Nottinghamshire County Council says it is continuing to strengthen its defences against fraud as new risks linked to cyber-crime, insider activity and artificial intelligence increasingly affect local authorities, according to a detailed progress report due to be considered by councillors next week.
The Counter-Fraud Progress Report, which will be discussed by the council’s Governance & Ethics Committee on 14 January 2026, provides an update on fraud prevention and detection work carried out during the current financial year, alongside progress against the authority’s wider counter-fraud action plan.
The report confirms that counter-fraud activity during 2025/26 has continued to focus on areas assessed as presenting the highest risk to the council, with officers remaining alert to both traditional fraud threats and rapidly evolving forms of digital and cyber-enabled crime.
A significant element of the council’s work continues to be its participation in the National Fraud Initiative, a compulsory, biennial data-matching exercise run nationally to identify potential fraud and error across the public sector. The current exercise covers the 2024–2026 period and compares local authority datasets with information held by bodies such as the Driver and Vehicle Licensing Agency, the Department for Work and Pensions and national mortality records.
Processing of data matches from the current exercise is still under way. As of the latest update, 583 of 752 pension and payroll matches and 1,888 of 5,874 trade creditor matches had been reviewed, with no outcomes reported at this stage. A total of 1,933 Blue Badge matches had also been identified, although these are yet to be fully assessed.
By contrast, work on concessionary travel passes is further advanced. All 2,700 matches in this category have been processed, with estimated outcomes of just under £80,000*
( * Number of passes stolen multiplied by £30.97 )
This figure is based on national estimates of the cost of reimbursing bus operators for journeys made using fraudulently obtained or misused passes. Resident parking permit matches have also been fully processed, with no outcomes reported.
Officers note that fuller results from the National Fraud Initiative exercise will be set out in the council’s next Annual Fraud Report and in future updates to the Governance & Ethics Committee, reflecting the scale and complexity of reviewing large volumes of matched data.
Alongside data-matching activity, the report highlights a renewed focus on staff awareness and training, particularly in response to evidence of a growing risk from insider fraud. Nationally, councils have reported an increase in cases involving employees, and the report stresses that colleagues are often the first to notice behavioural changes or warning signs that prompt further investigation.
During 2025, the council refreshed and relaunched its counter-fraud training using a newly procured learning management system, updating materials to reflect emerging risks and reinforcing how staff can raise concerns. Fraud awareness messages were also promoted internally during International Fraud Awareness Week in November, with additional communications focused on phishing and social engineering published during Cyber Security Awareness Month.
The report explains that work to strengthen fraud risk assessment arrangements was completed in April 2025, following commitments made in the previous Annual Fraud Report. Since then, officers have continued to refine the process, engaging with staff across departments to help identify potential insider risks and encourage wider participation in training and familiarisation with counter-fraud policies.
In relation to insurance and claims, the council’s Risk and Insurance Team continues to carry out proactive detection work using fraud checklists. While no claims finalised during 2024/25 were identified as fraudulent, two claims with a combined estimated value of £17,000 have been successfully defended so far during the current financial year after being flagged as fraudulent.
Internal Audit also remains closely involved in fraud investigation activity. Four live cases are currently being monitored, with regular updates provided to the chair of the Governance & Ethics Committee and summaries reported to members through the Annual Fraud Report. Officers note that, although individual fraud cases vary widely, each investigation is used as an opportunity to review procedures and strengthen internal controls to prevent recurrence.
The wider national context is also set out in the report. Data from the National Fraud Intelligence Bureau shows that while overall fraud levels have reduced since 2020, cyber-crime continues to rise, with social media account hacking and business email compromise identified as particularly fast-growing threats. The report also references intelligence from Cifas, which has highlighted the increasing role of artificial intelligence in enabling more convincing and large-scale fraud attacks.
Against this backdrop, the council has updated its counter-fraud risk assessment to reflect emerging issues identified through national networks and intelligence sharing. High-risk areas continue to include insider fraud, procurement fraud, mandate fraud, abuse of adult social care payments, pension fraud and cyber-crime.
The report also updates councillors on progress against the council’s Counter-Fraud Action Plan for 2025/26. Completed work includes a review into misuse of direct payments in adult social care, which led to additional training and support within the department. Monitoring of the council’s preparedness for the new “failure to prevent fraud” offence introduced under the Economic Crime and Corporate Transparency Act 2023 is ongoing, with updates already provided to statutory officers.
Other actions remain in progress, including reviews of the Fraud Response Plan and Anti-Money Laundering Policy, work on commissioning and governance arrangements, and the assessment of actions arising from a national adult social care fraud toolkit. Further updates to the council’s counter-fraud strategy are scheduled once new national guidance is issued.
Financially, the report reiterates the council’s position that money lost to fraud directly reduces funding available for frontline services. The most recent Annual Fraud Report, covering 2024/25, identified approximately £208,000 of detected or prevented fraud during that year.
Councillors are being asked to formally note the contents of the report, which officers say demonstrates continued vigilance and a zero-tolerance approach to fraud and corruption at a time when threats facing local authorities are becoming more complex and technologically sophisticated.
