Recommendation 2

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.