Councils conned out of £135m last year

Councils were fleeced of £135 million through nearly 120,000 frauds last year, spending watchdogs said today.

Scams involving the 25% single person council tax discount cost authorities £90 million alone after a "sharp increase" in claims, the soon-to-be abolished Audit Commission said.

There were also more than 4,000 fraudulent uses of disabled "Blue Badge" parking permits, according to the survey of English councils.

The commission - one of scores of public bodies being scrapped by the Government as part of cost-cutting measures - defended its work and warned that significant council staff cuts could weaken local authority controls.

Next year's "valuable" fraud survey would be the last, it added.

Other scams identified saw people claiming student council tax discounts using fake colleges and addresses, some of which turned out to be high street shops and restaurants.

Some 50,000 properties worth £2 billion had also been illegally sub-let or occupied, while Birmingham City Council uncovered £5.8 million of benefit overpayments.

The report - called Protecting the Public Purse - revealed that false benefit claims were the most common fraud against local authorities.

There were 63,000 housing and council tax benefit cases, amounting to a loss of £99 million.

But tenancy fraud - where people live in council houses to which they are not entitled or illegally sub-let them - could end up doing the most damage, the report warned.

The survey concluded: "With the recently announced abolition of the Audit Commission, our detected fraud survey for local government and the publication of the results will cease.

"The survey provides valuable information about the performance of local government in tackling fraud.

"It also helps to identify emerging fraud risks and provides an early warning system for counter-fraud staff."

The North West was the region with the highest proportion of fraud, with 19.6% of the total. London was next in line, with 18.8%.

The South West and North East contributed the lowest, with 6.5% each.

Communities and Local Government Secretary Eric Pickles announced in August that the commission was being disbanded, saying it had "lost its way".

Local Government Minister Bob Neill said: "It is more important than ever that councils are getting value for taxpayers' money and rooting out waste.

"Every year fraudsters are fleecing councils out of millions of pounds that should be being spent on protecting frontline services.

"Local authorities need to continue working to clamp down on the fraudsters stealing from the public purse, improve detection, increase protections and recover losses.

"Alongside other measures the simple act of increasing transparency by putting all spending over £500 online will bring in an extra level of checks and balances and help to identify and eliminate fraud."