Public sector organisations saved £41m following a data mining project that involved 470 local authorities, police and fire authorities, pension agencies and civil service bodies, writes Mike Simons.
The National Fraud Initiative (NFI) is promoted by public finance watchdog the Audit Commission.
Andrew Foster, controller of the commission, said, "The NFI has been a great example of the public sector working in partnership and harnessing the power of new technologies to bring real benefit in preventing fraud and ensuring the best use of public money."
Despite this endorsement, however, the exercise could fall foul of the Data Protection Commission, which places strict limits on information sharing.
Key areas of fraud uncovered by the initiative include:
The NFI began in 1993 and has been expanded into a nationwide exercise as part of the statutory audit of local government.
In the latest exercise, some 3.9 million housing benefit records were matched against databases holding 2.1 million pension fund records, 2.6 million payroll records, 900,000 student awards records and 4,000 market traders' records.
The NFI process required the collection, cleansing, matching and analysis of data. The Audit Commission specified a timetable and format for the presentation of data, but noted "failure to meet the data specification" was "a common problem".
The Audit Commission complained that millennium bug work had affected some councils' ability to take part in the initiative. Data cleansing was a cause of difficulty and the Audit Commission called for higher standards from local authorities.
"All problems with quality of data are logged and passed back to the councils with their results," said the Audit Commission. "Councils could resolve these by using a data quality report as the basis for training staff."
The Audit Commission is anxious to extend the National Fraud Initiative. The next exercise will include all public sector pension funds and payroll and pension data, and will be extended to include more central government departments and agencies.
However, the project could face problems from the Data Protection Commission. Jonathan Bamford, assistant data protection commissioner, said the NFI could breach the Human Rights Act, set to become law in October.
Bamford said the Data Protection Commission was in negotiations with the Audit Commission to clear up concerns about the fraud initiative. The Audit Commission said it was considering the implications of the Human Rights Act, but concerns about privacy had been answered.
Unless the issue is clarified soon, public sector bodies could find themselves caught, with government agencies making contradictory demands.
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