Fraud and Error
We never needed Austerity at all, if our government focused on fraud and error. As a matter of fact, Experian’s Annual Fraud Indicator (AFI) Report, reports there’s a huge well of money to be recovered. What a difference £190 billion per annum (or even half that) would make to the UK’s funding?
In this case the AFI report says vast sums of money vanish every year. For this reason, it’s hard to understand why our government don’t chase the cash? That’s what this blog is about.
Imagine, there’s a crock of sh*t our government can turn into a crock of gold. Of course that needs diligence, political will and the necessary skills.
At the moment times are hard. As a result we hear government mantras like value for money time and again. Naturally enough benefit fraud is in the crosshairs.
Fair enough, £3.8 billion was overpaid to benefits claimants. Of this, around £2 billion is the estimated fraudulent loss with the rest down to error. Put another way, £4 billion adds up to around 10% of the AFI report’s identified missing public sector money. What about the rest?
Hostile? You bet
In 2018, it was reported that 4,045 DWP staff investigate Fraud and Error. As a result, IT systems supporting controls like Universal Credit were (and are being) developed to ensure proper management. In this case, the costs of the system had already reached nearly £16 billion by 2015. At the same time, HMRC employed about 550 staff to get after the £ 2 billions lost to tax avoidance.
Put another way, based on an average £17K salary plus 75% overheads one might estimate around £136 million a year is spent by DWP and HMRC in pursuit of crooks and foul-ups.
How much would be a reasonable sum to spend on recovering the reported Fraud and Error costs? With this in mind, Experian’s Annual Fraud Indicator Reports offer solid ideas. If like for like was applied based on the DWP/HMRC approach, then maybe £1.3 billion might be reasonable amount with 45,000 management and staff.
Be Reassured, the Government Claims a Great Success
“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 and this is due to hard work. In other words, only £billions to go … every year. You read it right, every year. Of course, that’s only the Public Sector.
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 AFI reports, could it be that our leaders lack interest? In other words, is this statement 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
Above all, knowledge of Fraud and Error isn’t new. It may come as a surprise to learn that, back in 2014, the Public Accounts Committee accused our government of a deliberate cover up of fraud and incompetence.
The Government, itself, estimated in 2016 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, whilst an excellent result, is misleading in the scale of things.
As mentioned previously, we have the UK Annual Fraud Indicator (AFI) 2017. It reports fraudulent activity costs the country £190 billion pounds a year. Imagine if we could recover even half of that …
Why does 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, if it’s coming at all.
If the figures stack-up, hands up!
If £130 million a year is invested in recovering (or at least trying to recover) £4 billion of ill-gotten gains, then a similar effort to recover£190 billion makes sense. It’s worth remembering that even if we only recovered a third of the money, that would be £60+ billion.
One thing is clear, if the AFI figures are correct, up to ten times the annual reported losses or £1,900 billion has been lost to criminality and incompetence in the last 10 years.
Disgrace is an inadequate word
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 or develop their full potential.
I’m deeply concerned … we must do something positive and in line with the facts. Dissembling, incompetence and mis-organisation from Westminster muddies water and misleads us all.
© Mac Logan