A local authority councillor has been imprisoned for housing benefit fraud – one of a number of types of fraud which is estimated to cost councils £2.1 billion per year.

Shelina Akhtar was sentenced to 16 weeks in prison earlier this month after she admitted subletting her housing association home whilst also claiming benefits for the property.  The 33-year-old pleaded guilty to three charges of failing to notify the authority of a change in her circumstances.  She now faces being disqualified from holding office as a councillor.

Ms Akhtar’s case is the tip of the iceberg when it comes to tenancy fraud, with as many as ten per cent of social houses being unlawfully sublet in London and as many as one in 16 social homes being sublet nationally.

In addition to housing tenancy fraud, local authorities are at risk of fraud relating to council tax and business rates, procurement, pay, pensions, recruitment and blue badge schemes. Indeed, fraud is estimated to cost local authorities £2.1 billion per year (or £95 per household).

Cobbetts’ Fraud and Risk Services team is working with local authorities to develop legal funding solutions to help combat this problem, which has been identified by the Government as an area where savings can be made and stolen money recovered.

Councils can use various strategies to prevent fraud, including credit checks to stop tax and tenancy fraud and background checks to help stop criminals obtaining jobs in sensitive areas.  If fraud is detected, local authorities can take a number of steps to find, freeze and obtain assets and prosecute fraudsters.  They also now have the benefit of being incentivised by certain legislation such as the Proceeds of Crime Act 2002 which enables a local authority to retain a percentage of monies recovered from fraudsters for their own budgets.

Arun Chauhan, Director of Cobbetts’ Fraud and Risk Services team, said: “Unfortunately, the case of Ms Akhtar is just a high profile example of a problem that is all too common for local authorities.  The problem of fraud is one that councils can ill afford to ignore in these straitened economic times.

“However, with specialist help, local authorities can take steps to prevent fraud and recover assets from fraudsters.” Cobbetts was the sole law firm to sponsor the Fighting Fraud Locally conference in December at which the Government’s strategy to combat fraud against local authorities was unveiled.

The conference, which was attended by hundreds of senior figures from local authorities across the UK, enabled councils to share best practice in fighting fraud.  The conference heard how measuring fraud risk, taking proactive preventative measures, focusing on high risk areas such as procurement and having specialist counter-fraud teams can help reduce fraud.