The scale of fraud and error in the public sector is staggering, so it is good news that the chancellor has launched a £140m programme to help tackle the problem
Today’s Autumn Statement is one that Chancellor George Osborne has been waiting to give since taking office. A strong recovery has begun to affect government borrowing, and the UK is starting its long journey to recovery. As a fiscally neutral set of announcements, it means the government can offer some festive cheer – notably with a freeze on fuel duty – while sticking to its longer-term plan.
Osborne’s statement includes an initiative that is unlikely to generate many headlines, but is an important step forward in how the government manages taxpayers’ money: extra investment to tackle fraud against the public sector, error in its collection systems and debt owed to the state.
The scale of fraud, error and debt against the public sector is staggering. Last year, the state was defrauded of about £20.6bn, almost £16bn of which was on tax and benefits. Today’s Autumn Statement announced a £140m programme to tackle the problem, with a target reduction in losses of £2.3bn. That represents a sound investment by any standard.
Details of the programme are to follow shortly. But the elements listed in the Autumn Statement are encouraging. They include plans to carry out regular fraud and error checks to reduce the number of erroneous payments to tax credit claimants, as well as data matching across the benefit and tax systems to identify people claiming benefits with undeclared income.
Other elements of the programme include maintaining regular contact with pensioners living abroad so that fewer state pension overpayments are made after death.
But the most significant changes aim to improve the system’s capacity to investigate and stop fraud. Plans to create a single fraud investigation service that covers the entire welfare system will help remove gaps between the public sector’s systems that fraudsters can exploit. And plans to increase the use of private sector debt collection services will also help build capacity to combat fraud and collect unpaid tax debts.
Goran Persson, Sweden’s former Prime Minister, who rebalanced the country’s public finances in the 1990s, once likened his fiscal consolidation programme to a strict diet. Only when you are down to your target, he suggested, should you ‘raid the fridge’ for some popular public spending.
The UK’s chancellor seems to be following the same diet, offering some nibbles but continuing the coalition programme to slim-down government borrowing.
Ed Roddis is head of public sector research at Deloitte
