The National Audit Office (NAO) has revealed a concerning rise in fraud-related losses during the COVID-19 pandemic compared to the previous two years. Over £7bn of the total loss can be traced back to government schemes enacted during the pandemic.
Surge in Fraud Losses during COVID-19 Pandemic
The NAO’s data highlights a shocking surge in financial losses due to fraud during the COVID-19 pandemic. Incredibly, tens of billions of pounds have disappeared because of fraudulent activities, with a bleak outlook for recovering most of these losses. The government suffered a staggering £21bn in losses, with over £7bn linked directly to schemes implemented during the pandemic. Regrettably, it seems improbable that this taxpayers’ money will be recouped.
Viewed broadly, fraud has almost quadrupled, soaring from £5.5bn two years pre-pandemic to an alarming £21bn in the two years since. The NAO points out that many public entities remain unaware of the full extent of fraud they face. Meanwhile, HM Revenue and Customs (HMRC) struggles with numerous fraudulent claims tied to pandemic employment schemes.
Recovery Efforts Underway
In this challenging scenario, the HMRC’s taxpayer protection taskforce, with 1,200 tax specialists, aims to reclaim £1.1bn from an estimated £4.5bn. Meanwhile, the DWP recovered £500 million by analysing Universal Credit claims from the pandemic’s peak. Yet, at least £1.5bn in fraudulent claims from that period continued being paid out in the 2021-22 fiscal year. The DWP is planning targeted case reviews to detect and recover as much of the remaining amount as possible.
Gareth Davies, head of the NAO, voiced serious concerns over the sharp rise in reported fraud levels. He highlighted the risk this poses to public perception, potentially leading to beliefs that fraud and corruption are widespread and tolerated in the government. Davies praised the creation of the Public Sector Fraud Authority (PSFA) as a promising step to fight fraud more effectively.
Government Intensifies Anti-Fraud Measures
In response, a spokesperson stated that the government is amping up its strategy for combating public sector fraud to ensure every stolen pound is pursued. The spokesperson acknowledged that establishing the Public Sector Fraud Authority has already shown progress in protecting taxpayers’ money. Over £900 million has been invested in fraud prevention since 2021.
The spokesperson highlighted that over £3.1bn in fraud losses, including those from COVID-19 schemes, were recovered in the past two years. However, they acknowledged the need for additional actions. As part of this strategy, the Government Counter Fraud Profession is growing, with advanced technology and training being introduced to “further protect the public purse”.
Bolstering Prevention Measures
The UK government is focusing on enhancing fraud prevention measures to protect taxpayers and public funds. This entails giving agencies like the PSFA and GCFP more resources and tools for fraud detection and prevention. They will use advanced technology, like AI and data analytics, to spot patterns indicating fraud.
Government agencies will also strengthen collaboration and information-sharing practices to combat fraud more effectively. This collective approach enables a more unified response to fraud across all sectors. By pooling resources and expertise, the government can better identify, investigate, and prosecute fraud, increasing the chances of recovering stolen funds.
Role of Public Awareness and Education
Public awareness and education play a vital role in fraud prevention. As fraudsters evolve their tactics, the public must remain informed and vigilant. They can better protect themselves from fraud by providing the public with the knowledge to identify potential risks and red flags. Government bodies, financial institutions, and other organisations should collaborate to create and implement awareness campaigns and educational programs.
Continual Evaluation and Adaptation of Strategies
As fraudsters develop new tactics, government agencies must continuously evaluate and adapt their fraud prevention strategies. Regular assessment of the effectiveness of current measures and implementing improvements as needed is crucial. By remaining agile and responsive, the government can better safeguard public funds and uphold public trust in its services.
The alarming increase in fraud since the pandemic underscores the need for a robust and proactive response from the government. Enhancing fraud prevention, promoting collaboration, and raising public awareness helps the government protect taxpayers’ money and build trust. Creating the Public Sector Fraud Authority and expanding the Government Counter Fraud Profession are promising steps in addressing this crucial issue.
