Recommendation 20

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