NORTH YORKSHIRE COUNCIL AUDIT COMMITTEE

23 JUNE 2025

ANNUAL COUNTERFRAUD REPORT

2.0 BACKGROUND

2.1 Fraud is a significant risk to the public sector.Annual losses due to fraud and error are estimated to be as high as £81 billion in the United Kingdom. North Yorkshire Council engages Veritau to deliver a counter fraud service. The service helps the Council to mitigate fraud risk, investigate suspectedfraud, and to take appropriate action when it is detected.

2.2 Details of the counterfraud activities undertaken in 2024/25 and the outcomesfrom this work are contained in the Counter Fraud Annual Report which is attached at appendix 1. The report detailslevels of savingsachieved by the Council as a result of counter fraud work. The report also provides the Committee with information about whistleblowing concerns raised with Veritau during the year.

DANIEL CLUBB

Assistant Director– Corporate Fraud

Report preparedand presented by Daniel Clubb,Assistant Director – Corporate Fraud Veritau - Assurance Services for the Public Sector

County Hall Northallerton

5 June 2025

Background Papers:

None.

Appendices:

Appendix 1: Counter Fraud Annual Report 2024/25

CONTENTS

3 Background

3 Key Performance Figures

4 Analysis of Results

5 Whistleblowing

6 Counter Fraud Management

8 Appendix A: Counter Fraud Activity

BACKGROUND

1 Fraud is a significant risk to the public sector.Fraud is the most common offence in the UK, accounting for 41% of all crime1.The National Audit Office estimates that fraud and error cost the taxpayerbetween £55 and

£81 billion in 2023/24 and that only a fraction of this was detected2. Financialloss due to fraud can reduce a council’s abilityto support public services and can result in reputational damage.

2 Veritau provides a corporate fraud service to North YorkshireCouncil which aims to prevent, detect and deter fraud and related criminality. We use qualified criminal investigators to support departments with fraud prevention, proactively identify issues through data matching exercises, and investigate suspected fraud. To deter fraud, offenders face a range of outcomes, including prosecution in the most serious cases.

3 The counter fraud team also plans and takes part in counter fraud campaigns (eg the National Fraud Initiative), undertakes fraud awareness activities with staff and the public, and maintains and updates the Council’s counter fraud framework and associated policies.

4 This report providesthe Audit Committeewith a summary of counterfraud activity completed in 2024/25. It also details whistleblowing reports received and the types of concerns that have been reported.

KEY PERFORMANCE FIGURES

5 Protecting public money and recovering incorrectly obtained funds is a priority for the Council. Veritauhelped the Councilto achieve £240.7kin counter fraud savings in 2024/25.

6 The counter fraud team received and triaged 439 referrals of suspected fraud during the year. This included reports from the public, council employees, external agencies, and issues identified through proactive exercises. The team completed 114 investigations, and 47% of these cases resulted in a positive outcome3.

7 As a result of investigative work, warnings were issued to 18 people in respect to claimsfor council tax or NNDR reductions/discounts, incorrectly obtaining council funding, and providing false information to support a housing application. Two applications for school places were declinedafter investigations found the erroneous home addresses had been provided.

8 A detailed summaryof performance can be found in annex A, below.

1 Progresscombatting fraud (Forty-Third Report of Session2022-23), PublicAccounts Committee, House of Commons

2 An overview of the impact of fraud and error on publicfunds, NationalAudit Office

3 Actual outcomes vary by case type but include, for example, benefitsor discounts being stopped or amended, sanctions, prosecutions, or management action taken.

ANALYSIS OF RESULTS

9 Veritau has an annual targetof £225k to achieve in fraud relatedsavings. The savings for 2024/25 comprise the repayment of debt following investigative work, a maximum of one year’s future savings if an investigation has stopped an ongoing fraud that would otherwise have continued, and the prevention of any one-off payments that would have been made without our intervention. The chart below shows the areas where savings were achieved.

10 The following chart details the range of services that Veritau supported through investigative work in 2024/25.Council Tax, NNDR,and Council Tax Reduction Scheme investigations continue to be a significant portion of the team’s work.

WHISTLEBLOWING

11 North Yorkshire Council’s whistleblowing process provides employees with an outlet to raise concerns about potential wrongdoing taking place within the Council. Veritau has overall responsibility for managing the policy. The counter fraud team works with Council officers within Human Resources to ensure that all concerns raised are dealt with appropriately. Awareness of the policy is regularly raised with all Council employees including annual publicity for World Whistleblowers’ Day in June. Two e-learning modules were rolled out in 2024/25;one aimed at all staff to raiseawareness of the policy and process, and a second module to highlight the role and responsibilities of managers in the whistleblowing process.

12 Veritau logged 23 concerns raisedthrough whistleblowing channelsduring the year, however, on review not all reports met the criteria for whistleblowing4. Reports received were either shared with the appropriate service for action or investigated by the team depending on the nature of the concern. Where issueswere substantiated, outcomesincluded updates and improvements to procedures.

13 The following figuredetails the categories of whistleblowing reports received in 2024/25.

4 For example, some matters relatedto individual grievances covered by the Council’s Resolving Issues at Work Process.

COUNTER FRAUD MANAGEMENT

14 Veritau undertakes a range of non-investigative activityto support the development of counter fraud arrangements at the Council.

15 North Yorkshire Council entered its second year of operation in 2024/25. Continuing to develop relationships with staff across the authority and raising awareness of fraud amongstCouncil employees and the publicis an important function of the counter fraud team. Information about the Council’s whistleblowing policy was published to all employees in June 2024. Cybercrime is also a high-risk area for the council. In October 2024, as part of Cyber Security Awareness Month, Veritau worked alongside the Council’s communications team to raise awareness amongst all employees of the threat of cybercrime, how to spot it, and how to prevent it from happening.

16 Training has also been providedto social care managers, staff working in the Direct Payments team, social care staff, and HR colleagues. The training covered how the Council is affected by fraud, the role of the counter fraud team, different fraud types, how council employees can identify other signs of fraud and report them, and how to spot false or forged documents. The counter fraud team also ran a counter fraud workshop at the annual school bursar conference.

17 In March, Veritauproduced an updatedCounter Fraud Plan for the Council. It considered fraud risks to the authority and included a development plan for activities in 2025/26. An update to the Counter Fraud and Corruption Policy was also approvedby the Committee as part of a review of the fraud policy framework.

18 The counter fraud team is an activeparticipant in regionaland national counter fraud groups. Veritaurepresented the Councilin May 2024 at a meeting with the Public Sector Fraud Authority leadership team and Baroness Neville-Rolfe, Minister of State (Cabinet Office) for the last

government. The meeting focussedon sharing best practice and increased collaboration between local authorities and government to combat public sector fraud5. Veritau is also a member of the Yorkshire and Humber Counter Fraud Group and Tenancy Fraud Forum.

19 Veritau participated in and chaireda national FightingFraud and Corruption Locally (FFCL) working group examining issues surrounding adult social care fraud. The group published a national report and toolkit designed to encourage and help councils to examine and address adult social care fraud6. The team has presented the findings to local authority and counter fraud professional at a number of national and regional events.

20 Veritau shared alertson fraud threatsidentified by partnersin the counter fraud community, including the National Anti-Fraud Network (NAFN). “Career polygamy” has been a high profile topic nationally. This type of fraud occurs when someone illicitly works full time for multiple organisations at the same time. The team provided regular intelligence to the Council’s Human Resources Department about individuals who are found to be polygamously working for other organisations.

21 The team maintainsa fraud reportingtelephone number and a dedicated email address7. Council employees and members of the public are encouraged to report any concerns they have about fraud affecting the Council.

5 “Trailblazing” councils save millionsworking with government counter fraud squad, HM Government

6 AdultSocial Care FraudToolkit, FightingFraud and Corruption Locally Board

7 Any person who wishes to report fraud against the North YorkshireCouncil can call 0800 9179 247 or email counter.fraud@veritau.co.uk

APPENDIX A: COUNTER FRAUD ACTIVITY 2024/25

The table below shows the success rate of investigations and levels of savings achieved through counterfraud work in 2024/25.

	2024/25 (Actual: Full Yr)	2024/25 (Target: Full Yr)
Amount of actual savings (quantifiable savings - eg repayment of loss) identified through fraud investigation	£240,700	£225,000
Covid-19 grants savings8	£72,435	n/a
% of investigations completed which result in a successful outcome (eg payments stopped or amended, sanctions, prosecutions, and properties recovered)	47%	30%

Caseload figuresfor the periodare:

	2024/25 (Full Year)
Referrals received	439
Number of cases under investigation9	103
Number of investigations completed	114
Number of verification cases completed10	4

8 Composed of recoveryof incorrectly obtainedfunding and transferof outstanding recoveryto central government following mandated Councilaction

9 As at the end of each financial year on 31 March 2025

10 Verification cases are reviewsof applications for Right to Buy and school places

Summary of counter fraud activity

Activity

Work completed

Data matching

The 2024/25 National Fraud Initiative (NFI) data matching exercise began this year. Checks were made to ensure that the Council met government data matching requirements and best practice. Data held by the Council was securely sent to the Public Sector Fraud Authority (PSFA) in October 2024. Further data was submitted to PSFA in January 2025 as part of the annual Council Tax Single Person Discount exercise. Matches from both exercises are currently being reviewed by the counter fraud team and relevant services.

Fraud detection and investigation

The counter fraud team promotes the use of criminal investigation techniques and standards to respond to any fraud perpetrated against the council. Activity completed in 2024/25 included the following:

· Adult Social Care fraud – The counter fraud team completed 15 investigations in this area. Savings of £72.5k were calculated over the year.

· Council Tax Reduction Scheme – The team investigate allegations of abuse of the scheme. This includes joint investigations with the Department for Work Pensions where state benefits are also in payment. Twenty-four investigations were completed in this area, with warnings being issued to seven individuals for incorrectly obtaining reductions. A total of £44.3k in savings was identified in this area over the course of the year.

· Council Tax fraud – Nineteen investigations were concluded relating to council tax liabilities. Incorrect claims for Single Person Discount accounted for 79% of the cases investigated. Work in this area helped the Council achieve £42k in savings.

· Housing fraud – Two investigation were completed in 2024/25. One resulted in an individual being issued a warning for providing false information on behalf of family members when applying for housing.

· Internal fraud – Veritau completed 15 investigations into potential internal fraud or misconduct. Outcomes included helping services strengthen controls to prevent future issues and providing information for disciplinary processes.

Activity

Work completed

· External or third party fraud – Fifteen investigations relating to attempted frauds against the Council by third parties were completed. One person was issued with a warning for incorrectly continuing to receive funding that they were not entitled to. Other cases resulted in advice to services to help strengthen controls.

· Parking fraud – One investigation relating to an application for a disabled parking badge was completed. Fraud was not substantiated.

· Education verification – The counter fraud team works with Council officers to investigate and deter false applications for school places. Four applications for school places were verified in 2024/25. In two cases, the home address used for a school place was found to be misstated resulting in school placements being declined.

· Covid-19 related fraud – There are no ongoing investigations relating to Covid-19 related fraud, however the Council continues to recover money and be protected from financial loss as a result of previous investigations instigated for former district and borough councils.