This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
Date Published: 8 September 2023
Since the beginning of the COVID-19 pandemic, the level of fraud against the taxpayer has increased fourfold. This trend was partly caused by the government’s pandemic support schemes. In setting up the schemes, the Government prioritised speed over safety and made itself more vulnerable than necessary to fraud and error. The schemes were successful in distributing financial support quickly during the pandemic, but to make a swift rollout possible, the government relaxed its control over public funds, deprioritised counter-fraud measures and failed to address vulnerabilities fast enough. These schemes were problematic, but they only exacerbated the existing problem of tackling fraud and corruption against government. In 2020–21 alone, there were losses of between £33.2 billion and £58 billion to fraud and error unrelated to the ongoing pandemic. These trends not only cost the government financially, but also affect perceptions of corruption in the UK. In the latest Transparency International survey of public and business perceptions of corruption, the UK fell from 8th out of 180 countries in 2017 to 18th in 2022 for the perceived level of corruption. Perceptions of fraud and corruption in the UK are reversable, but the government must begin by demonstrating that it is serious about tackling these issues and regaining public trust.
In light of these significant losses and their effect on public confidence, the government must show more urgency in tackling fraud and corruption. It has made a start. Over the past year, the government has established the Public Sector Fraud Authority, invested more in its counter-fraud function and strengthened its counter-fraud standards. But tackling fraud cannot be left to counter-fraud technical experts alone; it must be embedded into the design and delivery of services. Senior officials across government must demonstrate leadership, set the tone from the top, build in preventative approaches to their operations and start to give the public the impression that they are serious about fighting fraud. We are concerned to hear that 27% of public bodies are still clearly under investing in counter fraud and only 6% can demonstrate that they are achieving the expected value for money from their counter fraud work.
The government can only start to tackle fraud properly when it is open about the scale of the challenge and where the problems lie. Yet, government efforts since 2016 to improve its understanding of fraud against the taxpayer have failed to yield a proper answer, with most public bodies still lacking credible and reliable assessments of the level of fraud they experience. This lack of acceptance must change if the reality and the perceptions of the level of fraud are to improve.