Sixty-Ninth Report - Tackling fraud and corruption against government

Select Committee

Public Accounts Committee HC 1230 8 September 2023

Report Status Government responded

Conclusions & Recommendations 25 items (2 recs)

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Government Response (AI assessment · 25 of 25 classified)

Accepted 20

Rejected 5

Government response

Treasury minutes: Government response to the Committee of Public Accounts on the Sixty-ninth report from Session 2022-23 · published 18 Nov 2023

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Recommendations & Conclusions

5 results

2 Recommendation Rejected

Publish annual strategic intelligence report on government fraud and corruption levels and risk areas.

Recommendation

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 Summary

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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9 Conclusion Rejected

Many departments lack reliable fraud measurement despite significant estimated losses

Conclusion

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 Summary

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

Over half of government's fraud assessments deemed unreliable, impacting understanding of losses

Conclusion

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 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 of the assessments, representing more than half (57%) of assessed expenditure, produced outcomes that are not reliable.27 When challenged on the value of the counter-fraud function, PSFA told us that the UK is the only country in the world to have a standard on fraud risk assessment. The standard means that all risk assessments across government are comparable and it is clear to what quality they are conducted. The technical advances were 16 Qq 50–51, 61 17 Qq 54, 61, 72 18 Q 44 19 Q 61 20 C&AG’s Report, para 2.5 21 Q 72 22 C&AG’s Report, para 1.17 and Figure 3 23 Q 58; C&AG’s Report, Figure 3 24 C&AG’s Report, para 1.16 25 C&AG Report, Figures 1 and 6; Fraud and error in the benefit system: financial year 2022 to 2023 estimates 26 C&AG’s Report, para 1.12–1.15 27 C&AG’s Report, para 1.15–1.16 12 Tackling fraud and corruption against government made possible through counter-fraud practitioners working as a function.28 PSFA told us that the reason all assessments conducted since the start of the COVID-19 pandemic were deemed to be unreliable was the scale and complexity of the schemes, which in tandem with the inherent difficulties associated with fraud measurement, resulted in shortcomings against the fraud measurement standard. For example, the Department of Health and Social Care’s assessment of the level of fraud in its procurement of PPE was not based on a fully random sample and could not be extrapolated.29 We asked PSFA about the reliability of the MoD’s estimate that 4.8% of its annual procurement spend is fraudulent. PSFA explained that MoD, in the absence of a random sampling exercise, had to rely on benchmarks from academic research, and therefore its estimate does not come with a high level of confidence. The most Show less

Government Response Summary

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

Government increases fraud measurement experts while acknowledging challenges separating fraud and error

Conclusion

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 Summary

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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20 Conclusion Rejected

A substantial gap persists between estimated and detected fraud outside tax and welfare.

Conclusion

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 Summary

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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