Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Rejected
A substantial gap persists between estimated and detected fraud outside tax and welfare.
Conclusion
Departments have detected an increasing amount of fraud and error outside of tax and welfare expenditure. Cabinet Office has reported that since 2014–15 departments have detected £0.9 billion of fraud.65 It is not, however, possible to tell whether the increase in detected fraud relates to better detection or increased occurrences of fraud.66 PSFA told us that government’s investment in analytical tools and the National Fraud Initiative have contributed to the increasing levels of detected fraud.67 We asked PSFA why government was only detecting a small proportion of the estimated levels of fraud and error outside the tax and welfare systems. In 2020–21, departments and their arm’s-length bodies had detected £243 million of fraud, excluding tax and welfare fraud, while the PSFA had reported between £3.5 billion and £29.1 billion of fraud and error in the same year. PSFA acknowledged the need to investigate the reasons behind the gap between the estimates of fraud and error, and the levels of detected fraud.68
Government Response Summary
The government disagrees, stating that while PSFA is developing a High-Risk Fraud Portfolio and will continue publishing annual Fraud Landscape Reports and conducting fraud measurement exercises, it will not publish a separate strategic intelligence report. Disaggregating fraud and error is deemed cost-intensive and discretionary for departments.
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.