Agenda item

The purpose of this report is to update the Audit Committee on work undertaken by the Corporate Fraud Team within the Council covering the period 1 April 2020-30 September 2020. 

The Interim Executive Director of Finance provided a brief introduction to the report which provided an update to the Committee on the work undertaken by the Corporate Fraud Team since the previous report in September 2020 and the steps being taken to recover any monies owed to the Council.

In response to a question from the Chair in connection with fraudulent Covid grant claims, Members were advised that the Council was required to undertake both pre and post payment checks which were quite onerous.  The Council also cooperated with other local authorities and there was a national database to cross-verify to identify any large scale fraud.   There had initially been a drive to pay out Covid business grants quickly with an emphasis on post-payment checks however with the other grants coming online more pre-payment checking was now being undertaken in relation to these grants.  The Council continued to report to Government and participate in national data matching exercises.

Councillor Dickinson highlighted pressure Councillors were under from those businesses or individuals who did not fit any of the criteria to apply for a business grant and the need to ensure that if businesses had received grants to which they were not entitled or had submitted fraudulent claims then this be reported openly and questioned the timescale for such a report.  He also asked that Audit be advised specifically in relation to discretionary grant funding and how this was applied, where the funding was spent, what proportions and whether or not it should have been given. The Interim Executive Director of Finance advised that appropriate legal action would be taken against any business found to have claimed grants fraudulently and this would be in the public domain in line with prosecutions undertaken in relation to Council Tax and Business Rate fraud.  The timing of any report summarising the outcome of post payment checks could not be confirmed as the team were still in the process of administering grants.  It was also the intention of Government to produce a national report which would provide some context. 

Councillor Hill questioned if any prosecution could be undertaken against directors of companies who had gone into administration following the submission of fraudulent claims.  The Interim Executive Director of Finance stated she believed that there would be the ability to pursue Directors if there was evidence that this had been done fraudulently however businesses were liquidated all the time and even more so during the pandemic. Substantial evidence would be required that the business had been liquidated for this reason and therefore would need to be assessed on a case by case basis.   The Government had advised that it would not claw back grants from local authorities on the basis of fraudulent payments provided that the relevant guidance had been followed and checks undertaken. 

Councillor Purvis thanked the teams for their work in distributing the grants and questioned if any more details could be provided in relation to the other 15 cases of external fraud on page 45 of the pack and if it was possible to name the triathlon cyclist on page 47 of the pack in relation to insurance fraud.  The Corporate Fraud Manager advised that the 15 cases would generally be in relation to DWP referrals which were passed over without any involvement.  In relation to the cyclist Members were advised that investigations would always be carried out into high value claims and that whilst the cyclist in question had been spoken to when it was suspected the offence had been committed unfortunately she had not been cautioned at that time and therefore prosecution action was not able to continue. 

Councillor Oliver, Cabinet Member stated that the business grants had initially been for those with fixed property costs, more funding had been provided in the Budget and the eligibility criteria had been extended which would allow more to apply, however it would still not allow all businesses to apply and these grants would be paid out as soon as possible.  He advised that the process was a cross departmental effort from the Council and a lot of work had been undertaken over the previous 12 months.  Some home based workers would now be eligible to claim but some would still not be able to.  He stated that whilst the Government would not claw back fraudulent payments provided that the Council could demonstrate that checks had been undertaken, the Council could still go back to the business to pay back the grants made to them.  Councillor Dickinson stated that he hoped that a robust system was in place to prevent abuse and asked that when a report was compiled this would also look at the decision making process and highlighted the original statement that £8m would be paid to Advance Northumberland, the Council’s own wholly owned company which was subsequently changed.   Councillor Oliver confirmed that proper checks were in place but this would not stop all fraudulent claims. 

The Chair thanked the Officers and their teams for their work and outlined the recommendation included in the report and it was unanimously

RESOLVED that the progress in work undertaken by the Corporate Fraud Team since the last report in September 2020 and the steps being taken to recover any monies owed to the Council be noted.