75th Report - Government use of data analytics on error and fraud

Government’s digital and counter-fraud experts know what government needs to do to make fraud and error savings through data analytics, but do not have a robust plan to support public bodies to do so. There are several barriers preventing the … Read more Government’s digital and counter-fraud experts know what government needs to do to make fraud and error savings through data analytics, but do not have a robust plan to support public bodies to do so. There are several barriers preventing the wider use of data analytics to fight fraud and error across government, including: the continued use of legacy systems; poor quality data; difficulties in sharing data; and a lack of digital skills in central government. However, while government knows what the barriers are, it lacks a detailed action plan to address them. DSIT published its delayed Roadmap for modern digital government in January 2026. 3 While this strategy sets out the government’s ambition to embrace AI and replace legacy IT systems, it contains little detail on how and when this will be done and nothing on how this will help tackle fraud and error losses or what DSIT’s responsibilities will be in this area. recommendation The Government Digital Service, Public Sector Fraud Authority and Government Finance Function should set out how they will work together to deliver the reduction in fraud losses that data analytics can achieve, with clear targets and milestones. This should include how government intends to move from a system of detecting and recovering fraud, to one more focused on preventing fraud in the first place. Show less

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Government is not doing enough to promote the effective sharing of data, which is stopping departments from maximising the savings they could make from data analytics. Government bodies have legal frameworks through which to share data, such as those established … Read more Government is not doing enough to promote the effective sharing of data, which is stopping departments from maximising the savings they could make from data analytics. Government bodies have legal frameworks through which to share data, such as those established by the Digital Economy Act 2017, but find it time-consuming and difficult to do in practice. The PSFA told us it is taking steps to make this process simpler and quicker. The PSFA also told us it is building a library of counter- fraud controls to encourage and enable better data sharing and to make it easier for government bodies to know what datasets and tools are already available. GDS said it was building a single data platform for use across government that will enable government bodies to find and use data assets. But government does not make full use of the other data- sharing tools available to it. For example, the National Fraud Initiative tool (NFI), which local authorities must use and through which they save millions of pounds by matching their own data with that of other local authorities, is not mandatory for central government. This means the NFI does not benefit from much of central governments data to help flag more potential fraud, and that central government itself does not realise some of the potential savings. recommendation a. The Public Sector Fraud Authority should write to the Committee within 6 months to explain its progress in developing a library of counter-fraud controls. It should also set out its steps to identify and address issues with data sharing through the Digital Economy Act, to make this process simpler and quicker. This communication should include an evaluation of how its work has enabled greater sharing of data and greater use of data analytics. 5 b. In the Treasury Minute response to this report the Department for Science, Innovation and Technology should set out further information on the single data platform. This should include the timetable for completion and be Show less

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Current legislation limits government’s ability to deploy data analytics to tackle fraud and error. Some existing legislation, such as the Digital Economy Act, support the use of data analytics to fight fraud and error by enabling data sharing across departments. … Read more Current legislation limits government’s ability to deploy data analytics to tackle fraud and error. Some existing legislation, such as the Digital Economy Act, support the use of data analytics to fight fraud and error by enabling data sharing across departments. However, there are also instances where legislation, written some time ago, does not fully support the effective deployment of modern data analytics techniques. For instance, the Local Audit and Accountability Act, introduced in 2014, does not allow for profiling of individuals’ behaviours. In practice, this means that it does not allow government to flag individuals who have committed fraud 6 before as an indicator for future fraud detection work, as would be done in other industries. Moreover, the data collected as part of the National Fraud Initiative, enabled by the Act, can only be retained for two years. This limits the ability to look at historical fraud trends and the range of data that can be used when trying to identify fraud. recommendation a. The Public Sector Fraud Authority should review the legislation impacting its ability to implement fraud and error data analytics and communicate to Parliament where it believes additional powers or other changes to legislation would be helpful. b. The Department for Science, Innovation and Technology and the Public Sector Fraud Authority should review the regulatory regime around government’s fraud and error activities and communicate to Parliament where they believe additional powers or other changes to legislation would improve controls for specific fraud and error risks. 7 1 Taking the opportunity to make fraud and error savings Introduction Show less

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We are concerned that government has not built the digital capability or senior digital leadership it needs to achieve change and bring fraud savings from data analytics. Digital transformation will require strong leadership. The government accepted the previous Committee’s September 2023 recommendation that all departments should have a non-executive director …

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Departments are not doing enough to be transparent or build public trust on the use of data analytics to tackle fraud. In tackling fraud, government must balance maintaining public trust by being transparent about what it is doing, with not providing so much information that it helps fraudsters. We are …

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On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Science, Innovation and Technology (DSIT), the Public Sector Fraud Authority (PSFA), and the Government Finance Function (GFF) within HM Treasury.1

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The PSFA told us that it now agrees annual targets for all government departments to reduce fraud error.12 Its latest figures from 2023–24 suggest that working towards these targets is having a tangible impact in preventing and recovering fraud losses.13 Although DWP makes its own fraud reduction targets public, the …

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There are a number of issues that are undermining government’s efforts to use data analytics more widely to combat fraud and error. DSIT told us that that getting usable data can be difficult because they are held on legacy IT systems or because the data are not of good enough …

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We recommended in March 2025 that government’s planned digital and AI roadmap should be underpinned by a implementation plan with clear accountabilities, delivery milestones, and metrics to allow progress to be tracked.19 The NAO report echoed this, further recommending that the PSFA publish a plan setting out how it will …

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The previous Committee recommended in September 2023 that all Departments should appoint at least one non-executive director with relevant digital, data and technology transformation expertise to their Board.22 This recommendation is reflected in the Government’s new Roadmap for modern digital government, which sets an expectation that by December 2026 “Central …

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The Cabinet Office told us in March 2025 that, to achieve annual savings of up to £500 million by reducing the need for digital consultants, it was aiming for 10% of civil servants to have digital expertise.25 Only 5.5% of the civil service met this criteria in April 2025, though …

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At present much work on sharing best practice and increasing digital and counter-fraud capability across government is carried on through networks and communities of practice, though not all colleagues who might benefit from these sessions are in attendance.29 The PSFA told us that it works with DSIT and the community …

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As confirmed in January 2025’s Blueprint for modern digital government policy paper, cross-government digital leadership now resides with DSIT.32 The blueprint included a plan to raise the status of the Government Chief Digital Officer to second permanent secretary-level. DSIT told us that it has now replaced the Government Chief Digital …

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The Digital Economy Act 2017 established a process through which government bodies can agree arrangements to share data with one another. The NAO reported that, as of July 2025, there had been 28 data-sharing pilot agreements set up through this process to tackle fraud, although only four had become business-as-usual …

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The National Fraud initiative (NFI) is a tool created in 1996 that brings data together from across the public sector to help bodies look for fraud and, to a lesser extent, for error. The NFI was originally focused on local authorities, who are required to use it. But the PSFA …

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The NAO report noted that, at present, there is no available library of counter-fraud tools and examples for government bodies to refer to.45 It recommended that the PSFA should maintain a library of digital counter- fraud control that public bodies can use to find ways to address their fraud risks.46 …

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The PSFA told us that it is important to use data to fight fraud, and to maintain public trust that government bodies are holding their data in accordance with Parliament’s intentions.49 The C&AG told us that, while transparency in government operations was a positive thing, when dealing with counter-fraud measures …

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To ensure transparency, government bodies are required to disclose the use of algorithms, AI and machine learning through the Algorithmic Transparency Recording Standard (ATRS) hub.52 As at February 2026 the hub, which requires records of any such items used in decision making, recorded 110 being used in central government. Of …

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The NAO noted that DWP provided an example of good practice in transparency by setting out in its annual report and accounts how it ensures that its use of data analytics does not result in adverse impacts 49 Q 37 50 Q 25 51 Q 74 52 Qq 69-70 53 …

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The PSFA told us that current legislation, for example the Digital Economy Act 2017 mentioned previously, is an essential foundation for the use of data analytics to fight fraud and error. That Act provided a mechanism which enabled government bodies to share certain datasets, allowing for greater use of data …

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However, the PSFA also told us that there are instances where legislation, written some time ago, does not fully support the effective deployment of modern data analytics techniques. For example, the Local Audit and Accountability Act 2014 does not allow for profiling of individuals’ behaviours. Which means in practice that …

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Legislation also requires that data collected as part of the National Fraud Initiative, enabled by the Local Audit and Accountability Act, can only be retained for the two years – the duration of each biennial exercise. The PSFA told us that this data would be useful to inform counter-fraud work …

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