow-up arrangements remained sound for most participating bodies over the period covered by the 2022/23 exercise. However, when compared to previous exercises, fewer bodies have been assessed by their auditors as having fully satisfactory arrangements, and there remains scope for some bodies to follow up on data matches more effectively.
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4Recommendations Recommendations Participating bodies should: • Ensure that an appropriate level of resource is available to deliver NFI follow-up activities in an efficient and effective manner, in line with local priorities. • Use the NFI Self-Appraisal Checklist as part of planning for the 2024/25 exercise. • Put in place arrangements for monitoring follow-up activity, and where it is necessary seek to understand reasons for low or nil outcomes.
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5 1. 1. Introduction 1. Introduction The proactive detection and prevention of fraud using the National Fraud Initiative (NFI) remains vitally important to public sector financial management as public bodies continue to recover from the Covid-19 pandemic and to deal with the impact of the cost-of-living crisis. 1. Fraud against the public sector costs the taxpayer and can undermine both confidence in government and the delivery of public services. The National Fraud Initiative (NFI) is a proactive data matching exercise designed to identify and prevent fraud. It remains vitally important during a time of ongoing financial pressure as public bodies continue to recover from the Covid-19 pandemic and to deal with the impact of the cost-of- living crisis. 2. The Public Sector Fraud Authority (PSFA) oversees the NFI across the UK, and Audit Scotland leads the exercise in Scotland, working with a range of Scottish public bodies and their external auditors. The NFI takes place every two years, and this report considers the outcomes from the 2022/23 exercise. Statutory basis for NFI 3. We carry out the NFI under powers introduced by the Criminal Justice and Licensing (Scotland) Act 2010 and incorporated in Part 2A of the Public Finance and Accountability (Scotland) Act 2000. It is important for all parties involved that this exercise is properly controlled, and that data is handled in accordance with the law. The Audit Scotland Code of Data Matching Practice includes a summary of the key legislation and controls governing the NFI data matching exercise. Participating bodies 4. In 2022/23, 110 public sector bodies in Scotland participated in the NFI, submitting data and following up on matches. The Scottish Government also submitted data for another 17 central government bodies who share their systems for payroll and/or creditors. Many councils also submit payroll data for their Arm’s-Length External Organisations (ALEOs). Across the UK there are over 1,100 participating bodies and data matching takes place across them all.
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1. Introduction 6 Main data match areas in 2022/23 5. The main data match areas for the 2022/23 NFI exercise were: • Payroll • Creditor payments • Council Tax (Single Person Discounts and Reduction Scheme reliefs) • Pensions • Housing Benefit • Housing Tenancy and waiting lists • Blue Badges (disabled parking) • Adult concessionary bus travel (new in 2022/23 exercise). 6. The 2022/23 NFI exercise matched new data from His Majesty’s Revenue and Customs (HMRC) using powers under the Digital Economy Act (2017). 7. Non-Domestic Rates Small Business Bonus Scheme (NDR SBBS) matching was postponed for the 2022/23 exercise due to the national NDR revaluation exercise in 2023. Results will be reported as part of the 2024/25 exercise. Basis for reported outcomes 8. All monetary outcomes included in this report are on a cash basis, prior year totals have not been adjusted to reflect inflation or changes in estimation methodologies since amounts were originally reported. Details of estimate methodologies used can be found at Appendix.
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72. Overall outcomes 2. Overall outcomes Overall outcomes from the NFI have increased from £14.9 million in 2020/21 to £21.5 million in 2022/23. Overall outcomes by type 9. The value of outcomes from the NFI, recorded since our last report, total £21.5 million (up from the £14.9 million in 2022). The cumulative value of outcomes from the NFI in Scotland since participation started in 2006/07 now stands at around £180 million. Exhibit 1 shows NFI outcomes by type for 2022/23 and the previous three exercises. Exhibit 1. NFI outcomes by exercise and type, 2016/17 to 2022/23 Reported outcomes have increased to £21.5 million in 2022/23. Source: Audit Scotland analysis of NFI outcomes 0 10 25 2022/232020/212018/192016/17 £ million £17.8m £15.3m £14.9m £21.5m 3.1 2.7 4.2 6.8 9.2 7.0 6.2 8.9 5.5 5.6 4.5 5.7 Actual savings: overpayments and additional income Forward savings estimates: from overpayments, additional income and prevented fraud Notional outcome estimates: not directly linked to actual overpayments or additional income, eg blue badges, housing tenancy and waiting lists 10. Increased outcomes reported in 2022/23 partly reflect improvement in recording of results as bodies continue to recover from Covid-19. There have also been changes to estimation methodologies which contribute to higher outcomes in some areas (details of methodologies can be found in the Appendix). It is not possible to extrapolate from these figures that underlying levels of fraud have increased.
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2. Overall outcomes 8 Outcomes by data match area 11. Most monetary outcomes from the NFI accrue to councils, the Scottish Public Pensions Agency and the Department for Work and Pensions (DWP) in the form of savings arising from council tax, pensions and housing benefits matches. 12. Many participating bodies only submit payroll and creditors datasets for matching, and this limits the monetary outcomes available to them. However, overpayments associated with duplicate creditor payments and payroll matches are not insignificant. NFI outcomes analysed by main data match area, are shown for the last three exercises in Exhibit 2 (page 9).
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2. Overall outcomes 9 Exhibit 2. NFI outcomes by area and exercise Most savings arise from Council Tax, Pensions and Housing Benefits matches. Notional outcome estimates Forward savings estimates Overpayments and additional income £ Million 0 1 2 3 4 5 6 Care Home Payments Payroll Concessionary Bus Travel Creditors Housing waiting lists Council Tax Reduction Scheme Housing Tenancy Housing Benefit Pensions Non-Domestic Rates Blue Badges Council Tax SPD Care Home Payments Payroll Concessionary Bus Travel Creditors Housing waiting lists Council Tax Reduction Scheme Housing Tenancy Housing Benefit Pensions Non-Domestic Rates Blue Badges Council Tax SPD Care Home Payments Payroll Concessionary Bus Travel Creditors Housing waiting lists Council Tax Reduction Scheme Housing Tenancy Housing Benefit Pensions Non-Domestic Rates Blue Badges Council Tax SPD £ million 2020/21 2018/19 2022/23
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2. Overall outcomes 10 Notes: 1. Non-Domestic Rates Small Business Bonus Scheme data was first submitted for the 2020/21 exercise but did not form part of the 2022/23 exercise due to the revaluation exercise taking place in 2023. 2. Care home payments have not been matched since 2018/19 due to legislative constraints. 3. Adult concessionary bus travel was a pilot exercise in 2020/21 and has been mainstreamed in 2022/23. Source: Audit Scotland analysis of NFI outcomes Wider benefits of NFI 13. The NFI also delivers benefits which are more difficult to quantify. These include its fraud deterrent effect and the financial governance assurance it provides to bodies where no issues are identified (Exhibit 3). Exhibit 3. Non-monetary benefits of NFI Source: Audit Scotland Acts as a deterrent to potential fraudsters Can provide assurance that systems are operating well Can identify where system improvements are required
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113. NFI delivery 3. NFI delivery NFI governance and follow-up arrangements remain sound for most participating bodies. However, when compared to previous exercises, appointed auditors assessed fewer bodies as having fully satisfactory arrangements. Auditor assessments 14. NFI governance and follow-up arrangements remain sound for most of the 110 bodies in Scotland that participated in the 2022/23 exercise. However, several bodies have struggled with delivery and there remains some scope for improvement. 15. We asked auditors to assess participating body NFI arrangements, and rate them as Green (satisfactory), Amber (mostly adequate) or Red (unsatisfactory). Auditor returns for 2022/23 included an increased number of amber and red ratings Exhibit 4 (page 12). 16. In most cases amber or red assessments reflect deficiencies with follow-up activity. Participating bodies routinely cited the lack of adequate resources as the main reason for delay or lack of progress with follow-up activity. 17. Our NFI Self-Appraisal Checklist includes requirements for participating bodies to consider Leadership, Commitment and Communication. The checklist also asks NFI key contacts and users to consider potential improvements to the efficiency and effectiveness of follow-up activity. The checklist can be found on our Counter Fraud webpage and has been updated for the 2024/25 exercise.
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3. NFI delivery 12 Exhibit 4. Auditor assessments of NFI delivery arrangements More bodies received amber and red assessments in 2022/23. Source: Audit Scotland analysis of Auditor Returns Percentage Satisfactory Mostly adequate Unsatisfactory 0 10 20 30 40 50 60 70 80 90 100 Colleges 2022/23 Colleges 2020/21 Colleges 2018/19 CG 2022/23 CG 2020/21 CG 2018/19 NHS 2022/23 NHS 2020/21 NHS 2018/19 LG 2022/23 LG 2020/21 LG 2018/19
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3. NFI delivery 13 18. Exhibit 5 shows the main determinants of successful NFI delivery that participating bodies should be focusing on to strengthen their arrangements. Exhibit 5. NFI participation – main determinants of success Successful delivery of NFI requires a clear commitment to a well-thought-out approach that optimises the use of available resources to follow up matches appropriately. Source: Audit Scotland 19. Audit Scotland will continue to work with bodies to support effective and efficient delivery of NFI through its ongoing engagement activities. Knowledge Resources Leadership Effective NFI delivery
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144. Specific match areas 4. Specific match areas NFI outcomes have increased in most data match areas in 2022/23. However, savings from council tax single person discounts decreased slightly, and increases in some areas are partly due to changes in estimation methodologies. Payroll 20. The number of payroll and multi-contract working frauds identified as a result of the NFI has increased. There were 12 cases identified in 2022/23. This is the highest number since 2016/17, which is the last exercise for which immigration data was matched. Overpayments and case numbers for the 2022/23 exercise are shown alongside those for the three previous exercises at Exhibit 6. Exhibit 6. Payroll outcomes and case numbers by NFI exercise There has been an increase in the level of identified fraud in 2022/23. Note. Notional outcomes of £5,685 per case are allocated where staff resign or have been dismissed (Appendix). Source: NFI management information 0 80 140 2022/232020/212018/192016/17 0 8 16 24 2022/232020/212018/192016/17 Number of cases Overpayments £ thousand Cases 13 8 3 12 £20,000 £129,000 £27,000 £100,000 Notional outcomes
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4. Specific match areas 15 Creditor payments 21. Participating bodies submit details of payments made to people or organisations supplying them with goods and services. Data is matched by the NFI to identify potential duplicate payments. Bodies identifying duplicate payments often refresh procedures and tighten controls to reduce future risk. 22. In 2022/23 outcomes worth £0.75 million were identified from 146 duplicate payments across 31 bodies. This is broadly in line with previous exercises as shown in Exhibit 7. Exhibit 7. Duplicate creditor payment savings and case numbers by NFI exercise £0.75 million of recoverable duplicate creditor payments was identified in 2022/23. Source: NFI management information 0 0.6 1.2 2022/232020/212018/192016/17 Number of duplicate payments Overpayments £ million 168 147 144 146 £0.6m £1.1m £0.5m £0.75m 130 150 170 2022/232020/212018/192016/17
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4. Specific match areas 16 Adult Concessionary Bus Travel 23. Following a successful pilot exercise in 2020/21, adult concessionary bus travel mortality screening was rolled out to councils in 2023. The National Entitlement Card Project Office, working in partnership with councils, submitted details of all live travel passes for matching. 24. The NFI identified 99,600 travel passes that belonged to holders who had died. Transport Scotland was able to check usage of these passes and identified that 1,075 had been used after the date of death. 25. The full fare value of fraudulent bus trips associated with these passes amounted to £0.31 million, with a cost to Transport Scotland of around £0.18 million, based on the applicable reimbursement rates to bus companies. 26. The cancellation of these passes will prevent future fraudulent use with an estimated value of £0.45 million (based on £420 per travel pass used fraudulently, see Appendix (page 26). The resultant saving to Transport Scotland is estimated at around £0.25 million based on current reimbursement rates.1 Council Tax Single Person Discounts 27. People living on their own, or in some cases with adults who can be ‘disregarded’, are eligible for a 25 per cent single person discount (SPD) on their annual council tax bill. The NFI matches SPD recipients to the electoral register and to other datasets to identify where other adult residents have not been declared on applications, have subsequently turned 18 or have moved in. 28. Councils withdrew £1.8 million worth of SPDs because of the NFI. The additional income, based on a forward projection of annual savings for two years, in line with the Cabinet Office methodology, equates to an additional £2.7 million. These amounts are shown together and alongside savings for the previous three exercises in Exhibit 8 (page 17). 29. Only 19 councils recorded NFI activity in relation to SPDs, as more councils are now making use of third party providers for data matching and follow-up. Seven councils using third-party providers now record no NFI outcomes (an increase of two from the previous exercise). 1 Total outcomes for this area (Exhibit 2) includes a notional amount of £0.91 million relating to the pilot exercise in 2020/21 (based on the Cabinet Office methodology at the time which applied £550 to each travel pass cancelled).
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4. Specific match areas 17 Exhibit 8. Council Tax SPD savings and case numbers by NFI exercise Case numbers and savings from single person discounts decreased in 2022/23. Source: NFI management information Thousand 4,846 4,588 3,720 3,419 1.8 2.6 2.7 Case numbers0 3 6 2022/232020/21 2018/19 2016/17 0 3 6 2022/232020/212018/192016/17 £4.4m £4.9m £4.6m £4.5m 3.1 1.8 2.8 1.5 2.9 1.7 2.7 1.8 Forward savings estimate Discounts removed £ million Council Tax Reduction Scheme (CTRS) 30. Council tax reduction is available to low-income households in Scotland. The NFI matches CTRS data to other datasets, such as payroll and pensions, for example, to identify undeclared income. 31. In 2022/23, additional council tax income of £0.92 million was identified because of follow-up on NFI matches (up from £0.65 million in 2020/21). Savings and case numbers are shown alongside those from the previous three NFI exercises in Exhibit 9 (page 18).
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4. Specific match areas 18 32. Actual additional income from the removal of council tax reductions has increased, as have forward savings estimates. The forward savings estimate methodology has, however, changed with savings now based on 33 weeks, compared to the 21 weeks previously used. Exhibit 9. Council Tax Reduction Scheme savings and case numbers by NFI exercise Total potential savings from CTRS have increased to £0.92 million in 2022/23. Source: NFI management information 115 280 772 395 Case numbers0 400 800 2022/23 2020/212018/192016/17 395 772 280 115 2022/23 2020/21 2018/19 2016/17 0.0 0.5 1.0 2022/232020/212018/192016/17 £0.48m £0.30m £0.65m £0.92m 0.08 0.23 0.09 0.38 0.12 0.53 0.23 0.69 Forward savings estimate Reductions removed £ million 33. Only 18 councils identified savings from CTRS, with most savings arising from matches to pensions (around 40 per cent) and payroll (around 30 per cent), where income had not been declared.
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4. Specific match areas 19 Housing Benefits 34. Housing benefits (HB) help people on low incomes pay their rent. HBs in payment continues to decrease as more benefit recipients move on to universal credit. 35. The DWP’s Verify Earnings and Pensions alerts service has also impacted HB savings from NFI as alerts are sent directly to councils for investigation, allowing them to follow up outside the NFI process. We no longer match HB to payroll and pension as part of the NFI. 36. There has, however, been an increase in reported savings in 2022/23 due to the inclusion of late DWP savings from the 2020/21 exercise which was affected by Covid-19. Exhibit 10 shows the HB overpayments and forward savings reported for the current and previous three NFI exercises. Exhibit 10. Housing Benefit savings by NFI exercise 2022/23 includes significant late DWP savings from the 2020/21 exercise. Source: NFI management information 0.0 1.5 3.0 2022/232020/212018/192016/17 £2.1m £2.8m £1.2m £2.2m 2.1 0.7 1.4 0.7 0.3 0.9 0.4 1.8 Forward savings estimate Overpayments £ million 37. HB matches involving suspected fraud are referred to the DWP for investigation and resultant savings are not attributed back to councils. In 2022/23 almost £2 million of savings arose from these referrals. £0.2 million of savings was identified locally by 17 councils, largely from the follow-up of matches to student loans.
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4. Specific match areas 20 Exhibit 11. Pensions savings by NFI exercise Follow-up activity and recording of outcomes in 2020/21 was impacted by Covid 19. Source: NFI management information 0 3 6 2022/232020/212018/192016/17 £5.4m £3.2m £1.5m £5.6m 2.8 0.40.7 4.8 0.1 1.4 5.1 0.5 Estimated forward savings Actual overpayments £ million Pensions 38. The NFI is an efficient and effective way for the Scottish Public Pensions Agency (SPPA) and councils that administer pensions to check that they are only paying pensions to people who are alive. 39. The follow-up of matches has led to the identification of actual overpayments of £0.5 million as at 31 March 2024, with projected forward savings amounting to a further £5.1 million. These savings are shown along with those reported for previous exercises in Exhibit 11. 40. Forward savings are estimated based on a potential payment period from the date overpayments are identified until the date the deceased pensioner would have reached the age of 85 (consistent with actuarial assumptions used to value public sector pension schemes). 41. In 2022/23 we have seen improved follow-up of pensions matches. However, not all overpayments identified had been recorded by 31 March 2024. Late savings will be reported as part of the 2024/25 exercise as a result.
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4. Specific match areas 21 Exhibit 12. Blue Badges outcomes and case numbers by NFI exercise There have been higher levels of recorded cancellation in 2022/23 than for recent exercises. Source: NFI management information 0.0 2.0 4.0 2022/232020/212018/192016/17 Badges cancelled Notional outcomes £ million Thousand 4,505 3,215 4,616 5,140 £1.8m £2.6m £2.7m £3.3m 0 3 6 2022/232020/212018/192016/17 Blue Badges 42. The Blue Badge scheme allows individuals with mobility problems to park for free at on-street parking meters, in ‘pay and display’ bays, in designated Blue Badge spaces, and on single or double yellow lines in certain circumstances. Badges are sometimes used by unauthorised persons after the badge holder has died. Not only is this an offence under the Disabled Persons’ Parking Badges (Scotland) Act 2014, but it may also result in parking spaces being denied to people who legitimately use the Blue Badge scheme. 43. The NFI matches Blue Badges issued to records of deaths, enabling badges to be cancelled. The number of badges cancelled in 2022/23 has gone up to 5,140, as shown at Exhibit 12.
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4. Specific match areas 22 44. The increased number of cancellations, together with a new estimate multiplier, has resulted in a higher notional outcome value. The Cabinet Office estimation methodology now applies £650 per badge cancelled (compared to £575 per badge in 2020/21). Housing Tenancy 45. With reported housing shortages and high levels of homelessness, tenancy fraud is increasingly an issue for councils. Where fraudulent subletting exists, it means that properties are not available to house people who are in most need and this can be costly to councils. 46. The NFI uses council housing tenancy data to identify possible cases where tenants may have sublet their property. It also helps identify cases where the tenant has died, and the property is either empty or has other individuals living in it. 47. As a result of the 2022/23 exercise, councils were able to identify and recover ten properties. A housing association property was also identified and made available for social housing. The numbers of properties recovered along with the notional outcome estimates for the last four exercises are shown at Exhibit 13 (page 23). 48. Notional outcomes of £78,300 are allocated per property recovered (£93,000 in 2020/21). This is based on an average four-year fraudulent tenancy and includes estimated costs of temporary accommodation for genuine applicants; legal costs to recover property; re-let cost; and rent foregone during the void period between tenancies. 49. In addition to recovery of properties, NFI has enabled several councils to update tenancy details where there has been legitimate succession following a bereavement.
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4. Specific match areas 23 Exhibit 13. Housing Tenancy outcomes and case numbers by NFI exercise Tenancies recovered as a result of NFI have remained in double figures in 2022/23. Source: NFI management information 0.00 0.50 1.00 2022/232020/212018/192016/17 £ million 2 1 10 11 £0.09m £0.19m £0.93m £0.86m Notional outcomes Tenancies recovered0 6 12 2022/232020/212018/192016/17 Housing Waiting Lists 50. Councils maintain waiting lists for council housing, and in some cases for all social housing in their area. The NFI matches waiting list data to housing tenancy data and other data sets, enabling undisclosed changes in circumstances to be picked up. This enables removal of ineligible applicants from the waiting list, stops inappropriate allocations, and accelerates allocations to people in genuine need of social housing. 51. In 2022/23 we have seen an increase in the number of applicants removed from waiting lists as a result of NFI. Notional outcomes have also increased as shown in Exhibit 14 (page 24).
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4. Specific match areas 24 52. Notional outcomes are attributed to applicants removed from the waiting list on the basis that social housing could have been allocated inappropriately. The estimation methodology allocates £4,283 per case removed from the waiting list (an increase from £3,240 per application in 2020/21). Exhibit 14. Housing Waiting List outcomes and case numbers by NFI exercise More applicants have been removed from the waiting list in 2022/23 than in previous exercises. Source: NFI management information 0.0 0.8 1.4 2022/232020/212018/192016/17 £ million 90 230 187 280 £0.7m £0.3m £0.6m £1.2m Notional outcomes Applicants removed from waiting list0 150 300 2022/232020/212018/192016/17
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255. Pilot exercises and future developments 5. Pilot exercises and future developments Social Security Scotland took part in a pilot data-matching exercise which identified limited fraud and error. We are also exploring the possibility of involving wider public sector bodies in the 2024/25 NFI exercise on a voluntary basis. Social Security Scotland – benefits pilot 2022 53. In 2022 a pilot exercise was undertaken with Social Security Scotland (SSS) to identify any instances where claimants received support but were not residing in Scotland, or where claimants appear to have claimed benefits more than once (eg, from more than one Scottish address). The pilot exercise included payments made in the three-month period from April to June 2021. 54. Around 45,000 lines of data relating to benefit payments were submitted for matching, resulting in the identification of 367 claimants who appeared to be residing outwith Scotland. Following review and corroboration of addresses by SSS there were just 17 cases where claimants were not entitled to benefits. Overpaid benefits of £16,450 were identified, a further £20,000 could have been paid out in relation to these claims, over the remaining eligibility periods. 55. Despite the identification of fraud and error, the number and value of cases was not deemed sufficient to justify the inclusion of this match type in the main biennial NFI exercise in 2022/23. The intention is to run another pilot in 2024/25 which may also include Adult Disability Payments for the first time. Inclusion of bodies on a voluntary basis 56. There are potential benefits from expanding the NFI to include more public sector bodies in Scotland. We invited Scottish housing associations and universities to participate in the 2024/25 NFI on a voluntary pilot basis. 57. While no universities have volunteered for participation, we are working with several interested housing associations. At this time, it is unclear how many of those interested will actually participate.
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26Appendix Appendix Estimated outcomes methodologies In some cases NFI outcomes include an estimated element for forward savings or for where no monetary value can be recovered The NFI uses the term ‘outcomes’ to refer to the financial value of fraud, error and overpayment that can be attributed to NFI data matching. In some cases NFI outcomes include an estimated element which seeks to capture: • The value of loss from a fraud or error detected because of an NFI match, in instances where no monetary value can be recovered - such as the value of recovering a property from a tenant who has fraudulently obtained that tenancy. We have called these ‘notional outcome estimates’ in our report. • The value of any future losses that may have been incurred without intervention as a result of an NFI match. For example, the value of future overpayments prevented through detecting and stopping a fraudulent or erroneous housing benefit claim. We have called these ‘forward savings’ in our report. Most NFI datasets have a methodology to calculate estimated outcomes. These methodologies account for: • data relevant to the fraud problem, including national published data and data from previous NFI cases • the policy context relative to the fraud problem • any regional variances that may result in the generation of estimate methodologies specific to a region or area • alignment where possible with relevant estimated savings methodologies used in other central government departments. All methodologies are reviewed prior to the start of each new NFI exercise. Any changes are reviewed by the Cabinet Office NFI Governance Board and approved by the Cabinet Office Fraud Prevention Panel. This panel consists of cross government counter fraud experts (including representatives from DWP, HMRC, NHS, MOD, BEIS, DFID, NAO, etc.) who review and challenge, where necessary, methodologies for calculating the estimated value of fraud prevention initiatives across government departments.
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Appendix 27 Once approved, these methodologies are built into the NFI web application to enable the estimated outcomes element to be automatically generated. A summary of the outcomes methodology calculations applied to NFI datasets is set out in the following table: Data match Basis of calculation of forward savings and estimated outcomes Council tax single person discount Forward savings – Annual value of the discount cancelled multiplied by two years. Council tax reduction scheme Forward savings – Weekly change in council tax discount multiplied by 33 weeks (increased from 21 weeks in 2020/21). Housing benefit Forward savings – Weekly benefit reduction multiplied by 21 weeks. Pensions Forward savings – Annual pension multiplied by the number of years until the pensioner would have reached the age of 85. Housing Tenancy Notional outcomes – £78,300 per property recovered, based on average four–year fraudulent tenancy. Includes: temporary accommodation for genuine applicants; legal costs to recover property; re–let cost; and rent foregone during the void period between tenancies (reduced from £93,000 in 2020/21). Housing waiting lists Notional outcomes – £4,283 for each case based on the annual estimated cost of housing a family in temporary accommodation, the duration a fraud may continue undetected and the likelihood a waiting list applicant would be provided a property (increased from £3,240 in 2020/21). Blue Badges Notional outcomes – Number of badge holders confirmed as having died multiplied by £650 to reflect lost parking and congestion charge revenue (increased from £575 in 2020/21). Concessionary bus travel Forward savings – Number of bus passes used fraudulently multiplied by £420. Based on average fraudulent use and reflecting two years forward use. Payroll Notional outcomes – £5,685 for each employee dismissed or resigns as a result of NFI matching. (up from £5000 in 2020/21).
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The National Fraud Initiative in Scotland 2024 Audit Scotland, 4th Floor, 102 West Port, Edinburgh EH3 9DN Phone: 0131 625 1500 Email: info@audit.scot www.audit.scot ISBN 978 1 915839 46 6