Tackling fraud and corruption against government

Public Accounts Committee Closed Inquiry
Opened: 29 Mar 2023 Closed: 18 Nov 2023 Parliament page
Before the COVID-19 pandemic, the Government Counter Fraud Function estimated that the level of taxpayer loss from fraud and error was already between £29.3 billion and £51.8 billion annually. Over the past two years the level of taxpayers’ funds lost to fraud has risen due to the government’s response to … Read more
2 Recommendations
23 Conclusions
1 Report
1 Oral session
2 Letters
1 Event
Activity timeline 6 events
18 Nov
2023
Report published
8 Sep
2023
Report published
19 Jun
2023
Correspondence
12 Jun
2023
Correspondence
15 May
2023
Oral evidence
15 May
2023
Formal meeting (oral evidence session) · The Grimond Room, Portcullis House
Oral evidence sessions 1 session
15 May 2023
View on parliament.uk
Tackling fraud and corruption against government
Alex Chisholm · Cabinet Office James Bowler CB · HM Treasury Mark Cheeseman OBE · Public Sector Fraud Authority
Title HC No. Published Items Response
Sixty-Ninth Report - Tackling fraud and corruption against gover… HC 1230 8 Sep 2023 25 Responded
Recommendations & Conclusions
25 results
2 Recommendation Rejected
Sixty-Ninth Report - Tackling frau…
Publish annual strategic intelligence report on government fraud and corruption levels and risk areas.
There are large gaps in government’s understanding of the extent and location of fraud and corruption risks. Most departments are exposed to several types of fraud and corruption risk in their income and spending, but few produce regular, reliable, and … Read more
Government Response
The government rejects the recommendation to publish a separate annual strategic intelligence report, stating the PSFA's High-Risk Fraud Portfolio will provide a strategic picture, and that disaggregating fraud and error is cost-intensive.
HM Treasury
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3 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Update Committee on counter-fraud review outcomes and actions addressing departmental weaknesses and resourcing.
Departmental counter-fraud staff often lack the credibility and authority needed to exert influence at senior levels. Historically, counter-fraud experts have focused on investigating suspected fraud and have not been brought into wider policy making and design. Many departments lack senior … Read more
Government Response
The government agrees and is implementing the recommendation. The PSFA will update on its Workforce and Performance Review, review compliance, launch a risk and prevention service, double specialists, launch a fraud leadership qualification, and coordinate reviews of department resourcing and outcomes, developing financial targets.
HM Treasury
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4 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Confirm plans to embed Initial Fraud Impact Assessments into departmental spending approval processes.
Government has often failed to implement basic counter-fraud measures into its new initiatives. Government’s COVID-19 response highlighted the importance of designing counter-fraud measures, including controls, reporting and recovery, into new initiatives at an early stage of the policy cycle. Government … Read more
Government Response
The government agrees and is implementing. The PSFA offers support and training for embedding Initial Fraud Impact Assessments (IFIAs). HM Treasury will update Accounting Officer Assessment guidance to reference the PSFA and advise AOs-in-training to use IFIA outcomes and explicitly set out fraud risk in summaries.
HM Treasury
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5 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Develop cross-government communication strategy highlighting efforts in pursuing fraudsters and counter-fraud effectiveness.
Government is not generating enough of a deterrence effect from pursuing those that commit fraud against the public purse. Most of government’s investigatory and enforcement capability sits in HM Revenue & Customs and DWP. PSFA will in due course set … Read more
Government Response
The government agrees. The PSFA is working with Cabinet Office Communications and has established a Cross Government Counter Fraud Communications Working Group. This group will develop a cross-government communications plan to highlight anti-fraud efforts and create a deterrence effect.
HM Treasury
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6 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Work with departments to recover money paid to fraudsters and set out recovery expectations.
It is very unlikely that most of the losses due to fraud and corruption will ever be recovered. While fraud detection levels are rising, a large gap still remains between the estimated underlying levels of fraud and amounts detected. In … Read more
Government Response
The government agrees and is implementing, stating a clear policy to find, report, and recover fraud. HM Treasury will continue to invest in recovery initiatives, considering returns case-by-case, and will work with the PSFA to hold departments accountable for financial targets, also pursuing legislative options to strengthen future fraud loss recoveries.
HM Treasury
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7 Recommendation Accepted
Sixty-Ninth Report - Tackling frau…
Set out plans to understand and support local government counter-fraud challenges and capabilities.
Central government often relies on local government to manage fraud risks on its behalf but does little to support local authorities’ capability to do so. For example, the Department for Business, Energy and Industrial Strategy required local authorities to pursue … Read more
Government Response
The government agrees but states the PSFA's mandate is primarily with ministerial departments. It highlights existing support for local government through sharing standards, the Counter Fraud Profession, providing expert advice on specific schemes, and the National Fraud Initiative.
HM Treasury
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1 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Public Accounts Committee gathers evidence on government efforts to tackle fraud and corruption
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury, Cabinet Office and the Public Sector Fraud Authority (PSFA) about tackling fraud and corruption against government.2
Government Response
The government acknowledges fraud as a national security threat and highlights the PSFA's establishment with new funding, exceeding its initial savings target. It also cites DWP and HMRC's efforts and the encouragement for departments to set financial impact targets to combat fraud.
HM Treasury
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8 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Government demonstrates commitment to tackling fraud with significant investment and new initiatives
We were interested to hear about how government was demonstrating leadership at the most senior levels on tackling fraud and corruption. HM Treasury explained the steps it is taking to change and embed the counter-fraud culture across the public sector. … Read more
Government Response
The government agrees with the recommendation and notes it is already implemented, detailing significant existing investments in counter-fraud, such as PSFA funding and DWP/HMRC recovery targets. It also reiterates encouraging all departments to set financial impact targets for their counter-fraud work to improve transparency and deter fraudsters.
HM Treasury
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9 Conclusion Rejected
Sixty-Ninth Report - Tackling frau…
Many departments lack reliable fraud measurement despite significant estimated losses
Most departments are exposed to more than one type of fraud risk, while all have exposure to internal fraud and corruption risk.22 However, few departments produce regular, reliable, and comprehensive measurements on the level of fraud and corruption in major … Read more
Government Response
The government disagrees, stating that while PSFA is creating a High-Risk Fraud Portfolio and will continue publishing annual Fraud Landscape Reports and conducting fraud measurement exercises, it will not publish a separate strategic intelligence report. Disaggregating fraud and error is considered cost-intensive and discretionary for departments.
HM Treasury
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10 Conclusion Rejected
Sixty-Ninth Report - Tackling frau…
Over half of government's fraud assessments deemed unreliable, impacting understanding of losses
Each FMA exercise covers a specific area of spend and estimates the level of fraud and error in that spending. Since 2014, the FMA programme comprised 62 assessments covering £224 billion of spending. The GCFF’s Oversight Board concluded that 32 … Read more
Government Response
The government explicitly rejects the implied recommendation, stating it will not publish a separate strategic intelligence report or information that could increase fraud threats. Instead, the PSFA will create a "High-Risk Fraud Portfolio" and continue to publish annual Fraud Landscape Reports, while supporting departments in targeted fraud measurement.
HM Treasury
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11 Conclusion Rejected
Sixty-Ninth Report - Tackling frau…
Government increases fraud measurement experts while acknowledging challenges separating fraud and error
HM Treasury told us that to improve government’s fraud measurement capability, the number of fraud measurement experts will be doubling from 99 to about 180 across government.31 PSFA told us that it would not advocate departments to conduct fraud measurement … Read more
Government Response
The government explicitly rejects the implied recommendation to separate fraud and error due to cost and practicality, stating it is left to departmental discretion. It reasserts its focus on a "High-Risk Fraud Portfolio" and continued publication of annual reports, while declining to publish information that could aid fraudsters.
HM Treasury
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12 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Government counter-fraud standards enhance professional capability and provide public transparency
In 2018, Cabinet Office established the GCFF, which in turn launched a set of Counter Fraud Functional Standards to set out minimum expectations for how government organisations should manage their fraud and corruption risks. In October 2018, government also launched … Read more
Government Response
The government agrees and details several actions, including prioritising support based on fraud understanding, launching a Risk, Threat and Prevention Service, developing a fraud leadership qualification, and strengthening the process for reviewing compliance against Counter Fraud Functional Standards.
HM Treasury
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13 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Significant development needed for government's counter-fraud profession despite growing membership
However, PSFA recognised that there is further work to be done on developing the counter-fraud profession. There are over 13,000 members of the counter-fraud function across government, around 84% of whom work for DWP or HMRC. Less than 45% of … Read more
Government Response
The government accepts the recommendation for further professionalisation, committing to actions such as doubling the number of counter-fraud specialists, launching the world’s first fraud leadership qualification, and providing further standards and training. It will also coordinate reviews of department resourcing and develop outcome metrics and financial targets for counter-fraud activities.
HM Treasury
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14 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Government introduces annual performance reviews and 3:1 return on investment target for counter-fraud
In 2021, HM Treasury commissioned GCFF to undertake a Workforce and Performance Review (WPR) to map the counter-fraud resources and delivery outcomes of 70 central government organisations.42 HM Treasury and Cabinet Office said that the WPR exercise will now be … Read more
Government Response
The government agrees and commits that the PSFA will update the committee in 12 months on the outcome of the next Workforce and Performance Review, confirming it will be an annual undertaking.
HM Treasury
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15 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
COVID-19 response highlights fraud design failures, leading to new impact assessments
Government’s response to the COVID-19 pandemic underlined the need to design counter-fraud measures, including controls, reporting and recovery, into new initiatives at an early stage of the policy cycle. Government could have maintained several basic standards of public accountability to … Read more
Government Response
The government accepts the recommendation and confirms Initial Fraud Impact Assessments (IFIAs) are embedded in HMT's approval processes with required training for officials. It further commits to using spending conditions to enforce fraud risk management expectations and requiring Accounting Officers to report irregularities in fraud management to Parliament.
HM Treasury
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16 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
PSFA launches new risk and prevention services, applying COVID-19 fraud lessons to new schemes
PSFA also informed us that it would soon launch its ‘risk, threat and prevention service’, which it wants to provide departments with further support on early risk assessments.50 The Cabinet Office made an announcement on 24 May, shortly after our … Read more
Government Response
The government accepts the importance of early risk assessment and confirms the PSFA has launched its Risk, Threat and Prevention Service. It also commits to doubling counter-fraud specialists, launching a fraud leadership qualification, providing further training, and strengthening compliance reviews to improve capabilities and outcomes across public bodies.
HM Treasury
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17 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Government acknowledges the importance of robust enforcement against fraud and corruption.
Detecting and pursuing fraudsters and corrupt officials is important for the provision of justice, to provide intelligence on the types of fraud and corruption occurring and to act as a deterrent for others.54 Cabinet Office told us it is the … Read more
Government Response
The government accepts the importance of deterrence through transparency and communication, establishing a Cross Government Counter Fraud Communications Working Group to develop a common narrative and amplify successful counter-fraud activities by June 2024. The PSFA will also publicly report on its strategic plans and progress in its Annual Report to demonstrate the consequences for fraudsters.
HM Treasury
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18 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Government lacks evidence on optimal prosecution levels needed for fraud deterrence.
On the deterrence effect of convictions and whether there is a sufficient level of convictions to create a suitable deterrent, the PSFA told us that it was not aware of any evidence to indicate what the right level of prosecutions … Read more
Government Response
The government agrees that transparency and clear communications are a priority, committing to establish a Cross Government Counter Fraud Communications Working Group to develop a plan, amplify successes, and promote the deterrence effect by June 2024.
HM Treasury
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19 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Government lacks sufficient capability to detect and investigate all fraud cases.
DWP and HMRC are the two departments at the front line of the battle against fraud. These departments have their own fraud investigation and enforcement legal powers.60 Cabinet Office told us that the PSFA will itself be setting up an … Read more
Government Response
The government accepts the importance of transparency, establishing a Cross Government Counter Fraud Communications Working Group led by the PSFA to develop a consistent communications plan by June 2024. The PSFA will also continue public reporting through strategic plans and an Annual Report to highlight the impact of counter-fraud work.
HM Treasury
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20 Conclusion Rejected
Sixty-Ninth Report - Tackling frau…
A substantial gap persists between estimated and detected fraud outside tax and welfare.
Departments have detected an increasing amount of fraud and error outside of tax and welfare expenditure. Cabinet Office has reported that since 2014–15 departments have detected £0.9 billion of fraud.65 It is not, however, possible to tell whether the increase … Read more
Government Response
The government disagrees, stating that while PSFA is developing a High-Risk Fraud Portfolio and will continue publishing annual Fraud Landscape Reports and conducting fraud measurement exercises, it will not publish a separate strategic intelligence report. Disaggregating fraud and error is deemed cost-intensive and discretionary for departments.
HM Treasury
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21 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Departments recover a minority of detected fraud, hindered by fragmented enforcement powers.
Departments also only recover a minority of the fraud they detect. In 2020–21, departments had recovered £29 million out of the £243 million of detected fraud. Enforcement and recovery powers are also fragmented across government, which exacerbates the challenge government … Read more
Government Response
The government commits to continue investing in fraud recovery initiatives and pursuing legislative options to strengthen the public sector's counter-fraud response. It will also work with the PSFA to hold departments accountable for financial targets on counter-fraud investment, building on existing efforts that have already seen significant recoveries.
HM Treasury
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22 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Complex accountability between central and local government hinders effective fraud risk management.
The accountability system between local and central government is complex. This complexity means it can be difficult to identify who is accountable for what.71 Central government often relies on local government to manage fraud risks on its behalf, for example, … Read more
Government Response
The government states that responsibility for local government fraud lies with council CFOs, while DLUHC is responsible for the wider accountability framework and has published new guidance. PSFA already supports local government through sharing practices, providing standards, and running the National Fraud Initiative.
HM Treasury
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23 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Local authorities lack financial incentive to recover COVID-19 grant fraud losses.
Between March 2020 and March 2022, local authorities distributed COVID-19 grants costing £22.6 billion via 4.5 million payments to businesses. By October 2022, the Department for Business, Energy & Industrial Strategy (BEIS) estimated that error and fraud across all the … Read more
Government Response
The government states that local council Chief Financial Officers are responsible for tackling fraud, while DLUHC accepts responsibility for the wider accountability framework and has published new guidance. The PSFA already shares practices, makes standards available, and runs the National Fraud Initiative to support local government.
HM Treasury
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24 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
No current plans to extend PSFA's remit to cover local government fraud management.
HM Treasury told us that while it may appear reasonable to extend the PSFA’s remit to also cover local government, there are different governance architectures across central and local government, and any change to the roles and responsibilities of the … Read more
Government Response
The government states that responsibility for local government fraud lies with council CFOs, while DLUHC is responsible for the wider accountability framework and has published new guidance. PSFA already supports local government through sharing practices, providing standards, and running the National Fraud Initiative.
HM Treasury
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25 Conclusion Accepted
Sixty-Ninth Report - Tackling frau…
Central government currently lacks oversight of local authorities' fraud and corruption risk management.
Cabinet Office and the PSFA told us that while local government does not explicitly fall under their remit, they still provide support to local authorities through various means. Local authorities can make use of the data-matching functionality of the National … Read more
Government Response
The government states that responsibility for local government fraud lies with council CFOs, while DLUHC is responsible for the wider accountability framework and has published new guidance. PSFA already supports local government through sharing practices, providing standards, and running the National Fraud Initiative.
HM Treasury
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Government Response AI assessment · 25 of 2 classified
Accepted 20
Rejected 5
Total 2 recs + 23 conclusions
Correspondence 2 letters
19 Jun 2023 Correspondence from Alex Chisholm, Civil Service Chief Operating Officer and Cabinet Office Permanent Secretary, re Tackling fraud and corruption against government: supplementary evidence, dated 25 May 2023
Parliament page
12 Jun 2023 Correspondence from Alex Chisholm, Civil Service Chief Operating Officer and Cabinet Office Permanent Secretary, re Tackling fraud and corruption against government: supplementary evidence, dated 25 May 2023
Parliament page