Agenda Item No 12


The Vale of Glamorgan Council


Audit Committee 26th November 2013


Report of the Head of Accountancy and Resource Management


Single Fraud Investigation Service (SFIS)


Purpose of the Report

1.         To inform members of progress with the Single Fraud Investigation Service.


That the report is noted, and further reports are presented to the Audit Committee in order to provide updates on the progress of the Single Fraud Investigation Service.

Reason for the Recommendation

To keep Audit Committee informed of the progress of the Single Fraud Investigation Service and the likely effect on service provision.


2.         The coalition government's strategy for tackling welfare fraud and error, published in October 2010, set out a commitment to create the Single Fraud Investigation Service (SFIS) to investigate benefit and tax credit fraud and, when commenced, Universal Credits.  SFIS would be part of the Department for Work and Pensions (DWP).  Universal Credit was introduced from April 2013, but claimants with existing relevant benefits continue to receive those benefits until the full migration to Universal Credit is completed.

3.         This commitment will be achieved by bringing together investigation staff from local authorities, DWP, and Her Majesty's Revenues and Customs (HMRC).  The aim is to reduce fraud and error overpayments in the welfare system by one quarter, £1.4 billion, by March 2015.

4.         In April 2013, Council Tax Benefit was replaced by the Council Tax Reduction Scheme.  This new scheme is administered directly by the Council and will not be included under the SFIS remit.  Investigation of fraud involving this scheme will be the responsibility of the Council and legislation is in place to allow this.

5.         The formation of SFIS will bring together expertise from DWP, HMRC and local authorities with the aim of all working together under a single policy and set of operational procedures.

6.         Consultation was conducted in September 2011 among the participants and a decision was made that, in the short term, Investigators would stay with their original employing organisation, retaining their terms and conditions, while working under one banner of SFIS with a planned start date of April 2013.

Relevant Issues and Options

7.         The amalgamation of investigation staff from DWP, HMRC and local authorities has been postponed pending the outcome of studies within a number of pilot sites including; Corby Borough Council, Glasgow City Council, London Borough of Hillingdon and Wrexham Council.   It is understood that the pilots are realising benefits, across government, and have provided many lessons for a future service.

8.         In addition, the SFIS project is drawing expertise from DWP, HMRC and local authorities and as a result; a Group Auditor based within the Internal Audit Section's HB/CTB Fraud Investigation Team has been seconded to the project team since March 2013.  The initial secondment was for a period of 6 months, however, this has been extended until February 2014.

9.         The SFIS project team are in the process of finalising the business case and considering the options for delivery, these include:

Introducing SFIS as a partnership;

Introducing SFIS as a single organisation within DWP;

Introducing SFIS as a single organisation, but owned by another organisation;

Delay the introduction of SFIS until after the full roll out of Universal Credit;

Take no action and leave the services as they are.

10.      Evidence to date points to a recommendation to introduce SFIS as a single organisation within DWP.  In August 2013 the DWP programme board recommended that SFIS be introduced within the DWP during 2014/15 and this has since been ratified by the Permanent Secretary and Minister.  At this stage, the proposed approach is still a recommendation and more work will need to take place, including finalising the full business case and seeking agreement of funding with HM Treasury.

11.      The current planning assumptions are that, as SFIS is implemented;

The investigation of HB/CTB fraud will move to the DWP;

The investigation of Local Council Tax Scheme (LCTS)/Tenancy Fraud etc. will remain with local authorities;

The amendment of HB/CTB claims will remain with local authorities;

The calculation and recovery of any HB/CTB overpayments will remain local authorities;

DWP investigators will request information and evidence from local authorities to support an investigation;

Single prosecution bodies will be used (Crown Prosecution Service (CPS) for England and Wales and Procurator- Fiscal (PF) for Scotland).

12.       As part of the next phase of project activity, the SFIS project team will be working closely with Human Resources experts to understand the impacts on people working on fraud investigations and prosecutions, including looking at any potential TUPE (Transfer of Undertakings Protection of Employment) or COSOP (Cabinet Office Statement of Practice) implications.

13.      The Audit Committee will be regularly updated as more information becomes available.

Resource Implications (Financial and Employment)

14.      Currently Auditors tasked with Housing Benefit investigation are continuing to work as usual. When SFIS is introduced the Council will retain employment responsibilities until such time as SFIS becomes an organisation separate from DWP/HMRC and the Local Authority. There is currently no timetable for this to happen.

Sustainability and Climate Change Implications

15.      None directly from this report.

Legal Implications (to Include Human Rights Implications)

16.      The formation of SFIS is under statutory powers introduced by the Welfare Reform Act 2012

Crime and Disorder Implications

17.      Participation in this initiative will assist the Council in protecting the public money it looks after.

18.      Pursuing initiatives to prevent, detect and deter crime is encompassed within the terms of reference under which Internal Audit operate.

Equal Opportunities Implications (to include Welsh Language issues)

19.      None as a direct consequence of this report.

Corporate/Service Objectives

20.      The work of Internal Audit is intended to assist in the achievement of all corporate and service objectives.

Policy Framework and Budget

21.      The proposals in this report are in accordance with the policy framework or budget.

Consultation (including Ward Member Consultation)

22.      No further consultation is proposed.

Relevant Scrutiny Committee

23.      Corporate Resources

Background Papers


Contact Officer

Helen Smith - Operational Manager - Audit Tel: 01656 754901

Officers Consulted

External Audit Manager - Grant Thornton UK LLP

Responsible Officer:

Alan Jenkins - Head of Accountancy & Resource Management