Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Rejected
Publish annual strategic intelligence report on government fraud and corruption levels and risk areas.
Recommendation
There are large gaps in government’s understanding of the extent and location of fraud and corruption risks. Most departments are exposed to several types of fraud and corruption risk in their income and spending, but few produce regular, reliable, and comprehensive estimates of the level of fraud and corruption of their risky areas. Government expects the number of fraud measurement experts across public bodies to increase from 99 to around 180. But the current system of fraud measurement does not tell us, beyond the well-known problems in tax and benefits, where the problems are or which public bodies are most affected. Where government does attempt to measure fraud, it often includes more innocent errors because it finds it difficult to establish the intent behind the misinformation provided. Conflating error with fraud can give the impression that government is underestimating and obscuring where the real fraud problems are. PSFA estimates that, for the two thirds of government expenditure where it does not have specific estimates, the level of fraud and error is somewhere between 0.5% and 5% of expenditure. This implies that in addition to the £10 billion of tax fraud and £6.4 billion of benefit fraud last year (2022–23), government lost somewhere between £2.5 billion to £28.5 billion from fraud and error, but it does not know exactly where or how. Recommendation 2: The Public Sector Fraud Authority should publish an annual strategic intelligence report on the level of fraud and corruption across government and where across government’s activities the main risks and issues 1 Q 54 6 Tackling fraud and corruption against government lie. This should build on the previous landscape reports and use better targeted fraud measurement and assurance exercises to provide an overall estimate of the extent and location of fraud and corruption by recognising the difference between fraud and error.
Government Response Summary
The government rejects the recommendation to publish a separate annual strategic intelligence report, stating the PSFA's High-Risk Fraud Portfolio will provide a strategic picture, and that disaggregating fraud and error is cost-intensive.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. The PSFA recognises the value in having a strategic picture of the highest risk areas. In its Mandate, the PSFA committed to the creation of the High-Risk Fraud Portfolio. As this is built, it will provide a common understanding, and strategic intelligence picture, of the highest risk areas that can be shared across government. The government will seek to be transparent. However, it will not publish any information that could increase the fraud threat by showing how attacks could be executed. The PSFA will not publish a separate strategic intelligence report. The PSFA will continue to publish annual Fraud Landscape Reports and bulletins. These outline the main risks and issues across government, including the levels of detected fraud (and corruption) and associated error in departments and public bodies (excluding tax and welfare, as these are published elsewhere). These levels are based on the best available evidence. The PSFA are working with departments to identify opportunities to improve the quality of data use in these estimates. Fraud Measurement exercises will continue as a tool to understand fraud and error loss levels in areas of high risk. The PSFA will continue encouraging, and supporting, departments to do more targeted measurement through assurance, training and updating standards, including learning from our international partners. Disaggregating between fraud and error requires determining intent which is cost intensive and may not be the most effective use of counter-fraud resources, so is left to the discretion of individual departments.