London Borough of Ealing, which is leading the project, has launched a tender for a firm which would be paid on a payment-by-results basis.

Those behind the scheme estimate that this could make the contract worth £20m over its nine year life.

The tender said: “The overarching objectives of the Hub are to increase both fraud detection and fraud prevention. Data will be entered into the hub from participating authorities and third parties via an automated process.

“The London Borough of Ealing (the ‘Lead Authority’) is seeking to develop a pan-London data analytics and investigation hub (the ‘Hub’) for the purposes of detecting and preventing fraud on a payment-by-results commercial basis.”

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The private sector supplier will be expected to run all services related to the running of the hub and supply and manage all necessary ICT.

It is expected that the hub will integrate with existing datasets held by the participating councils, and will process enquiries received by fraud investigators from within the authorities.

Using analytics technology, the hub will also automatically identify cases and produce risk profiles to detect and prevent fraud.

The supplier will be expected to take cases through an investigations process and will lead on the recovery of revenues on behalf of the councils.

The hub will work with the City of London Police, the National Crime Agency, and the Chartered Institute of Public Finance and Accountancy.

In December 2014, the project won £430,000 to pay for development from central government.