Government accused of ‘flying blind’ on soaring levels of fraud

The Government is “flying blind” on its exposure to fraud, which has quadrupled since the start of the Covid pandemic, MPs have said.

The cross-party Public Accounts Committee (PAC) also said that while most of the £21 billion of taxpayers’ money lost to fraud during the pandemic is unlikely to be recovered, the Government should be doing more to recoup what it can.

In a report, the panel criticised the current system of fraud assessment for failing to reveal where the problems lie or which public bodies are most affected.

On top of around £16.4 billion lost to tax and benefit fraud in the past year, the Government could have lost up to £28.5 billion to fraud and error – without knowing exactly where or how, the PAC said, citing estimates from the Public Sector Fraud Authority.

It also said the fourfold increase of public money paid out to fraudsters in the two years of the pandemic damaged public confidence in the integrity of Government.

The UK slipped to 18th – from eighth – out of 180 countries in 2022 for perceived corruption levels, according to Transparency International.

To rebuild public trust, Whitehall officials must show they are serious about tackling the issue and embed counter-fraud measures into services, the MPs said.

They expressed concern that only 6% of the UK’s public bodies can demonstrate that they are achieving the expected value for money from their counter-fraud work, and 27% are not investing enough in it.

Chairwoman Dame Meg Hillier said: “The Government is flying blind on the levels of fraud and corruption perpetrated against it, despite widespread awareness of the toxic threat posed by these despicable crimes.

“The Cabinet Office has blamed worsening public perceptions of the UK’s fraud and corruption on ‘noisy reporting’ from the media. It is time for some noisy reporting back from the most senior Government officials on quite how seriously it is tackling this worsening problem, with examples of fraud not being allowed to go unpunished.

“The risk of fraud and corruption in public life, both from internal and external threats, is of course ever-present. But this should be spurring Government to recognise and prepare for it as an ongoing risk, rather than simply accepting it.

“If senior officials and politicians simply shrug their shoulders and look away in the face of these outrages, then malign actors will continue to pick away not just at the public purse, but at the bonds of trust that knit us together as a society.”

Labour’s shadow attorney general Emily Thornberry said: “While the fraud epidemic has spread across our country in recent years, the Government has stuck in the same pattern of complacency, indifference and inaction.

“We saw it when Rishi Sunak wrote off billions in fraudulent Covid payments, and we are seeing it today, with the Government still unable to say how much the UK is losing each year to fraud.

“As the party of law and order, Labour would treat this crime with the seriousness it deserves, and deliver a comprehensive plan to get a grip of fraud at every level it is affecting our country, from government departments and major corporations to small firms and ordinary households.

“Most of all, we would relentlessly track down and punish the criminals responsible, wherever they are in the world, and do everything possible to protect our communities, our businesses, and our public services against their parasitic trade.”

A Government spokesman said: “We are overhauling the way we tackle public sector fraud to ensure we prevent more fraud and chase down public money stolen from taxpayers.

“Since 2021, we have invested more than £900 million in taking action on fraud, and have established the Public Sector Fraud Authority to bolster fraud defences across departments.

“In the last two years, the Government has recovered more than £3.1 billion of fraud losses, including within Covid-19 schemes, but we know there is more we can do.

“That is why we are expanding the Government’s counter-fraud profession, developing new technologies and boosting skills and training to further protect the public purse.”