The number of Lambeth Council staff fired or investigated by police for fraud increased by 400 per cent last year.

Serious disciplinary action was taken against 12 members of council staff in 2008/9, up from just three in 2007/8, a new council report shows.

In total some 70 staff were investigated by the council’s internal fraud team, an increase of 50 per cent on the previous year.

Fourteen of these cases are still being looked into.

Investigations included allegations of fraud and corruption, involving misappropriation of cash, incorrect hours claimed, and improper extensions of contracts to consultants.

Some 32 cases were proved, up from 27 the previous year.

A council spokeswoman said the findings of the report did not mean levels of fraud were increasing at the council, but increased vigilance meant more was being detected.

The report states that with a £1.2bn service budget and over 7,500 employees, the council had “a significant number of administrative and financial processes and systems which are potentially open to the risk of fraud and abuse”.

The council’s housing department was exposed by external auditors as the council department most at risk, as it had low fraud prevention measures compared with other departments.

The most allegations of malpractice made by whistleblowers within the council itself - five - were focussed on the council’s controversial housing manager Lambeth Living, and other tenant management organisations.

The report to the council’s corporate committee also revealed some 11 of 90 people prosecuted in the borough for blue badge fraud - more than 10 per cent - were also members of council staff.

The council has said the majority of these were for mis-use, including using another person’s blue badge to obtain free parking when at work.

Faryal Velmi, director of Brixton-based Transport for All, which protects transport rights for disabled and elderly, said the revelation was “shocking” and demanded more robust action be taken.

However she commended the council’s honesty in admitting the fraud by its employees.

A council spokeswoman said it must be stressed that, while the number of investigations for fraud inside the council had risen, it did not mean that the level of fraud had also increased.

“A staff anti-fraud awareness campaign across the council led to extra vigilance, which led to more cases being referred for investigation.

“There was also an increase in the number of cases where no further action was necessary. The council's message on fraud is very clear. It will never be condoned, it will always be prosecuted where possible, and all accusations will be investigated," she said.

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