Public Sector Fraud – A Way Forward?

The UK government can now argue that it is backing the statements it has made about tackling fraud with an injection of cash and some ambition.

Over recent months and years there has been a procession of eye-opening disclosures about the scale of fraud in the UK. In many cases, these have been followed by swift statements from government figures about how such fraud is being tackled and the efforts that are being made to track down and hold to account those who are to blame.

The problem with such statements, however, has been a lack of credibility. Taxpayers now know that almost £1 billion has been lost to fraudulent coronavirus grant applications. The National Audit Office has let it be known that less than half a per cent of all “estimated irregular payments” paid out in such grants by local councils has been recovered.

The government’s tub thumping when it comes to combating fraud has, as a result, seemed at best hopeful and at worst deceptive. Now, however, it seems to be putting its money where its mouth is and backing its words with action: it has announced its updated Counter Fraud Profession Strategy.

In simple terms, this involves the new Public Sector Fraud Authority (PSFA) boosting the skills of staff within government so they are better able to protect public services from fraud. With an expert-led focus on developing staff ability, thousands of professionals working across the public sector will find themselves schooled in anti-fraud practices, with 250 fraud risk experts being fully trained by the end of 2023.

There is no guarantee that such an approach will save the taxpayer a sizeable proportion of the huge amounts of money that are lost to public sector fraud. Estimates state that the public sector loses around £40 billion a year to fraud, so the challenge facing those who will implement the new strategy is a daunting one. It will not be made any easier by the fact that those who perpetrate fraud display a consistent ability to recognise new opportunities for doing so – often well before those whose job it is to prevent them committing such wrongdoing.

The original Counter Fraud Profession Strategy was launched in 2018, when it had 3,000 members across 17 organisations. It has since grown to the point where it now has around 7,000 members across 48 organisations. Such statistics can, at first glance, seem impressive. But it should be remembered that the Department for Business, Energy and Industrial Strategy has put the overall loss to the taxpayer through Covid loan support schemes at £15.8 billion. And HM Revenue and Customs has said that errors and fraud in Covid payments have seen £4.5 billion paid out unnecessarily.

Such figures reinforce the scale of the challenge. But, it could be argued, they also show how glaringly inadequate public sector fraud prevention has been over the years. The new version of the strategy is being trumpeted as a bigger, better version of the original. Given that the first version had been in place for the best part of two years before Covid hit the UK – and the UK’s finances – it is little surprise that those in the corridors of power have now seen fit to say it is in need of improvement.

The new and supposedly improved version of the strategy will be judged a success if it has a significant positive impact on public sector fraud. But that is one almighty if. While it can be seen as a commendable move, it remains to be seen how effective it can be. Its aim of training thousands and having 250 highly-skilled fraud risk experts up and running by the end of this year seems ambitious, to put it mildly.

The strategy has been introduced with a big fanfare and faces a big challenge. It arrives during a cost of living crisis and in the wake of what has been a strike-blighted winter of discontent for large parts of the public sector. Public finances are tight, and what there is in the state’s coffers is, as we know, vulnerable to fraud. There is little doubt there was a need for a new strategy to tackle public sector fraud. There is even less doubt that it needs to succeed.


Niall Hearty, Partner at Rahman Ravelli

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