Civil servants tasked with fighting fraud are failing to “exert influence” on senior officials, which is hampering the government’s ability to tackle soaring levels of fraud and corruption, the Public Accounts Committee has warned.
In a new report, Tackling fraud and corruption against government, released today, the committee said: “Departmental counter-fraud staff often lack the credibility and authority needed to exert influence at senior levels.”
Earlier this year, civil service chief operating officer Alex Chisholm rejected claims from the National Audit Office that some senior official are "reluctant" to tackle fraud and corruption.
Civil servants working in this area “have often struggled to get the attention, understanding and support needed from senior decision-makers," the PAC report says.
This is partially due to the counter-fraud profession being relatively new, only being established in 2018, but also because many officials working on fraud “are not members of the profession and have not been trained or assessed against the professional standards", according to the committee.
There are more than 13,000 members of the counter-fraud function across government, the majority working for the DWP or HMRC, but less than half (45%) are members of the Government Counter Fraud Profession.
The report calls on the Public Sector Fraud Authority, which was set up last year, to “set out what it has done to address any identified weaknesses in the effectiveness of departments’ efforts to tackle fraud and corruption".
Issues of capacity and credibility are part of a wider problem across government, with the report outlining “large gaps” in the “understanding of the extent and location of fraud and corruption risks”.
On top of around £16.4bn lost to tax and benefit fraud in 2022-23, the government could have lost up to £28.5bn to fraud and error “but it does not know exactly where or how,” it states.
Barely one in 20 (6%) of the UK’s public bodies can demonstrate that they are achieving the expected value for money from their counter fraud work, and senior officials need to show leadership on this issue, it says.
“The government must begin by demonstrating that it is serious about tackling these issues and regaining public trust.” Tackling fraud “cannot be left to counter-fraud technical experts alone; it must be embedded into the design and delivery of services.”
The report adds: “Senior officials across government must demonstrate leadership, set the tone from the top, build in preventative approaches to their operations and start to give the public the impression that they are serious about fighting fraud.”
In addition, the PSFA should produce “an annual strategic intelligence report on the level of fraud and corruption across government.”
Dame Meg Hillier, PAC chair, said: “The government is flying blind on the levels of fraud and corruption perpetrated against it, despite widespread awareness of the toxic threat posed by these despicable crimes.”
She added: “If senior officials and politicians simply shrug their shoulders and look away in the face of these outrages, then malign actors will continue to pick away not just at the public purse, but at the bonds of trust that knit us together as a society.”
This comes just months after the NAO revealed how fraud in government spending has almost quadrupled to £21bn over the past two years - with most public bodies unable to show they are properly equipped to tackle the problem.
The new PAC report warns that “Government has often failed to implement basic counter-fraud measures into its new initiatives.” And there needs to be more done to crack down on fraudsters.
“Government has not set out the level of prosecutions and convictions for fraud that it wants to achieve in order to produce an effective preventive deterrent,” it says.
The report also claims that “it is very unlikely that most of the losses due to fraud and corruption will ever be recovered”. It cites the gulf between the £243m detected fraud in 2020-21 and the £29m that was recovered.
“Enforcement and recovery powers are also fragmented across government. The Cabinet Office and HM Treasury say they will continue to try to recover as much of the £21 billion lost during the pandemic as possible, and will not write off any amounts, but accept that it is unlikely they will be able to recover most of it.” the report says.
Responding to the concerns highlighted by the PAC, a government spokesperson said: “We are overhauling the way we tackle public sector fraud to ensure we prevent more fraud and chase down public money stolen from taxpayers. This includes having invested more than £900, in taking action on fraud, since 2021 and establishing the PSFA to bolster fraud defences across departments.”
They added: "In the last two years, the government has recovered more than £3.1bn of fraud losses, including within Covid-19 schemes, but we know there is more we can do. That is why we are expanding the government's counter-fraud profession, developing new technologies and boosting skills and training to further protect the public purse."