Lambeth Homeless Fraud is the just the Tip of an Iceberg

9.28.00am GMT Mon 8th Feb 2010

Massive overpayments have been made by Labour-run Lambeth to private landlords but the amounts uncovered could be just the tip of an iceberg as fears of a multi-million pound fraud go uninvestigated.

Liberal Democrat opposition councillors have actively been pursuing the allegations of a fraud cover-up in Labour-run Lambeth's troubled Housing Department as Labour councillors have sat on attempts to pursue the allegations.

Labour Lambeth was put under severe pressure when it was forced to admit to a monumental cock-up after its temporary housing budget went overspent by a staggering £13.5million in just two years. The scandal has cost each council taxpayer hundreds of pounds.

Lambeth had been paying private landlords to house homeless people who did not exist - but Labour politicians down in the Town Hall said they could find no evidence of fraud. In addition the council continued to pay out for a whole estate which had been taken over by 300 squatters and failed to take into account a cut in funding from the Department for Work and Pensions.

After a full-scale scrutiny commission it was decided that the possibility of fraud be pursued and a "fully conclusive report" on "private sector leasing" be brought to the Council's corporate committee. But the decision was ignored. Now more than 12 months late it has resulted in a dismissive 14-line response still claiming there is no evidence of fraud, and even this "report" has only been produced after repeated requests by Lib Dem opposition councillors. More than £875,000 was overpaid for empty flats, it is revealed, but it is stated that this has all been recovered and there is no evidence of any fraud, it is claimed.

The report however admits that £232,000 had been over-paid to 10 hoteliers for bed and breakfast accommodation. The overpayments were identified in October 2008 but now, more than a year later, £171,000 remains outstanding. A shocking £78,135 is still to be recovered from a single hotelier. "Little action has been taken in the last 12 months to recover the amounts outstanding from the providers," the report admits. No comment is made as to whether fraud is involved.

"Apart from this admission that private landlords were overpaid by almost a £1million and that hoteliers have got away with almost £200,000 this whitewash of a report smacks of a massive cover-up," commented Lib Dem housing spokesperson Jeremy Clyne. "This could be just the tip of a huge iceberg that this discredited Labour administration is desperately trying to hush up."