30 April 2004
Some government departments are allowing billions of pounds a year to dribble away through fraud in the public sector because of 'appallingly lax controls', a senior MP warned this week.
Although an overall figure is difficult to ascertain, it is estimated that the Exchequer loses at least £23bn a year to fraud across the public and private sectors.
Edward Leigh, chair of the Commons' Public Accounts Committee, which has investigated the impact of fraud on the government purse, told a private conference of finance and security experts on April 27 that new energy must be put into the battle to stem the fraud.
Citing examples of lax control, Leigh pointed towards the Department for Environment, Food and Rural Affairs and its predecessors, for 'instances where nowhere near enough is being done'.
Defra officials, he explained, had paid out more than £100,000 in agricultural subsidies to a farmer for 'land' that officials had failed to check. A tip-off later led to the individual being prosecuted for providing map references that placed the 'land' in Iceland, Greenland and the North Sea.
But it isn't just Defra that falls victim to fraud. It is estimated that the Department for Work and Pensions, which pays out £11bn in benefits each year, loses some £2bn through fraud.
Meanwhile, simple tobacco duty fraud costs Customs and Excise around £2.3bn per year, while VAT losses have hit £12bn.
'No-one pretends that all the losses can be stopped,' Leigh said, 'but Parliament demands that more can be done.'
The conference coincided with the launch of new Treasury guidance on tackling fraud, which calls on public bodies to share best practice and make use of tough new laws on reclaiming criminal assets.
Sir John Bourn, the head of the National Audit Office, welcomed the guidance. He also said departments were 'raising their game'.
In particular, he claimed that the tough new Proceeds of Crime Act, which allows public bodies to seize money gleaned from criminal activities, indicated a new approach to the issue and 'greater professionalism' in tackling fraud.
At the conference Mike Eland, acting chair of Customs and Excise, encouraged departments to set tough targets to reduce fraud to 'ensure that [public] funds are spent as Parliament intends'.
PFapr2004
