So the Government’s response to the Covid Counter-Fraud Commissioner is out.
It’s worth remembering what the Commissioner found:
- £10.9 billion lost to fraud and error across the Covid schemes.
- £324 million in PPE fraud
- £1.88 billion of fraud in the Bounce Back Loan scheme issued by the Department for Business and Trade.
Largely, the Government has accepted the Commissioner’s recommendations for tackling fraud – which is good because they were mainly motherhood and apple pie recommendations. It has also announced today a new Public Authorities Fraud Investigation and Enforcement Service with extensive powers to track down pandemic-related fraud.
Given the extensive new powers being given to a unit within government it will be important that the new independent reviewer, who will have oversight of new anti-fraud powers for government introduced under the Public Authorities Fraud Bill, also reviews their use by the new Service.
Disappointingly though, the Government rejected four of Tom Hayhoe’s 22 recommendations, which are critical to protecting public funds from fraud and corruption. The recommendations only ‘partially accepted’ (read ‘in large part rejected’) include:
- Having a Challenge Champion in crisis situations,
- Ensuring that small companies publish profit and loss accounts (remembering that small companies were the engine of Bounce Back Loan fraud),
- Stronger measures when ministers issue directions to override the civil service (crucial given that ministerial directions included overriding an accounting officer’s concerns about fraud on the Bounce Back Loan), and
- Clearer central oversight of MHCLG’s spending through local bodies (including grants).
And the bigger question is whether the government is doing enough beyond COVID-related fraud. The National Audit Office estimates that fraud against the taxpayer is £5-31 billion a year, excluding benefit and tax fraud – £55-81 billion if you include them.
There has been lots of very good and useful activity – including beefing up the Public Sector Fraud Authority. Meanwhile, the introduction of a Local Audit Office for local government in autumn this year is a really positive step. The fact that the National Audit Office has once again refused to sign off on the Whole of Government Accounts (for the third year in a row) – because of the huge number of unaudited local government accounts – shows how urgently we need this reform.
But there is a long way to go. In May this year, the National Audit Office (NAO) found that the Ministry of Defence was failing dismally to tackle fraud and economic crime. This comes as the Government plans to pump £13.5 billion into defence spending.
Last year, the audit body also found that the home energy scheme run by the Department for Energy Security and Net Zero had around £44 million worth of fraudulent claims, with 98% of homes under one programme requiring redoing – but only 8% of them actually being redone. The Department had not undertaken any fraud risk assessment and had no data to estimate fraud. This is a case study of how public sector fraud has real victims – with people being left with mould and damp in their houses as a result.
Meanwhile, in 2024 the NAO found that unmitigated conflicts of interest in government risked “influencing the objectivity of its operations.” So far there has been no adequate response to the body’s recommendations from the Government – and there was little in Tom Heyhoe’s report to address the sidelining of conflict of interest rules during PPE procurement. The COVID Inquiry investigation into PPE procurement that will report on 14th July, may have more to say about this.
So if the Government is serious about tackling the serious loss of funds to the public purse through fraud, it needs to go further by:
- Getting a grip on conflicts of interest – creating a central database in government, and ramping up mitigation measures, including proper transparency about how they are implemented
- Introducing a new fraud against the public purse offence, with meaningful whistleblower incentivisation, and
- Beefing up the new misconduct and corruption offence in the Hillsborough law so that it will be fit for purpose to hold to account those in public office and large private contractors for wrongdoing.
