Recommendation 9

Most departments are exposed to more than one type of fraud risk, while all have exposure to internal fraud and corruption risk.22 However, few departments produce regular, reliable, and comprehensive measurements on the level of fraud and corruption in major areas of their spending.23 PSFA estimates that, for the two-thirds of government expenditure where there are no specific estimates, the level of fraud and error is somewhere between 0.5% and 5% of expenditure.24 This implies that in addition to the £10 billion a year of lost tax revenue from evasion and criminal attacks and £6.4 billion of benefit fraud last year (2022–23), government is losing somewhere in the range of £2.5 billion to £28.5 billion to fraud and error each year across the rest of its expenditure.25 PSFA and its predecessors have run a Fraud Measurement and Assurance (FMA) programme since 2014 to assess the level of fraud and error outside of the few areas, such as tax, welfare and Ministry of Defence (MoD) spending, where there are annual exercises.26