Fraud and Error

Fraud and Error 2017

For years we’ve had a tub of sh*t our government could turn into a crock of gold. It seems, we never needed Austerity at all. Says who? Experian, that’s who, in their Annual Fraud Indicator Report 2017.  They calculated fraud and error add up to £190 billion per annum lost to the UK. Imagine what recovering £40 billion from fraud and error in the public sector alone would make to UK finances every year.

The report estimates billions of pounds disappear from the UK annually because of Fraud and Error. In fact, that’s what this significant and credible piece of research says. £190 billion is a lot of money. Furthermore, the issues have been raised for years. Above all, fraud and error on an industrial scale are ignored.

Back in 2014, the UK Commons Public Accounts Committee accused the government of a deliberate cover-up of fraud and incompetence. Is the failure to investigate deliberate? Of course, the UK government needs the determination to do it.

Hard times

Times are hard, and we hear government mantras like value for money.

Unsurprisingly, benefit fraud is in the crosshairs. The latest figures indicate £3.8 billion was overpaid to benefits claimants. Roughly half that figure is down to ‘error’. That leaves £2bn as the estimated fraudulent loss. Put another way, that adds up to just over 1% of the stolen money UK-wide. What about the rest?

Investigate? Yes Please

In 2018  4,045 DWP staff investigated ‘Fraud and Error’, aiming to recover £2 billion lost to benefits fraud. Of course, IT systems supporting controls like Universal Credit aim to ensure proper management. By 2015 the IT system’s costs had reached nearly £16 billion. At the same time, HMRC employed about 1,000 staff to get after the £2 billion lost to tax avoidance with a quarter of the resources.

It all adds up to around 5,000 people investigating £4 billion of (probably) misappropriated revenue. Based on a mean £15K salary plus 75% overheads, one might estimate around £130 million a year is spent by DWP and HMRC in pursuit of crooks.

Naturally enough, you may wonder, what else can we pursue? The short answer is ‘lots.’ With this in mind, Experian’s Annual Fraud Indicator Reports are worth a look.

Government Claims Great Success. Is the assertion fraudulent?

“Attempts at fraud will happen and government sees the identification of these problems as a great success. It is only through identifying and understanding fraud that we can take effective action against it. We have made good progress, since 2014/15, identified fraud in the public sector has risen from £29.7 million to £73.6million. This rise has been due to the hard work of public sector workers and the coordinated drive from the Cabinet Office.” Chris Skidmore (then Minister for the Constitution)

Minister Skidmore reported that his team had identified £74 million of fraud due to hard work. In other words, only £39.9 billion to go …EVERY YEAR. You read it right. Every year.

As the Minister says:

This Government’s ambition is for the UK public sector to be one of the leading countries in both identifying and dealing with fraud loss and risk. The Cabinet Office is bringing government together to move on this agenda.

In light of other facts in documents such as the Annual Fraud Indicator reports, could it be that our leaders lack interest or have a general unwillingness to pursue criminality? In other words, is this simply an attempt to spin away a sustained failure to investigate public and private sector fraud and bring criminals to justice?

There’s More, Much, Much More

In 2016, our government estimated between £22 and £49 billion were lost annually due to fraud and error in the public sector. With this in mind, crowing about identifying £74 million of fraud and error. The excellent result was somewhat misleading compared to the scale of things.

The Biggie

As mentioned previously, we have the UK Annual Fraud Indicator (AFI) 2017. It reports fraudulent activity costs the country £190 billion a year. Imagine if we could recover even half of that.

Why is the Government Fraud Landscape Annual Review 2018 report much lower amounts of money? In spite of the Experian figures, one wonders why the 2018 AFI is already six months late. Is it coming at all?

Recover the money!

If £130 million a year is spent recovering (or at least trying to recover) £4 billion of benefit losses, wouldn’t a similar effort to recover £181 billion make sense? Imagine similar resources being applied. It’s worth remembering that even if we only recovered a third of the money, that would be £60+ billion.

One thing is clear, thinking of the last ten years, if the Annual Fraud Indicator figures are correct, up to ten times the annual reported losses, or £1,900 billion, have been lost to criminality and incompetence.

Disgrace

Here we are, in a wealthy country with food banks where 30% of our children (4,1 million) live in relative poverty. My goodness, a significant portion of our future adult population may never be fed properly with the impact on their physiology and never have the chance to achieve their full potential.

Are you concerned? Dissembling, incompetence and ‘misorganisation’ from Westminster muddies the water and misleads us all.

© Mac Logan