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Fraud and Risk Focus Blog

UK Budget 2020: Coronavirus and local authorities

19 March 2020

In the recent Budget, the UK Chancellor of the Exchequer, Rishi Sunak, stated a fundamental review of the business rates system in the autumn of 2020. We are hoping this review will include measures to help local authorities fight fraud in some of their higher targeted activities. Areas prone to fraud in local authorities include: exemptions, discounts, avoidance and falsely claimed small business rates relief (which incidentally also gets a boost in the budget announcement).

Let’s talk Corona

The first thing on many minds is how the government is reacting to the Coronavirus pandemic. So far around £350bn has been committed by the government to tackling Coronavirus - with ‘whatever it costs’ to be spent on NHS and staffing levels, as well as local authority spending to support social care and the vulnerable.

We already know that councils’ social care packages have become a key target for fraudsters. Coronavirus will be making the vulnerable even bigger targets for fraudsters trying to offer them ‘aid’, whether it be selling them fake vaccines, selling false life insurance or scam pension investments etc.

Local Authorities will also see many people trying to misrepresent their circumstances in attempt to receive social benefits.

Consequently, those commissioning services at the local level need to be alert to red flags and ensure they are making necessary checks.

Infrastructure

A large amount of money has been pledged for construction and infrastructure, with £1.5m for Further Education colleges, £120m for eight new Institutes of Technology, £95m to invest in high quality facilities and industry-standard equipment to support the rollout of T levels and £27bn for transport routes, such as road projects.

These infrastructure projects mean construction has to take place, which will involve the purchasing and buying of supplies and the hiring of additional staff, with all of these areas open to procurement and contract fraud. When hiring additional staff and using contractors, buyers should be vigilant. Cifas members can use both the National Fraud Database and Internal Fraud Database for supplier checks and for vetting companies and individuals, provided compliant Fair Processing Notices have been seen.

Small Business Rate Relief

The government will also provide an additional £2.2 billion funding for local authorities to support small businesses that already pay little or no Business Rates through the Small Business Rate Relief (SBRR). This will provide a one-off grant of £10,000 to around 700,000 business currently eligible for SBRR or Rural Rate Relief to help them meet their ongoing business costs. For a property with a rateable value of £12,000, this grant is one quarter of their rateable value, or comparable to three months of rent.

It is estimated that there could be over £25m worth of fraud being perpetuated by businesses falsely claiming SBRR across England, according to data analytics experts Destin Solutions.

Additionally, local authorities will also be given a £500m Hardship Fund. The details of what this means are yet to be unveiled, but as with all awards involving money, the application process needs to be robust in order to minimise the opportunities for fraudsters to exploit the fund.

Destin Solutions also found that information provided by small businesses claiming relief has historically been extremely difficult for Local Authorities to verify due to a lack of resources and an inability to access a country-wide view of businesses and the properties they occupy. Now with coronavirus forcing many businesses to shut or limit sales, it will be hard to say how many will need and request relief and there may be a number of fraudulent cases.

Local Authorities work hard to deliver services with tight resources to ensure that valuable services are directed to genuine applicants. Since they are able to retain a portion of business rates they will want to ensure they maximise this.  

This is again where our databases become so valuable. Once one local authority files a case for a fraudulent application, every other member will be protected from facing the same instance of fraud, in turn eliminating many repeat offenders.

If you are a Local Authority interested in finding out more about how Cifas can help protect you against many types of fraud, please contact our Director of Local Government Rachael Tiffen.

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Posted by: Rachael Tiffen

Rachael is Local Government Lead at Cifas.

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Posted by: Rachael Tiffen

Rachael is Local Government Lead at Cifas.

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