Recommendation 4

Departments do not make enough use of counter fraud expertise when designing new initiatives to ensure they minimise losses to the taxpayer. One of the key lessons from government’s response to the pandemic is the need to balance speed of implementation and accessibility of support schemes with efforts to prevent fraud and protect taxpayers’ money. Despite it being two years since it was established, Cabinet Office’s work to increase the awareness of the new Counter Fraud Function is still at an early stage. Departments consulting it is still optional, meaning it lacks authority despite its expertise. BEIS, for example, did not consult the Counter Fraud Function when designing the Bounce Back Loan Scheme despite the increased risk Fraud and Error 7 of fraud and error compared to its usual operations. Designing schemes in a way that prevents fraud and error is essential if losses to the taxpayer are to be minimised. The Counter Fraud Function is working to introduce a minimum standard for fraud risk assessments across government. Transparency about these risk assessments is vital if decision makers, including Parliament, are to understand the implications of these design choices. Recommendation: HM Treasury and Cabinet Office should, within six months, introduce mandatory fraud impact assessments that require formal sign off from the Counter Fraud Function for all Government Major Project Portfolio programmes and for all other schemes that departments identify as having a moderate to high risk of fraud or error. A summary of these assessments should be published.