New research released today by CIPFA shows that prior to the COVID-19 pandemic, grant fraud represented just 0.3% of the total identified instances of fraud in the UK's local government sector.
The latest CIPFA Fraud and Corruption Tracker (CFaCT), which includes local government data between 1 April 2019 and 31 March 2020, provides a baseline illustration about the prevalence of grant fraud in the public sector, just before unprecedented levels of COVID-19 grant funding for councils were released by the government in March of last year.
The report follows previous warnings from the National Crime Agency and other law enforcement bodies of an increase in cases related to suspected COVID-19 grant fraud. Valued at an estimated loss of £36.6m, the report reveals only 161 instances of grant fraud occurred in 2019/20.
Marc McAuley, CIPFA Head of Counter Fraud Operations said:
"Today's findings give the local government sector a strong baseline to measure the true scale of COVID-19 grant fraud. Before the pandemic gripped the UK, this type of financial crime was largely negligible.
"There's no doubt that the prevalence of grant fraud has grown immensely over the past year, as the government released several waves of grant funding for local authorities to distribute.
"Only time will tell how widespread this activity is. But for now, we have the starting point we need to measure it."
The report also shows that council tax continued to be the largest area of identified fraud for councils, with more than 30,600 cases totalling £35.9m in 2019/20.
This year, 32% of respondents also stated their organisation had been a victim of a Distributed Denial-of-Service (DDOS)/hacking attack in the last 12 months, a 5% increase from the previous year.
Survey respondents also expressed concern about councils' inability to tackle usual areas of fraud due to resource being re-directed into the processing and review of COVID-19 business grants.
Read the full report here.
Notes to Editor
This year's results are based on responses from 98 local authorities. An estimated total volume and value of fraud has been calculated for all local authorities in England, Wales, Scotland and Northern Ireland. Missing values are calculated according to the size of the authority and for each type of fraud, an appropriate universal measure of size has been selected such as local authority housing stock for housing frauds.
It should be noted that the response rate for the 2019/20 survey was significantly lower than previous years, which was to be expected, due to the impact of COVID-19 on local government funding/resources.
The CFaCT survey covers the pre-pandemic period of 2019/20 and therefore the data in this report represents what local authorities were experiencing before the outbreak in 2020.
CIPFA, the Chartered Institute of Public Finance and Accountancy, is the professional body for people in public finance. CIPFA shows the way in public finance globally, standing up for sound public financial management and good governance around the world as the leading commentator on managing and accounting for public money.