£27bn Covid relief fraud ‘may be tip of iceberg’



A report out this week by the cross-party Public Accounts Committee (PAC) reveals how relaxed controls combined with the speed of the coronavirus financial support packages created “a perfect storm for thieves”, with at least £27bn lost to fraud.

 

The coronavirus-linked sum is on top of around £50bn lost annually to criminals and through mistakes, according to government estimates, which counts for more than 40% of all reported crime in the UK.

Banks were also slammed for their careless approach to dishing out the money as they “don’t have enough skin in the game” to be concerned about losses, the committee found.

“This report makes very uncomfortable reading,” said Pete Miller at The Miller Partnership. “By that I mean uncomfortable as a taxpayer concerned about the way in which my taxes are being used by the government. We might disagree over the government’s spending priorities but I’m sure none of us are happy about over £50bn of taxes being lost to fraud or error.”

Despite their different definitions, there is little to distinguish “between people grappling with complex government forms in the hope of obtaining a grant, loan or some other subsidy to which they are entitled as against people deliberately targeting frailties in the system to obtain money to which they are not entitled”, Miller said.

 

“The report refers to fraud and error costing the taxpayer between £29.3bn and £51.8bn in 2018-19, of which £2.5bn and £25bn arose outside DWP and HMRC, although the latter figures are based on assumptions by Cabinet Office,” Miller said. “It is difficult to have any confidence in these numbers.”

The report states there are around 16,000 counter-fraud professionals throughout the civil service. “While 77% of them work within DWP and HMRC – which is logical, as these are the departments most obviously open to fraud or error – there must be some low hanging fruit in other government departments, if some of those staff were redeployed,” Miller said. “Most worrying to me is that we are told that it is optional for government departments to consult the Cabinet Office’s counter fraud function (CFF), which is absurd and shows a lack of common sense.”

 

“I’m sure I am not alone in thinking that any counter fraud function within government should be mandatory for all government departments and that the higher the risk, the more important it is to consult,” Miller told AccountingWEB. “One of the key messages throughout this report is a lack of coordination between government departments on issues relating to fraud and error.”

 

Extract from an article by Mark Taylor, published on AccountingWeb.co.uk

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