Lessons learned: tackling fraud and protecting propriety in government spending during an emergency

a) We recommend that HM Treasury: publish, disseminate and maintain the Spending in a Crisis guidance it produced in response to the Boardman review

m) We recommend that the Public Sector Fraud Authority develop and test a plan so that in an emergency it has the following: ? Clarity over the key counter-fraud priorities. This should build on the experience of providing the global fraud risk assessment during the COVID-19 pandemic and provide clarity on where the resources are needed. This should take account of both the likely return on investment from deploying people to that area, and the opportunity cost of not retaining them where they are. ? Visibility over where people with the right skills are. The PSFA should develop a more comprehensive map of counter-fraud talent within government, including where it exists outside of the profession. The PSFA should facilitate better networking within the profession. ? Strong bonds across the Government Counter Fraud Profession so that it can form effective new teams in an emergency. It is helpful if teams have worked together before they have to do so in an emergency. Such a model could vary from a network of people that the PSFA draws upon across departments (such as currently used for project reviews), a central surge team (such as the Commercial Function?s complex transactions team), or centralised employment (such as the Government Commercial Organisation). ? Influence over their deployment. The PSFA should continue to develop its global assessment of fraud risks within government to enable it to better target the deployment of existing talent across government in emergencies.

n) We recommend the Central Digital and Data Office work with departments and the Public Sector Fraud Authority to extend the remit of the essential shared data assets plan to: Work out now what current datasets might be needed in an emergency to make payments and fight fraud. This should include current datasets that are not shared in normal times but would become critical datasets in an emergency

o) We recommend the Central Digital and Data Office work with departments and the Public Sector Fraud Authority to extend the remit of the essential shared data assets plan to: Review the extent to which these datasets are accessible and readily shareable within government. As part of the general maintenance and development of these datasets, improve their ability to be shared and made use of at pace in an emergency.

p) We recommend the Central Digital and Data Office work with departments and the Public Sector Fraud Authority to extend the remit of the essential shared data assets plan to: Consider what data-sharing arrangements could be set up now. In an emergency, public bodies may not have time to agree data-sharing protocols.

q) We recommend that the Cabinet Office and HM Treasury: embed into their guidance and training the expectations of how decisions on public spending are to be recorded during an emergency to uphold accountability. Use this to emphasise to staff the importance of maintaining transparency during an emergency.

r) We recommend that the Cabinet Office and HM Treasury: seek to automate transparency over spending so publication requires little or no human involvement, building on current plans on contract awards following the Procurement Act 2023.

t) We recommend that the Government Commercial Function: produces guidance for commercial staff, to sit alongside its outsourcing and construction playbooks, on how to buy in a seller?s market. This would apply to both national emergencies and other situations where departments face a seller with significant commercial leverage. To do so it should consider recent experience of handling: ? the need to understand the market, and the level of competition and the characteristics of a seller?s market that make normal procurement practices difficult; ? how to use the emergency powers in the Procurement Act 2023; ? how to triage high volumes of offers, potentially with the use of dynamic purchasing arrangements; ? high standards of transparency and accountability expected from vendors and how these can be used to provide additional leverage where commercial leverage is limited; ? how to demonstrate value for money using benchmarking; ? the use of open-book accounting for brokers of goods; and ? how to record and manage actual and perceived conflicts of interests

i) Where the initial fraud impact assessment indicates a risk of fraud, we recommend that HM Treasury: require that business cases include a budget and high-level milestones for implementing the fraud risk management cycle. High-level milestones might include, for example, the month an inspection regime might be in place.

b) We recommend that departments, working with HM Treasury, Cabinet Office and the Public Sector Fraud Authority (PSFA): each develop internal ?how to guides? (?playbooks?) to aid future responses. These need to cover how governance can be streamlined when needed, how to bring in and use the right additional expertise, and what additional delegations are needed and how these will be managed. Consideration should also be given to how the regularity of spending will be monitored and reported. Where departments have already prepared such guides, we recommend they share and continue to improve them

c) We recommend that departments, working with HM Treasury, Cabinet Office and the Public Sector Fraud Authority (PSFA): include in the playbooks how they will keep delivery partners up to date on the relevant rules. The government?s delivery partners, including companies, charities and local authorities, will often need to plan and develop their capabilities to deliver new schemes. It is important that departments set out emergency scheme rules as soon as possible to support this. Where elements still need to be developed, it should be clearly communicated to delivery partners that they will be returned to. When changes to scheme rules are required, give them as much notice as possible.

d) We recommend that the Cabinet Office working with HM Treasury and the PSFA: continue to develop training on meeting public spending rules in an emergency, building on the short module on public spending rules in the Crisis Management Excellence Programme and desktop exercises.

h) We recommend that departments: stress the need to agree upfront with delivery partners the principles by which fraud and propriety will be managed in departmental playbooks and training (recommendations b and d), even if the full terms and conditions relating to issues such as inspection, monitoring, and clawback cannot be agreed before the scheme is launched

j) We recommend that the Cabinet Office: update model contracts and grant agreements with standardised clauses that embed the fraud risk management cycle, particularly to enable inspection, measurement of fraud, clawback, and reporting.

l) We recommend that the Public Sector Fraud Authority: Maintain a library of good practice controls it can suggest to mitigate fraud risks. For example, the PSFA?s lessons exercise identified that staged payments could limit exposure where payee eligibility has not yet been verified.