Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Accepted
Set out plans to understand and support local government counter-fraud challenges and capabilities.
Recommendation
Central government often relies on local government to manage fraud risks on its behalf but does little to support local authorities’ capability to do so. For example, the Department for Business, Energy and Industrial Strategy required local authorities to pursue any losses from error and fraud they identify arising from payments in COVID-19 business grant schemes. However, as all recovered monies must be paid back to central government, local authorities have had no financial incentive to go beyond the minimum required action to identify losses. And only a small proportion of the estimated losses, £21 million out of an estimated £1.1 billion, has been recovered so far. Central government has tried to provide some support to local authorities, for example, local authorities were provided with around £200 million for the cost of administering the schemes, and local authorities have been able to make use of the data matching functionality of the National Fraud Initiative to counter fraud. But the different governance architecture in place across local government has added a layer of complexity to the interactions of central and local government. Local government bodies have also struggled to maintain timely financial reporting. The Treasury agreed to speak to the Department for Levelling Up, Housing and Communities officials about what more can be done to support local authorities manage the risk of fraud and corruption in their spending. Recommendation 7: HM Treasury should set out, in its Treasury Minute response: a) how it plans to understand the challenges for local government counter- fraud work. b) what support central government plans to provide to local government bodies who administer schemes and manage fraud and corruption risks to funds on behalf of central government. Tackling fraud and corruption against government 9 1 The problem
Government Response Summary
The government agrees but states the PSFA's mandate is primarily with ministerial departments. It highlights existing support for local government through sharing standards, the Counter Fraud Profession, providing expert advice on specific schemes, and the National Fraud Initiative.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented The PSFA works directly with ministerial departments and public bodies (bodies publicly funded to deliver public or government services), as set out in the PSFA mandate. Whilst implementing arrangements and controls to tackle fraud and safeguard public money is the responsibility of each council's Chief Financial Officer, the PSFA also shares practices and makes available standards to the wider public sector, including local government. In addition, local government counter fraud professionals can join the Counter Fraud Profession. When requested, the PSFA also supports assurance processes on selected schemes delivered through local authorities. For example, the PSFA provided expert advice and counter fraud services to the recent energy support schemes, to understand and minimise potential fraud loss. The PSFA also runs the National Fraud Initiative (NFI). This is a highly successful counter fraud data matching exercise. Between April 2020 and March 2022 this enabled participating organisations to prevent and detect/recover £443 million fraud and error across the UK. Data for the NFI is provided by over 1,100 participating organisations from the public and private sectors, including local authorities