Source · Select Committees · Public Accounts Committee
Recommendation 10
10
Rejected
Over half of government's fraud assessments deemed unreliable, impacting understanding of losses
Conclusion
Each FMA exercise covers a specific area of spend and estimates the level of fraud and error in that spending. Since 2014, the FMA programme comprised 62 assessments covering £224 billion of spending. The GCFF’s Oversight Board concluded that 32 of the assessments, representing more than half (57%) of assessed expenditure, produced outcomes that are not reliable.27 When challenged on the value of the counter-fraud function, PSFA told us that the UK is the only country in the world to have a standard on fraud risk assessment. The standard means that all risk assessments across government are comparable and it is clear to what quality they are conducted. The technical advances were 16 Qq 50–51, 61 17 Qq 54, 61, 72 18 Q 44 19 Q 61 20 C&AG’s Report, para 2.5 21 Q 72 22 C&AG’s Report, para 1.17 and Figure 3 23 Q 58; C&AG’s Report, Figure 3 24 C&AG’s Report, para 1.16 25 C&AG Report, Figures 1 and 6; Fraud and error in the benefit system: financial year 2022 to 2023 estimates 26 C&AG’s Report, para 1.12–1.15 27 C&AG’s Report, para 1.15–1.16 12 Tackling fraud and corruption against government made possible through counter-fraud practitioners working as a function.28 PSFA told us that the reason all assessments conducted since the start of the COVID-19 pandemic were deemed to be unreliable was the scale and complexity of the schemes, which in tandem with the inherent difficulties associated with fraud measurement, resulted in shortcomings against the fraud measurement standard. For example, the Department of Health and Social Care’s assessment of the level of fraud in its procurement of PPE was not based on a fully random sample and could not be extrapolated.29 We asked PSFA about the reliability of the MoD’s estimate that 4.8% of its annual procurement spend is fraudulent. PSFA explained that MoD, in the absence of a random sampling exercise, had to rely on benchmarks from academic research, and therefore its estimate does not come with a high level of confidence. The most
Government Response Summary
The government explicitly rejects the implied recommendation, stating it will not publish a separate strategic intelligence report or information that could increase fraud threats. Instead, the PSFA will create a "High-Risk Fraud Portfolio" and continue to publish annual Fraud Landscape Reports, while supporting departments in targeted fraud measurement.
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.