Pounds 50m fraud incentive for councils

LOCAL AUTHORITIES are to be given a pounds 50m incentive to act as government agents in a crackdown on fraud in housing benefit and council tax rebates, it was announced yesterday by Peter Lilley, the Secretary of State for Social Security, writes Colin Brown.

Mr Lilley told the cross-party Commons select committee on social security that the money was being offered in an attempt to prevent an estimated pounds 180m being lost in fraud.

'In the present arrangements, there is a disincentive for local authorities to identify fraud in housing benefit,' Mr Lilley said. 'We are proposing to reverse that and introduce an incentive for local authorities which will be able to keep some of the savings.

'Precise discussions on how this will be implemented are under way. Some of the savings - about pounds 50m - will be kept but pounds 180m will be the extra contribution to the savings that my department is expecting to make.'

Councils will keep 15 per cent of any savings through their anti- fraud efforts above a threshold point, but they will be given higher shares - 20 per cent and 17.5 per cent - in the first two years.

Mr Lilley estimated Giro cheques worth pounds 130m were reported missing each year, and about pounds 85m of Giro cheques were subsequently cashed fraudulently.