Source · Select Committees · Public Accounts Committee
Recommendation 39
39
Deferred
Relaxed funding criteria in early remediation schemes increased fraud risk for taxpayers.
Recommendation
The NAO report found that previous attempts by MHCLG to accelerate remediation resulted in it relaxing some of its safeguards and the taxpayer being exposed to an increased risk of fraud. This included moving from making payments in arrears to making up–front payments of between 30% and 80%.65 We asked MHCLG whether it should have been obvious that relaxing funding criteria as dramatically as it did in 2020 would lead to increased fraud, noting that one potential loss of over £500,000 had already been identified. MHCLG told us that the priority for the early schemes had been to get funding out as quickly. It stressed that the system was never without checks at all, and that there were, for example, checks by experts around the scope of the work. It explained that it had made a series of changes over the last few years in response to a fraud risk assessment by the Government Internal Audit Agency, including benchmarking costs and a reduction in single–tender actions.66
Government Response Summary
The government agrees and will provide an update on the feasibility of fraud measurement by the end of 2025. However, full outputs from the fraud loss measurement exercise, which has an 18-month standard, are not expected until Autumn 2026.
Government Response
Deferred
HM Government
Deferred
6.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2025 6.2 The government will provide an update on the feasibility of fraud measurement by the end of 2025. 6.3 The government has worked extensively to ensure that the action taken for the NAO recommendation is both efficient and effective. The government reviewed the Public Sector Fraud Authority’s recommended approach for fraud loss measurement which is a highly technical process. The public sector standard to effectively complete this exercise is 18 months in length, therefore full outputs will not be available until Autumn 2026. The response and approach has been agreed with the NAO and has been indicated in the six-monthly update to the PSFA. 6.4 The government will use initial findings and continued engagement with PSFA and NAO to drive continual improvement to counter fraud controls. The government will share learning across the Ministry and with the PSFA to help prevent fraud in other programmes.