Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Of the £21.8 billion grant funding the Department provided to local authorities to distribute in...
Conclusion
Of the £21.8 billion grant funding the Department provided to local authorities to distribute in their areas in 2020–21, the Department has so far attempted to assess the extent of fraud and error in only £11.5 billion of this funding, and through a sample of only 476 grants. This very small sample represents only 0.05% by number out of a total population of circa one million grants.28 The Department now considers this insufficient to gain an accurate picture of the true level of fraud and error in these payments and has initiated a tenfold increase in its sampling of these grants to inform its 2021–22 accounts.29 The Department also told us it has committed to an even larger sample of 12,000 for its second group of grants, which it also distributed to local authorities in 2020–21.30 It has not yet started assessing fraud and error in this group and considers it unlikely that it will be able to report on these until its 2022–23 accounts.31 In addition, the Department continued to provide grant funding to local authorities in 2021–22 as part of a third group of schemes, but also considers it unlikely that it will have reliable fraud and error estimates for this group until its 2022–23 accounts.32 The ICAEW told us that non-complex fraud and error in these latter schemes could total between £318 million and £968 million if levels are comparable to those in the schemes the Department has assessed so far.33 22 Qq 10, 13, 33–36; Department for Business, Energy & Industrial Strategy, Annual report and accounts 2020–21, 25 November 2021, Accountability report, page 122 23 Department for Business, Energy & Industrial Strategy, Annual report and accounts 2020–21, 25 November 2021, Accountability report, page 122 24 Q 10 25 ICAEW, pages 4–5, paras 12–13 26 C&AG’s Report, pages 130–134 27 Q 68; Committee of Public Accounts, HMRC Performance in 2020–21, Thirty-Seventh Report of Session 2021–22, HC 641, 11 February 2022; Committee of Public Accounts, The Department for Work and
Government Response
Not Addressed
HM Government
Not Addressed
2.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 2.2 The general principle applies that local authorities are responsible and accountable for the lawful use of funds under Section 151 of the Local Government Act 1972. 2.3 Section 151 Officers within the local authorities are required to exercise their duties in line with the Chartered Institute of Public Finance and Accountability (CIPFA) guidance, 26 ensuring their oversight of the proper administration of financial affairs within the local authority including these grants. 2.4. It is a condition of BEIS grants to local authorities that they must take all reasonable and practicable steps to recover any payment made in fraud or error before BEIS becomes liable. BEIS will pursue collection of all outstanding debt unless there is a value for money (VFM) case for not doing so. Decisions will be made on a case-by-case basis. A dedicated debt recovery policy has been developed with Cabinet Office and Treasury (HMT). The debt recovery policy guidance has been published on GOV.UK. 2.5 Further details to be provided in due course. The department will write to the Committee detailing how full cooperation from local authorities will enable robust fraud and error estimates which will lead to better recovery outcomes.