Council business rate changes may drive fresh thinking on fraud

Published 06 February 2017

With UK councils losing an estimated £2.1bn to fraud annually, upcoming changes to business rate provision may provide fresh impetus to tackle error

By Alan Mo

In this era of extended austerity and growing service demand, local authorities are under huge pressure to maximise their budgets. Despite this, councils are still losing around £2.1bn per annum to fraud; money that could have been invested in delivering essential services to local people. To put this into context, this is roughly equivalent to the cost of providing fire and rescue services in England. As local authority services continue to be cut, councils will find it difficult to justify sustained losses to fraudsters.

The imminent phasing out of the Revenue Support Grant and national non-domestic rates (NNDR) reform also brings potential business rates fraud into the mix.

Tackling this may have been low on the agenda at a time when business rates went to the Treasury and came back to councils as a grant; but the move to allow councils to keep 100% of business rates will encourage local authorities to refocus efforts to maximise income collected and reduce fraud.

As local authorities increase efforts to tackle fraud, this will open up opportunities for suppliers to support the underlying technical infrastructure, especially as councils are still investing in data warehousing platforms to support efforts to identify fraud through the matching and mining of data.

But some big hurdles remain, not least the loss of fraud investigation staff to the DWP's Single Fraud Investigation Service (SFIS), which is why a compelling case can be made for more shared services, or outsourcing the entire investigation service to a private partner.

Nevertheless, project leaders still need to develop strong business cases before budget holders will agree to release funds to support any 'invest to save' initiative. With this in mind, suppliers willing to take on more risk to fund a 'save to invest' approach, similar to the approach taken with the London Fraud Hub, could find favour amongst decision makers.

GlobalData Public Sector subscribers can read the full report on 'Tackling Fraud in Local Government' (login required) here.


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