In a fraud landscape review published yesterday, the National Audit Office revealed that, excluding tax credit and benefit fraud, detected fraud across government in 2014/15 was just £72.9m – equivalent to 0.02% of total expenditure.
However, this is significantly lower than some estimates, which suggest a public sector fraud rate of between 3% and 5% across the European Union and US. This indicated, the auditors said, that significant fraud and error is going unreported.
“Government lacks a clear understanding of the scale of the fraud problem and departments vary in their ability to identify and address fraud risks,” the NAO stated.
“The data that does exist is patchy, inconsistent and of variable quality. The most comprehensive data relates to areas of known risk – tax credit and benefit fraud – but information across the rest of government is clearly incomplete. It is difficult to formulate solutions if the scale and nature of the problem is unknown.”
It noted a recent Cabinet Office exercise to collect fraud returns from Whitehall departments but highlighted “gaps and inconsistencies” in the data sets. The returns do, however, suggest that a lower level of fraud is being reported than expected.
The NAO concluded that it was difficult estimate the success of the government’s anti-fraud actions because of these data gaps.
“Most central activity to date has focussed on getting departments to recognise the risks and establish governance structures and processes to better identify and address fraud, which is a necessary first step to being able to evaluate success,” the watchdog said.
It urged Whitehall to carry out thorough fraud risk assessments and improve data quality. The Cabinet Office should also publish an annual fraud report to raise awareness and transparency throughout central government.
