What has led to the creation of the new Public Sector Fraud Authority?
As a sector, we can be proud of many of the things we have done to understand and take action on fraud against the taxpayer. There has always been great work done in some public bodies. Years ago, the government recognised it could do more across the system and invested in the beginnings of some centrally-driven activity. Over time, this has brought a more coordinated approach and a better understanding of the challenge.
From those beginnings, we created the counter-fraud function – bringing together the 16,000 people who work in central government public bodies to understand and fight fraud, and the functional centre in the Cabinet Office. Experts across government have built a professional structure for those working in counter fraud, made big strides in the use of data and analytics and better utilising technology to find fraud – with measurable financial outcomes – and created new standards for fraud work, much of which is world-leading.
But fraud has been evolving and, more widely, is now known to be the most common type of crime in the UK. This includes both attacks on individuals and on the public sector. Both types of fraud impact ordinary people and take away valuable resources from those who need it most.
Fraud against the public sector increases the cost of public services, and as the government focuses on efficiency it is important that we up our ambition on how we look for, and reduce its impact. The better we do this, the more we can reduce the cost of delivering government services.
During the pandemic, fraudsters seized the opportunity to attack the public sector as the government moved to support individuals, communities and businesses through the Covid support schemes. Fraud experts across government have been learning from this experience, and now we have a great opportunity to embed those learnings.
With the launch of the Public Sector Fraud Authority, we are upping the ambition of the public sector to do more to prevent, identify and tackle fraud. This will mean an increased focus on performance and outcomes across government, and also increased support for public bodies through the evolving and specialist disciplines that make up a modernised fraud response.
What tools will the new authority use to strengthen the public sector’s response to current fraud trends and emerging threats?
The most important tool that we have is our people. Capable, passionate and empowered people have a huge impact on fraud. I have seen this day in and day out for more than 10 years.
The biggest thing we can do to strengthen our response is to help our people. One of the PSFA workstreams will be “practice, standards and capability”, which will build guidance and practice for fraud experts to use, and create new standards.
Those capable, passionate and empowered people can then have more of an impact on fraud. They will know the best tools and will play a key part in developing new and innovative ones to tackle evolving crime.
Of course, the PSFA will be encouraging increased use of modern tools to find and fight fraud. This means using data, data-matching and analytics to first identify fraud – and then prevent it through process redesign. It also means better using technology, and things like machine learning and automation to make detection and prevention more and more efficient and upstream.
Additionally, there are new techniques – things public bodies are starting to use more (like fraud risk assessments and the new initial fraud impact assessments for new policies and services) and also tools we do not use as much at the moment but have seen other countries using. One example is pressure testing to really understand the vulnerabilities of the controls we rely on.
The PSFA will equally be looking to drive efficiency through working with public bodies to do better investigation and compliance work to stop irregular payments and get money back where we can. Some of this will be through the support and services we build in the PSFA. But most will be through public bodies upping their ambitions, developing their people and looking to use these modern tools to uncover hidden crime and increase their measurable impact on it.
What makes fraud in the public sector different from fraud in the private sector?
There is much more that makes it similar than makes it different. It can be tempting to see fraud against the public sector as more distant than fraud against individuals and businesses. It can feel less personal, as it seems not to have a direct impact on us or people we know. However, fraud against the public sector impacts everyone. It takes hard-earned taxes away from vital public services and directs it towards people who do not deserve it. The way I think of it, for every person that defrauds the government there is an operation that doesn’t take place or one less grant that goes to your local community.
One thing we can do in the public sector is to more keenly see the cost/benefit of investing in counter-fraud activities. When I was in legal aid, we knew that the £1.5m we invested in fighting fraud returned around £5m in audited benefits every year. As we launch the PSFA, we are committing to an initial £180m in audited impact. We know that where we treat fraud as a business issue in the public sector, it is possible to have measured impact in excess of the investment made.
How can we better use data in the fight against fraud?
A modern approach to fraud management has data at its core. I am really proud of the progress we have made in better using data to find and prevent fraud – both in the centre of the function and in some public bodies.
The National Fraud Initiative, which is now based in the Cabinet Office, has been using data services to find and stop fraud across the public sector since its foundation in 1996. Its impact has been more than £2bn over that time. However, there is more work to do.
In terms of how public bodies can do more, I would break it down into three things. Firstly, we should look to better understand the data that we have access to – how it can help and its limitations. Secondly, we should look to where we can get other data that could help us to find potential fraud or irregularities – and understand its limitations. Thirdly, we should challenge ourselves to take action.
I am really proud that the centre of the counter-fraud function – which the PSFA will build from – got its hands dirty and tried doing data-matching activities with departments. Some worked well, some less so. But all of it took the agenda forward and gave us invaluable insights.
PSFA will launch a new National Counter Fraud Data Analytics Service that will provide tools and techniques to support departments and public bodies. This new service will incorporate the NFI and take it further, utilising new techniques allowing more disparate data to be analysed and patterns or potential fraud more effectively identified. We hope to help public bodies to be able to use straightforward routes to access data and other advanced and sophisticated anti-fraud technologies.
The UK currently has a geographically fragmented mixture of bodies in the fight against fraud. Do you think a single, national body would help? Is the PSFA that body?
Fraud is a hidden, diverse and evolving crime. There are lots of bodies involved in fighting fraud – both public-sector fraud and more widely fraud in the UK. In the public sector, individual bodies own the risk of fraud in the policies and services they have responsibility for. It is right that they have counter-fraud capability.
One of the things the PSFA will do is bring Cabinet Office and HM Treasury more closely together in working with the rest of government to take on fraud. From my experience, both in the centre and in working in a department, that can only be a good thing. I am really looking forward to seeing how the integration works, and building trusted and productive relationships across an increasingly cohesive centre of government.
More widely, there are a number of bodies we work with in fighting fraud: the National Economic Crime Command in the NCA; the Home Office; the City of London Police. There has been a lot of discussion about whether there should be one, national body. I can certainly see some advantages. However, there are also advantages to having a diverse set of organisations working together on this. I have seen this drive innovation, different ways of thinking and, to a certain extent, productive competition.
I hope that the PSFA will be a rallying authority on public sector fraud, creating an environment where we think less about our organisational barriers and silos, and more about our combined mission. The less we see and define ourselves, and what we can achieve, by organisational barriers, the stronger we will be and the more outcomes we will be able to deliver. Fraudsters often don’t see the barriers between organisations. Neither should we.
The launch of the Public Sector Fraud Authority was put on hold earlier this year. Is it now ready?
When you experience these challenges, there are a number of ways that those involved can react. It made me even more proud of the public sector when I experienced first-hand how the reaction of all involved was to gather round and, at a real pace, come together to get to a place where we could launch and everyone was comfortable that the PSFA would have the impact expected.
The practical difference of the delay for the PSFA is actually limited. After being given the funding in March, we were always launching to then recruit, procure and build our new organisation. We now do the launch slightly further along the road of building, with more structures in place and roles ready to advertise – such as the senior civil service posts that went live with the launch.
So, now we will continue on the journey to build. To build a new organisation that will work with departments and public bodies to better understand and reduce the impact of fraud. We have the taxpayers’ pounds, and the importance of fairness, firmly in our sights and are resolute in our determination to build a new organisation that the UK can be proud of, and one that works with the rest of the system to drive performance.
That journey will not be short. It will be two years to build the PSFA, and I am sure it will continue to evolve beyond that. However, I am very much looking forward to the next step on that journey.
Mark Cheeseman is interim chief executive of the Public Sector Fraud Authority. He has worked in the public sector for 20 years. He transformed the Legal Aid Agency’s fraud response and has been at the Cabinet Office for the past nine years, where he has led on the creation of the counter-fraud function and the counter-fraud profession.