Recommendations & Conclusions
31 items
2
Conclusion
Ninth Report - Fraud and Error
Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. Efforts to tackle fraud and error in the tax and benefits system come under regular scrutiny. While we regularly scrutinise and challenge HMRC and DWP on their …
Government response. 2: PAC conclusion: Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. 2: PAC recommendation: HM Treasury and Cabinet Office should, within six months, work with …
HM Treasury
3
Conclusion
Ninth Report - Fraud and Error
Departments’ lack of urgency to robustly measure fraud and error hinders their ability to direct their counter fraud and error efforts. The robust measurement of fraud and error is a crucial aspect of any counter fraud response because it shows where controls need to be improved and effort directed. BEIS, …
Government response. 3: PAC conclusion: Departments’ lack of urgency to robustly measure fraud and error hinders their ability to direct their counter fraud and error efforts. 3a: PAC recommendation: HM Treasury should, within three months, strengthen current reporting requirements and ensure that …
HM Treasury
4
Conclusion
Ninth Report - Fraud and Error
Departments do not make enough use of counter fraud expertise when designing new initiatives to ensure they minimise losses to the taxpayer. One of the key lessons from government’s response to the pandemic is the need to balance speed of implementation and accessibility of support schemes with efforts to prevent …
Government response. 4: PAC conclusion: Departments do not make enough use of counter fraud expertise when designing new initiatives to ensure they minimise losses to the taxpayer. 4: PAC recommendation: HM Treasury and Cabinet Office should, within six months, introduce mandatory fraud …
HM Treasury
5
Conclusion
Ninth Report - Fraud and Error
HM Treasury and Cabinet Office do not know whether departments are adequately resourced to tackle fraud and error. There are currently 16,000 members of the Counter Fraud Function within the public sector, with 77% of counter fraud professionals working in DWP or HMRC. Although Cabinet Office understands where counter fraud …
Government response. 5: PAC conclusion: HM Treasury and Cabinet Office do not know whether departments are adequately resourced to tackle fraud and error. 5: PAC recommendation: HM Treasury and Cabinet Office should write to the Committee within three months setting out how …
HM Treasury
6
Conclusion
Ninth Report - Fraud and Error
Gaps in transparency and information sharing between departments is hindering efforts to prevent, detect and correct fraud and error. Timely data sharing can be used to prevent fraud by data matching, improve detection of fraud by sharing intelligence, and enable recovery in cross-government schemes. Increasing the use of these methods …
Government response. 6: PAC conclusion: Gaps in transparency and information sharing between departments is hindering efforts to prevent, detect and correct fraud and error. 6a: PAC recommendation: Cabinet Office should write to the Committee within six months detailing how it has worked …
HM Treasury
7
Conclusion
Ninth Report - Fraud and Error
HMRC, DWP and BEIS are unable to justify the inconsistencies in their approaches to the consequences of fraud and error for different groups of debtors. Departments need to take steps to detect, pursue and recover the billions of pounds of fraud and error overpayments it has lost during the COVID-19 …
Government response. 2021. This is the government’s response to the Committee’s report. Relevant reports • NAO report: Overview of English Rail System – Session 2021-22 (HC 1373) • PAC report: Overview of English Rail System – Session 2021-22- (HC 170)
HM Treasury
1
Conclusion
Ninth Report - Fraud and Error
On the basis of a report by the Comptroller and Auditor General, we took evidence from Cabinet Office, the Department for Business, Energy and Industrial Strategy (BEIS), the Department for Work and Pensions (DWP), HM Revenue & Customs (HMRC) and HM Treasury about fraud and error.1
Government response. Based on a report by the National Audit Office, the Committee took evidence on 29 April 2021 from Cabinet Office, the Department for Business, Energy & Industrial Strategy, the Department for Work and Pensions, HM Revenue and Customs and HM …
HM Treasury
8
Conclusion
Ninth Report - Fraud and Error
Fraud and error within Universal Credit rose by £3.8 billion to an all-time high of £5.5 billion between April 2020 and March 2021. DWP told us it that during lockdown it found opportunities for innovation by adapting traditional controls, such as face-to-face meetings with claimants, for remote working. As an …
Government response. 1.3. Departments take a risk-based approach to fraud and error overall. This is in line with best practice and is advocated by the Government Counter Fraud Function (GCFF). The use of a risk based approach is supported by the Counter …
HM Treasury
9
Conclusion
Ninth Report - Fraud and Error
We have regularly reported on HMRC’s and DWP’s efforts to tackle fraud and error in the tax and benefit systems. DWP’s accounts have been qualified every year since 1988–89 due to material levels of overpayments and underpayments in benefits expenditure.24 In our report on their 2019–20 accounts we concluded that …
Government response. 1.3. Departments take a risk-based approach to fraud and error overall. This is in line with best practice and is advocated by the Government Counter Fraud Function (GCFF). The use of a risk based approach is supported by the Counter …
HM Treasury
10
Conclusion
Ninth Report - Fraud and Error
We asked Cabinet Office about fraud and error risks outside the tax and benefits system. Cabinet Office told us that the diversity of risks is “very, very large”, because government spends £850 billion and collects around £800 billion in income. It explained that this covers all the different grants, procurement, …
Government response. 2: PAC conclusion: Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. 2: PAC recommendation: HM Treasury and Cabinet Office should, within six months, work with …
HM Treasury
11
Conclusion
Ninth Report - Fraud and Error
The Counter Fraud Function undertook a Global Fraud Risk Assessment across 206 COVID-19 response schemes, with an estimated total value of £387 billion. It risk-assessed 16 of these schemes as having a high or very high fraud risk, representing 57% (£219 billion) of the £387 billion.31 As part of this …
Government response. 2: PAC conclusion: Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. 2: PAC recommendation: HM Treasury and Cabinet Office should, within six months, work with …
HM Treasury
12
Conclusion
Ninth Report - Fraud and Error
It also assessed a large number of other COVID-19 schemes as potentially at high risk of fraud but believed scheme owners needed to do more work to fully quantify those risks.32 Counter fraud resources across government
Government response. 2: PAC conclusion: Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. 2: PAC recommendation: HM Treasury and Cabinet Office should, within six months, work with …
HM Treasury
13
Conclusion
Ninth Report - Fraud and Error
We asked HM Treasury and Cabinet Office about the capability and capacity of counter fraud resources across the public sector. Cabinet Office explained that traditionally Departments have decided individually what level of capability they need, but as fraud is a quickly evolving and complex crime this approach is not optimal.33 …
Government response. 5: PAC conclusion: HM Treasury and Cabinet Office do not know whether departments are adequately resourced to tackle fraud and error. 5: PAC recommendation: HM Treasury and Cabinet Office should write to the Committee within three months setting out how …
HM Treasury
14
Conclusion
Ninth Report - Fraud and Error
We asked whether counter fraud expertise is adequately deployed across the rest of government. Cabinet Office provided information on where counter fraud expertise is deployed across the rest of government but it is clear that some of the major departments have relatively few counter fraud resources.36 Cabinet Office told us …
Government response. 5: PAC conclusion: HM Treasury and Cabinet Office do not know whether departments are adequately resourced to tackle fraud and error. 5: PAC recommendation: HM Treasury and Cabinet Office should write to the Committee within three months setting out how …
HM Treasury
15
Conclusion
Ninth Report - Fraud and Error
HM Treasury told us it has ongoing dialogue with departments and supports the funding of counter fraud activity if it is cost effective. We asked HM Treasury why it took 12 months to approve the £100 million funding for a Taxpayer Protection Taskforce within HMRC. HM Treasury told us it …
Government response. 5.4 The Spending Review process provides departments with the opportunity to assess their individual fraud capacity and resourcing levels. Departments have the opportunity to submit bids to obtain the right counter fraud tools and resources. Bids will be subject to …
HM Treasury
16
Conclusion
Ninth Report - Fraud and Error
HM Treasury told us that other government functions have a critical role in helping with fraud risk. It told us the Finance and Commercial Functions must operate as an effective second line of defence in advising and supporting fraud risk. It suggested that the combination of these functions operating under …
Government response. 5.2 The government will write to the Committee in November 2021 setting out how it will be working with departments and across the system to help build their counter fraud capacity and capability. This will involve working closely with the …
HM Treasury
17
Conclusion
Ninth Report - Fraud and Error
The Counter Fraud Function describes fraud as a hidden crime which you must find before you can fight.41 The government’s counter-fraud functional strategy states an aim to be the most transparent government globally in dealing with public sector fraud.42 Cabinet Office told us it aims to put as much focus …
Government response. 6.2 The GCFF will continue to work with departments to increase the use of real time application checks to help prevent fraud where there is a good business case to do so. During the COVID-19 pandemic, additional real time data …
HM Treasury
18
Conclusion
Ninth Report - Fraud and Error
HM Treasury’s guide to Managing Public Money states that that every department should measure and estimate the scale of fraud and error and disclose this in its Annual Report were material.45 The NAO identified the proper measurement of fraud and error as a crucial because it shows departments where controls …
Government response. 3.10 The government agrees with the Committee’s recommendation. Target implementation date: September 2021 3.11 HM Revenue and Customs (HMRC) has from the outset of the schemes actively assessed the level of error and fraud within all the COVID-19 support schemes …
HM Treasury
19
Conclusion
Ninth Report - Fraud and Error
We asked about DWP’s progress in developing a target for fraud and error. We have previously recommended that DWP analyse the extent to which fraud and error in the system was temporary because of the pandemic and what was due to longer term structural issues.49 DWP explained that COVID-19 has …
Government response. 3d: PAC recommendation: DWP should write to the Committee with its targets for reducing fraud and error. 3.15 The government agrees with the Committee’s recommendation. 10 Target implementation date: December 2021 3.16 As set out in the Department for Work …
HM Treasury
20
Conclusion
Ninth Report - Fraud and Error
We asked BEIS about efforts to estimate the level of fraud and error in the Bounce Back Loan Scheme. BEIS told us it has commissioned PwC to undertake a sampling exercise to come up with a specific estimate of fraud which it expects to be completed in May 2021. BEIS …
Government response. 3b: PAC recommendation: BEIS should write to the Committee within 3 months setting out how they will measure fraud and error in all their COVID-19 schemes and build prompt measuring of fraud and error into their future programmes from the …
HM Treasury
21
Conclusion
Ninth Report - Fraud and Error
We asked about what needed to be done to improve the consistency of fraud and error reporting across the public sector. Cabinet Office told us that the introduction of the Functional Standards, a set of minimum criteria for dealing with fraud, is an important tool to increasing consistency of approach.52 …
Government response. 6a: PAC recommendation: Cabinet Office should write to the Committee within six months detailing how it has worked with departments to identify and address gaps in real time data sharing. 6.1 The government agrees with the Committee’s recommendation. Target implementation …
HM Treasury
22
Conclusion
Ninth Report - Fraud and Error
Cabinet Office and DWP told us that timely data sharing can be used to prevent fraud by data matching, improve detection of fraud by sharing intelligence, and enable recovery in cross-government schemes.55 The Digital Economy Act 2017 permits data-matching for the purposes of fraud and error.56 Cabinet Office told us …
Government response. 6a: PAC recommendation: Cabinet Office should write to the Committee within six months detailing how it has worked with departments to identify and address gaps in real time data sharing. 6.1 The government agrees with the Committee’s recommendation. Target implementation …
HM Treasury
23
Conclusion
Ninth Report - Fraud and Error
In written evidence Cifas, the UK’s largest cross-sector fraud sharing organisation, told us there should be transparency around the businesses that have been in receipt of COVID-19 support scheme funds, and, in its submission to us, the Fraud Advisory Panel agreed that transparency around fraud and error is “imperative” to …
Government response. 6b: PAC recommendation: HM Treasury should, within six months, set out the transparency principles it expects for government support schemes, including the presumption that the business beneficiaries of government support schemes will be published. 6.4 The government disagrees with the …
HM Treasury
24
Conclusion
Ninth Report - Fraud and Error
In written evidence Cifas told us that it believed government’s failure to mandate industry standard fraud significantly contributed to the vast scale of fraud in COVID-19 support schemes.66 BEIS told us that it “found cross-Whitehall collaboration incredibly useful” on the Bounce Back Loan Scheme and local authority grant schemes. It …
Government response. 6a: PAC recommendation: Cabinet Office should write to the Committee within six months detailing how it has worked with departments to identify and address gaps in real time data sharing. 6.1 The government agrees with the Committee’s recommendation. Target implementation …
HM Treasury
25
Conclusion
Ninth Report - Fraud and Error
Each government department has a responsibility to minimise fraud and error, put it right and report on it.70 HM Treasury told us it expects policy to be developed with fraud risk considered at the development and design stage.71 The NAO concluded that deterrence and prevention are often more cost-effective for …
Government response. 4: PAC conclusion: Departments do not make enough use of counter fraud expertise when designing new initiatives to ensure they minimise losses to the taxpayer. 4: PAC recommendation: HM Treasury and Cabinet Office should, within six months, introduce mandatory fraud …
HM Treasury
26
Conclusion
Ninth Report - Fraud and Error
The Cabinet Office told us that the Counter Fraud Function is aiming to introduce a minimum standard for fraud risk assessments across government.74 But it is also still working to increase awareness of the Counter Fraud Function.75 For example, consultation with the Function’s central team of experts is at the …
Government response. 4: PAC conclusion: Departments do not make enough use of counter fraud expertise when designing new initiatives to ensure they minimise losses to the taxpayer. 4: PAC recommendation: HM Treasury and Cabinet Office should, within six months, introduce mandatory fraud …
HM Treasury
27
Conclusion
Ninth Report - Fraud and Error
The Cabinet Office told us that in emergency situations like the pandemic response it is important to get support out to communities and individuals who need it, and how you balance accessibility and control is one of the areas counter-fraud professionals and other professionals in policy, finance and risk management …
Government response. 1.3. Departments take a risk-based approach to fraud and error overall. This is in line with best practice and is advocated by the Government Counter Fraud Function (GCFF). The use of a risk based approach is supported by the Counter …
HM Treasury
28
Conclusion
Ninth Report - Fraud and Error
We asked DWP how it balanced the need to protect taxpayers’ money with the speed and accessibility of support schemes. DWP told us that Universal Credit was a good example of balancing these needs as applications normally rely on people coming into the jobcentre for ID checks which was no …
Government response. 1.3. Departments take a risk-based approach to fraud and error overall. This is in line with best practice and is advocated by the Government Counter Fraud Function (GCFF). The use of a risk based approach is supported by the Counter …
HM Treasury
29
Conclusion
Ninth Report - Fraud and Error
Departments need to ensure that they detect fraud and error and recover overpayments wherever possible.84 HM Treasury told us it is up to departments to undertake an assessment of how feasible it is to recover funds lost to fraud and error. DWP told us it has a “lot of different …
Government response. 1.3. Departments take a risk-based approach to fraud and error overall. This is in line with best practice and is advocated by the Government Counter Fraud Function (GCFF). The use of a risk based approach is supported by the Counter …
HM Treasury
30
Conclusion
Ninth Report - Fraud and Error
We asked DWP and HMRC about the different departmental responses to similar fraudulent actions, such as concealment of earnings. HMRC told us it has a policy of using criminal investigations in only the most serious cases, where it is the necessary response and where it will have a real deterrent …
Government response. 7.1 The government disagrees with the Committee’s recommendation. 7.2 The Department for Work and Pensions (DWP) feels that this is a policy matter and as such will bring the Committee’s views to the attention of ministers across departments. 7.3 HMRC’s …
HM Treasury
31
Conclusion
Ninth Report - Fraud and Error
We asked BEIS about plans to recover loans made as part of the Bounce Back Loan Scheme. BEIS told us that in the first instance, it is the banks responsibility to manage recovery in line with their usual processes.92 BEIS explained that it is planning to work with the police …
Government response. 7b: PAC recommendation: BEIS should write to the Committee within three months setting out details of steps it will take to assess whether the recovery efforts of banks are reasonable, and the steps it will take to recover taxpayers’ money …
HM Treasury