Fraud and Error

Public Accounts Committee Closed Inquiry
Opened: 23 Mar 2021 Closed: 16 Nov 2021 Parliament page
Before the COVID-19 pandemic, the Government Counter Fraud Function estimated that the level of fraud and error against government was already between £29.3 billion and £51.8 billion annually. The National Audit Office’s work over the past year has shown that the risk of fraud and error has risen significantly during … Read more
16 Recommendations
15 Conclusions
1 Report
1 Oral session
6 Letters
1 Event
Activity timeline 9 events
14 Dec
2021
Correspondence
14 Dec
2021
Correspondence
28 Oct
2021
Report published
25 Oct
2021
Correspondence
30 Jun
2021
Report published
25 May
2021
Correspondence
25 May
2021
Correspondence
18 May
2021
Correspondence
29 Apr
2021
Oral evidence
Oral evidence sessions 1 session
29 Apr 2021
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Fraud and Error
Cat Little · Cabinet Office Jim Harra · HMRC Mark Cheeseman · Cabinet Office Peter Schofield · Department for Work and Pensions Sarah Munby · Department for Business, Energy and Industrial Strategy
Title HC No. Published Items Response
Ninth Report - Fraud and Error HC 253 30 Jun 2021 31 Responded
Recommendations & Conclusions
31 results
2 Recommendation Accepted in Part
Ninth Report - Fraud and Error
Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of...
Government’s focus on the long-standing fraud and error risks it understands, risks large amounts of fraud and error being unidentified or untackled elsewhere. Efforts to tackle fraud and error in the tax and benefits system come under regular scrutiny. While … Read more
Government Response
The government agrees to identify and update fraud and error risks across government annually, setting an implementation date of February 2022. However, it rejects publishing individual fraud and error risks at a detailed level due to concerns about increasing overall fraud risk, instead committing to provide internal government access to the Global Fraud Risk Assessment and increase transparency on the use of Fraud Risk Assessments.
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3 Recommendation Accepted
Ninth Report - Fraud and Error
Departments’ lack of urgency to robustly measure fraud and error hinders their ability to direct...
Departments’ lack of urgency to robustly measure fraud and error hinders their ability to direct their counter fraud and error efforts. The robust measurement of fraud and error is a crucial aspect of any counter fraud response because it shows … Read more
Government Response
The government accepts the recommendation and sets a November 2021 target, stating that HM Treasury has mandated enhanced reporting requirements for departments on COVID-19 support scheme funds within their annual reports and accounts, and the Government Financial Reporting Manual (FReM) now requires detailed risk explanations including fraud and error.
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4 Recommendation Accepted
Ninth Report - Fraud and Error
Departments do not make enough use of counter fraud expertise when designing new initiatives to...
Departments do not make enough use of counter fraud expertise when designing new initiatives to ensure they minimise losses to the taxpayer. One of the key lessons from government’s response to the pandemic is the need to balance speed of … Read more
Government Response
The government accepts the recommendation and aims to implement it by February 2022, committing to introduce mandatory Fraud Impact Assessments with formal sign-off for major spend initiatives. Guidance is being developed, and Managing Public Money will be amended to require these assessments for major projects, with summaries to be published.
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5 Recommendation Accepted
Ninth Report - Fraud and Error
HM Treasury and Cabinet Office do not know whether departments are adequately resourced to tackle...
HM Treasury and Cabinet Office do not know whether departments are adequately resourced to tackle fraud and error. There are currently 16,000 members of the Counter Fraud Function within the public sector, with 77% of counter fraud professionals working in … Read more
Government Response
The government accepts the recommendation and commits to writing to the Committee by November 2021. This letter will detail how they will work with departments and across the system to build counter fraud capacity and capability.
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6 Recommendation Accepted
Ninth Report - Fraud and Error
Gaps in transparency and information sharing between departments is hindering efforts to prevent, detect and...
Gaps in transparency and information sharing between departments is hindering efforts to prevent, detect and correct fraud and error. Timely data sharing can be used to prevent fraud by data matching, improve detection of fraud by sharing intelligence, and enable … Read more
Government Response
The government agrees to the recommendation for the Cabinet Office to write to the Committee by November 2021, detailing its work with departments to address gaps and improve real-time data sharing.
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7 Recommendation Not Addressed
Ninth Report - Fraud and Error
HMRC, DWP and BEIS are unable to justify the inconsistencies in their approaches to the...
HMRC, DWP and BEIS are unable to justify the inconsistencies in their approaches to the consequences of fraud and error for different groups of debtors. Departments need to take steps to detect, pursue and recover the billions of pounds of … Read more
Government Response
The government's response is irrelevant, referencing reports on the English Rail System rather than addressing the recommendation for HMRC, DWP, and BEIS to detail how they will address fraud sanction inconsistencies and recovery efforts.
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1 Conclusion Acknowledged
Ninth Report - Fraud and Error
On the basis of a report by the Comptroller and Auditor General, we took evidence...
On the basis of a report by the Comptroller and Auditor General, we took evidence from Cabinet Office, the Department for Business, Energy and Industrial Strategy (BEIS), the Department for Work and Pensions (DWP), HM Revenue & Customs (HMRC) and … Read more
Government Response
The government acknowledges the committee's introductory statement, confirming it received evidence from the listed departments and that this document constitutes the government's response to the report.
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8 Conclusion Accepted
Ninth Report - Fraud and Error
Fraud and error within Universal Credit rose by £3.8 billion to an all-time high of...
Fraud and error within Universal Credit rose by £3.8 billion to an all-time high of £5.5 billion between April 2020 and March 2021. DWP told us it that during lockdown it found opportunities for innovation by adapting traditional controls, such … Read more
Government Response
The government states that departments already take a risk-based approach to fraud and error, in line with best practice advocated by the Government Counter Fraud Function and supported by existing standards and guidance.
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9 Conclusion Accepted
Ninth Report - Fraud and Error
We have regularly reported on HMRC’s and DWP’s efforts to tackle fraud and error in...
We have regularly reported on HMRC’s and DWP’s efforts to tackle fraud and error in the tax and benefit systems. DWP’s accounts have been qualified every year since 1988–89 due to material levels of overpayments and underpayments in benefits expenditure.24 … Read more
Government Response
The government states that departments already take a risk-based approach to fraud and error, which aligns with best practice advocated by the Government Counter Fraud Function.
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10 Recommendation Accepted in Part
Ninth Report - Fraud and Error
We asked Cabinet Office about fraud and error risks outside the tax and benefits system.
We asked Cabinet Office about fraud and error risks outside the tax and benefits system. Cabinet Office told us that the diversity of risks is “very, very large”, because government spends £850 billion and collects around £800 billion in income. … Read more
Government Response
The government agrees to build on the Global Fraud Risk Assessment (GFRA) and update it annually, but will not publish fraud risks at the requested level of detail, instead providing internal government access.
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11 Recommendation Accepted in Part
Ninth Report - Fraud and Error
The Counter Fraud Function undertook a Global Fraud Risk Assessment across 206 COVID-19 response schemes,...
The Counter Fraud Function undertook a Global Fraud Risk Assessment across 206 COVID-19 response schemes, with an estimated total value of £387 billion. It risk-assessed 16 of these schemes as having a high or very high fraud risk, representing 57% … Read more
Government Response
The government agrees to build on and annually update the Global Fraud Risk Assessment (GFRA) with a target implementation date of February 2022, and will provide access to it across government, but rejects publishing fraud risks at a detailed level due to concerns about increasing overall risk.
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12 Conclusion Not Addressed
Ninth Report - Fraud and Error
It also assessed a large number of other COVID-19 schemes as potentially at high risk...
It also assessed a large number of other COVID-19 schemes as potentially at high risk of fraud but believed scheme owners needed to do more work to fully quantify those risks.32 Counter fraud resources across government
Government Response
The government response provided addresses a different PAC recommendation regarding the identification and publication of fraud risks, rather than the committee's specific conclusion about high-risk COVID-19 schemes and the need for scheme owners to quantify those risks.
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13 Recommendation Accepted
Ninth Report - Fraud and Error
We asked HM Treasury and Cabinet Office about the capability and capacity of counter fraud...
We asked HM Treasury and Cabinet Office about the capability and capacity of counter fraud resources across the public sector. Cabinet Office explained that traditionally Departments have decided individually what level of capability they need, but as fraud is a … Read more
Government Response
The government accepts the recommendation, committing to write to the Committee by November 2021 to detail how it will work with departments to build counter-fraud capacity, leveraging the Spending Review process and the Government Counter Fraud Profession.
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14 Recommendation Accepted
Ninth Report - Fraud and Error
We asked whether counter fraud expertise is adequately deployed across the rest of government.
We asked whether counter fraud expertise is adequately deployed across the rest of government. Cabinet Office provided information on where counter fraud expertise is deployed across the rest of government but it is clear that some of the major departments … Read more
Government Response
The government accepts the recommendation and commits to writing to the Committee in November 2021 to detail how it will work with departments to build counter-fraud capacity and capability, and will review departmental capacity after the Spending Review 2021.
HM Treasury
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15 Conclusion Deferred
Ninth Report - Fraud and Error
HM Treasury told us it has ongoing dialogue with departments and supports the funding of...
HM Treasury told us it has ongoing dialogue with departments and supports the funding of counter fraud activity if it is cost effective. We asked HM Treasury why it took 12 months to approve the £100 million funding for a … Read more
Government Response
The government responded by outlining the existing Spending Review process for departmental fraud funding and committed that HM Treasury and the Counter Fraud Function will review counter fraud capacity following the 2021 Spending Review.
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16 Conclusion Accepted
Ninth Report - Fraud and Error
HM Treasury told us that other government functions have a critical role in helping with...
HM Treasury told us that other government functions have a critical role in helping with fraud risk. It told us the Finance and Commercial Functions must operate as an effective second line of defence in advising and supporting fraud risk. … Read more
Government Response
The government committed to writing to the Committee in November 2021, detailing how it will work with departments and across the system to build counter fraud capacity and capability, including close collaboration with the Government Counter Fraud Profession.
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17 Conclusion Not Addressed
Ninth Report - Fraud and Error
The Counter Fraud Function describes fraud as a hidden crime which you must find before...
The Counter Fraud Function describes fraud as a hidden crime which you must find before you can fight.41 The government’s counter-fraud functional strategy states an aim to be the most transparent government globally in dealing with public sector fraud.42 Cabinet … Read more
Government Response
The government's response focused on its plans to increase the use of real-time application checks and improve data sharing across departments, without directly addressing the committee's conclusion about transparency and annual fraud reporting.
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18 Conclusion Accepted
Ninth Report - Fraud and Error
HM Treasury’s guide to Managing Public Money states that that every department should measure and...
HM Treasury’s guide to Managing Public Money states that that every department should measure and estimate the scale of fraud and error and disclose this in its Annual Report were material.45 The NAO identified the proper measurement of fraud and … Read more
Government Response
The government agrees and states HMRC plans to publish detailed provisional assessments for each scheme in its annual report and accounts in autumn 2021, along with a technical note on the methodology.
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19 Recommendation Accepted
Ninth Report - Fraud and Error
We asked about DWP’s progress in developing a target for fraud and error.
We asked about DWP’s progress in developing a target for fraud and error. We have previously recommended that DWP analyse the extent to which fraud and error in the system was temporary because of the pandemic and what was due … Read more
Government Response
The government agrees to the committee's recommendation, stating DWP is developing options for setting a fraud and error target and will write to the Committee with an update by December 2021.
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20 Recommendation Accepted
Ninth Report - Fraud and Error
We asked BEIS about efforts to estimate the level of fraud and error in the...
We asked BEIS about efforts to estimate the level of fraud and error in the Bounce Back Loan Scheme. BEIS told us it has commissioned PwC to undertake a sampling exercise to come up with a specific estimate of fraud … Read more
Government Response
The government agrees with the recommendation and has a target implementation date of November 2021. It details ongoing work with PwC to estimate fraud in the Bounce Back Loan Scheme and CBILS, and explains that work to assess fraud and error in grant schemes is underway with initial results expected by December 2021. BEIS commits to developing a proportionate risk-based approach for measuring fraud and error in later schemes and future programmes.
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21 Recommendation Accepted
Ninth Report - Fraud and Error
We asked about what needed to be done to improve the consistency of fraud and...
We asked about what needed to be done to improve the consistency of fraud and error reporting across the public sector. Cabinet Office told us that the introduction of the Functional Standards, a set of minimum criteria for dealing with … Read more
Government Response
The government accepts the recommendation, committing to continue working with departments to increase real-time application checks and writing to the Committee by November 2021 to detail progress and future actions on real-time data sharing.
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22 Conclusion Accepted
Ninth Report - Fraud and Error
Cabinet Office and DWP told us that timely data sharing can be used to prevent...
Cabinet Office and DWP told us that timely data sharing can be used to prevent fraud by data matching, improve detection of fraud by sharing intelligence, and enable recovery in cross-government schemes.55 The Digital Economy Act 2017 permits data-matching for … Read more
Government Response
The government agrees with the recommendation to address gaps in real-time data sharing, stating it will continue to expand real-time application checks and will write to the Committee by November 2021 with details of progress and future actions.
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23 Recommendation Rejected
Ninth Report - Fraud and Error
In written evidence Cifas, the UK’s largest cross-sector fraud sharing organisation, told us there should...
In written evidence Cifas, the UK’s largest cross-sector fraud sharing organisation, told us there should be transparency around the businesses that have been in receipt of COVID-19 support scheme funds, and, in its submission to us, the Fraud Advisory Panel … Read more
Government Response
The government explicitly disagrees with the recommendation to set out new transparency principles for government support schemes, including a presumption of publishing business beneficiaries. It cites a duty to protect the privacy of small businesses and clarifies that information is published where required, with facilities from 2021 onwards reported on a new UK transparency database.
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24 Conclusion Accepted
Ninth Report - Fraud and Error
In written evidence Cifas told us that it believed government’s failure to mandate industry standard...
In written evidence Cifas told us that it believed government’s failure to mandate industry standard fraud significantly contributed to the vast scale of fraud in COVID-19 support schemes.66 BEIS told us that it “found cross-Whitehall collaboration incredibly useful” on the … Read more
Government Response
The government agrees with the associated recommendation to address gaps in real-time data sharing, committing to increase the use and expansion of real-time application checks through the GCFF and to write to the Committee by November 2021 detailing progress and future actions.
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25 Conclusion Accepted
Ninth Report - Fraud and Error
Each government department has a responsibility to minimise fraud and error, put it right and...
Each government department has a responsibility to minimise fraud and error, put it right and report on it.70 HM Treasury told us it expects policy to be developed with fraud risk considered at the development and design stage.71 The NAO … Read more
Government Response
The government agrees with the associated recommendation, committing to introduce mandatory Fraud Impact Assessments (FIAs) for major projects and high-risk schemes with formal sign-off from the Counter Fraud Function by February 2022. It will amend "Managing Public Money" guidance and develop policy official guidance to implement this.
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26 Conclusion Accepted
Ninth Report - Fraud and Error
The Cabinet Office told us that the Counter Fraud Function is aiming to introduce a...
The Cabinet Office told us that the Counter Fraud Function is aiming to introduce a minimum standard for fraud risk assessments across government.74 But it is also still working to increase awareness of the Counter Fraud Function.75 For example, consultation … Read more
Government Response
The government agrees with the associated recommendation, committing to introduce mandatory Fraud Impact Assessments (FIAs) for major projects and high-risk schemes with formal sign-off from the Counter Fraud Function by February 2022. It will amend "Managing Public Money" guidance and develop policy official guidance to implement this.
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27 Conclusion Accepted
Ninth Report - Fraud and Error
The Cabinet Office told us that in emergency situations like the pandemic response it is...
The Cabinet Office told us that in emergency situations like the pandemic response it is important to get support out to communities and individuals who need it, and how you balance accessibility and control is one of the areas counter-fraud … Read more
Government Response
The government states that departments already take a risk-based approach to fraud and error, in line with best practice advocated by the Government Counter Fraud Function and supported by existing standards and guidance, implying this addresses the balance between accessibility and control.
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28 Conclusion Not Addressed
Ninth Report - Fraud and Error
We asked DWP how it balanced the need to protect taxpayers’ money with the speed...
We asked DWP how it balanced the need to protect taxpayers’ money with the speed and accessibility of support schemes. DWP told us that Universal Credit was a good example of balancing these needs as applications normally rely on people … Read more
Government Response
The response provides a general statement about departments taking a risk-based approach to fraud and error, failing to address the specific DWP processes, verification issues, or the team reviewing past cases mentioned in the conclusion.
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29 Recommendation Accepted
Ninth Report - Fraud and Error
Departments need to ensure that they detect fraud and error and recover overpayments wherever possible.84...
Departments need to ensure that they detect fraud and error and recover overpayments wherever possible.84 HM Treasury told us it is up to departments to undertake an assessment of how feasible it is to recover funds lost to fraud and … Read more
Government Response
The government responds by stating that departments already take a risk-based approach to fraud and error, which aligns with best practice and is supported by relevant guidelines.
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30 Conclusion Rejected
Ninth Report - Fraud and Error
We asked DWP and HMRC about the different departmental responses to similar fraudulent actions, such...
We asked DWP and HMRC about the different departmental responses to similar fraudulent actions, such as concealment of earnings. HMRC told us it has a policy of using criminal investigations in only the most serious cases, where it is the … Read more
Government Response
The government rejected what it interpreted as a recommendation, disagreeing with the committee's implied criticism of different departmental responses to fraud and stating that DWP and HMRC strategies are closely aligned, while committing to keep practices under review.
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31 Recommendation Accepted
Ninth Report - Fraud and Error
We asked BEIS about plans to recover loans made as part of the Bounce Back...
We asked BEIS about plans to recover loans made as part of the Bounce Back Loan Scheme. BEIS told us that in the first instance, it is the banks responsibility to manage recovery in line with their usual processes.92 BEIS … Read more
Government Response
The government agrees with the recommendation and states that the British Business Bank reviews lender recovery efforts, with BEIS holding the Bank accountable through governance meetings and monitoring performance.
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Government Response AI assessment · 31 of 16 classified
Accepted 20
Accepted in Part 3
Acknowledged 1
Deferred 1
Not Addressed 4
Rejected 2
Total 16 recs + 15 conclusions
Correspondence 6 letters
14 Dec 2021 Correspondence from Mark Cheeseman, Director of the Government Counter Fraud Function, Cabinet Office, re PAC Fraud and Error, dated 3 December 2021
Parliament page
14 Dec 2021 Correspondence from Sarah Munby, Permanent Secretary, Department for Business, Energy & Industrial Strategy, re Covid Support Schemes – PAC Fraud and Error Report Recommendations, dated 7 December 2021
Parliament page
25 Oct 2021 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re HMRC Error and Fraud – PAC Error and Fraud Report Recommendation 3c, dated 24 September 2021
Parliament page
25 May 2021 Correspondence from Mark Cheeseman, Director of the Government Counter Fraud Function, Cabinet Office, re Follow up on Fraud and Error, dated 17 May 2021
Parliament page
25 May 2021 Correspondence from George Turner, Director, TaxWatch, re Response to Fraud and Error session on Thursday 29 April 2021, dated 18 May 2021
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18 May 2021 Correspondence from Jim Harra, Chief Executive and First Permanent Secretary, re HMRC questions, dated 7 May 2021
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