As crime goes, fraud is often unseen and underestimated, but when it happens in the public sector, it can take a huge toll on the public purse. Public sector departments like HM Revenues & Customs, the Department for Work and Pensions, and the Department for Business, Environment and Industrial Strategy have reportedly lost billions of pounds to fraudsters since the onset of Covid-19. BEIS alone has estimated that £4.9bn of the £79.3bn guaranteed through three Covid business support schemes was lost to fraud and error.
At a time when government is more focused on delivering better outcomes for citizens despite budget constraints, the launch of the Public Sector Fraud Authority (PSFA) signalled the ambition to do more to prevent, identify and tackle fraud – whatever the type and scale of the crime. But what can be done to tackle the fraud taking place within public sector bodies themselves?
Two months on from the launch of the PSFA, a new piece of research sheds light on some of the contributing factors to expense fraud in the UK public sector. 500 decision-makers within the UK public sector participated in the study, which was conducted by strategic insight agency Opinium, commissioned by SAP Concur. The report is now available to download.
A challenging environment
Five hundred decision-makers across England, Scotland, Northern Ireland and Wales took part in the survey, which explored expense fraud in the UK public sector. From local and central government departments to the NHS and education, all respondents held a high level of seniority, ranging from senior managers to chairs and chief executives.
While participants admitted expense fraud at surprisingly high levels (Education: 31%; NHS: 40%; Civil service: 32%, General:42%), they also revealed that departments do little to prevent – or act against – fraudulent claims.
With 81% of respondents claiming to understand what would count as fraud and 84% appreciating the risks of being associated with a fraudulent claim, the issue doesn’t seem to be down to a lack of awareness. So, what could be the decisive factor?
Digital transformation
Most public sector departments rely on manual expense processes, making it more difficult for finance teams to identify mistakes, falsified claims or long-term fraud patterns.
Survey participants considered the expense process within their departments, and three in 10 believed the most significant barrier to more closely monitoring and preventing expense fraud is the fact that processes aren’t digitalised.
Legacy expense management systems are often the outlier in departments that are otherwise focused on digitally transforming. While 77% of survey participants said the pandemic has led to their department investing in more technology, six in 10 said outdated processes and technology are holding them and/or their departments back.
A cultural shift
Talent retention is yet another challenge for public sector departments. Many employees are considering leaving their posts for private sector roles, seeking jobs with less stress and higher innovation, not to mention better financial compensation packages. Morale at work has hit rock bottom, therefore people feel less loyal and more inclined to take from their departments, albeit in this low-level way.
With the ongoing cost-of-living crisis, providing the best working environment is more important than ever. When a sense of purpose and direction is even more critical for talent retention, turning to digital tools designed to alleviate the burden of manual tasks could be the helping hand needed to foster a culture of innovation and transparency, leading employees to feel more valued.
The attitude towards expense fraud, the impact of archaic expense processes, the barriers to digital transformation, and the impending talent crisis are sentiments shared by survey respondents, as seen in the graph below.
Fortifying the culture of the public sector while embracing the power of digital transformation is a challenge for civil servants. However, the latest study into expense fraud has uncovered some important pain points and opportunities to take action and make a difference.
Download survey report.