Councils are being told today that they could save hundreds of millions of pounds if they took tougher action against fraud. The Audit Commission says people fraudulently claiming a single person discount on their council tax could be costing taxpayers almost 2 million pounds a week and tenancy fraud could be tying up at least 50,000 council and housing association homes.

‘Protecting the Public Purse – Local Government Fighting Fraud’ says councils in England spend 154 billion pounds a year on providing services but they will face a severe challenge in coping with increased demand for their services if they do not do more to tackle fraud. While houses worth 2 billion pounds are being wrongly occupied, waiting lists have increased by more than 50 per cent in the last six years and the number of people in need of social housing is forecast to reach 2 million by 2011.

The Commission’s Chief Executive, Steve Bundred, said: “It has never been more important that councils fight fraud. Every pound lost to cheats is a pound that can’t be used for people in real need.”

The report calls on councils to reassess urgently their counter fraud plans and to make sure staff understand, and have faith in, whistle-blowing arrangements. It includes a series of case studies, including the work of Croydon council which, it says, shows local authorities are more effective if they work with other organisations to target the most costly frauds.

Mr Bundred added: “‘The Audit Commission will launch an annual survey of existing and emerging risks and levels of identified frauds and associated costs. This will enable us to track trends and highlight developing threats.” The first survey will cover the last financial year and will provide a base against which future levels of fraud can be measured.