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National Fraud Initiative uncovers millions

The Auditor General’s report, published today, reveals that more than £49.4 million of fraud and overpayments have been found in Wales since the NFI began in 1996.

NFI is a biennial exercise which matches data within and across organisations, systems, and national borders to help public bodies identify potential fraud or error in claims and transactions.

The 2020-21 NFI exercise helped Welsh public bodies identify £6.5million of fraud and overpayments and in so doing protected financial resources needed to deliver vital public services. The NFI in Wales also helped organisations in other parts of the UK identify 153 cases of fraud and error amounting to £183,045.

The value of Welsh outcomes in NFI 2020-21 reduced by £1.5 million from the previous NFI exercise. This decrease is because the number of fraudulent or erroneous claims for Council Tax Single Persons Discount and Housing benefit identified through NFI fell. The reduction in outcomes in these areas was partly offset by an increase in the detection of ineligible applications for social housing and claims for COVID-19 business support grants. While overall outcomes have fallen, this is partly due to a timing issue. Many NFI participants started review of NFI matches later than normal due to work pressures arising from the COVID-19 pandemic. Late savings arising from the 2020-21 NFI exercise will therefore be reported as part of the NFI 2022-23 exercise.

Seven main areas generated almost 98% of the outcomes. These areas were; housing benefit, creditor payments, council tax discount, blue badges, COVID-19 business support grants, council tax reduction scheme and waiting lists.

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

For the first time, Welsh NFI matches were enriched by HMRC data provided under the provisions of the Digital Economy Act 2017. The HMRC data is proving highly effective in helping to identify applicants who have claimed means-tested benefits and discounts but have not declared income that should have been declared on their applications. The report highlights a case study which focused on this area.

Auditor General, Adrian Crompton said: “identifying £6.5 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. The success of the NFI depends on the proactivity and effectiveness of participant bodies in investigating the data matches, and it is disappointing that some Welsh bodies did not adequately engage in NFI 2020-21. However, I recognise that the public bodies faced considerable pressures due to the COVID-19 pandemic. We recommend that all bodies use our checklist to self-appraise their involvement in the NFI before and during the 2022-23 NFI exercise.”

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