The 2006/2007 NFI exercise marked the first time recipients of the council tax single person discount were cross-checked with the electoral register. A pilot exercise, involving Cardiff Council, successfully identified savings of over £2.5 million to the public purse.

The NFI works by comparing data from different public bodies to find suspicious cases. The value of fraud detected by the NFI has increased due to the increasing sophistication of the methods the NFI uses and the willingness of individual bodies to investigate the cases.

In some areas, such as housing benefit, the evidence suggests the value of fraud and overpayments identified by the NFI has reduced, and this suggests that previous exercises of NFI have been successful in eliminating many of the long running, and hence high value frauds.

Developments have also been made to the security of the National Fraud Initiative producing significant benefits in 2006/2007. The introduction of a new secure web-based tool to record results has removed the risk associated with the physical transfer of datasets.

Seventy Welsh public sector bodies participated in the 2006/2007 exercise with participants including local authorities, police authorities, fire authorities, NHS Trusts, local health boards, probation boards and the National Assembly for Wales.

Whilst this report produced some significant findings, there are a number of public services where there is scope for applying data matching further to detect and prevent fraud. The Wales Audit Office has indicated its commitment to the development of the NFI and other data matching exercises.

The Auditor General, Jeremy Colman said today:

“The results show what can be achieved when public sector bodies work together to combat fraud. Fraud is a serious issue; it reduces the money available for public services and confidence in the bodies that provide them. The NFI has been vital in identifying and combating fraud, its long term value for the public sector has become immeasurable.”

Notes to Editors:

• The NFI was set up to enable public sector bodies to match claimant data across different service areas and geographical boundaries systems to identify potentially fraudulent and erroneous payments and has become the UK’s premier public sector fraud detection exercise.
• The NFI exercise began in 1996 and is now run biennially. To date it has been used to identify fraud and erroneous payments totalling over £450 million for the UK; £11.5 million in relation to Wales.
• The NFI requires authorities to submit information in respect of their financial systems. This information relates to housing benefits, rent, rebates, pension payments, payroll, payments to asylum seekers, council tenancies, students awards, records of deaths etc.
• The Wales Audit Office is independent of government and is responsible for the annual audit of some £19 billion of annual public expenditure.
• The Wales Audit Office was created on 1 April 2005 following the passing of the Public Audit (Wales) Act 2004, which expanded the functions of the Auditor General for Wales and enabled the transfer of staff from the Audit Commission in Wales and National Audit Office in Wales to his employment.