Ministry of Defence permanent secretary Jeremy Pocklington has told MPs he expects the department’s returns on counter-fraud spending to come into line with other government organisations within the next three years.
However members of parliament’s Public Accounts Committee were left in the dark on when the MoD will have an accurate picture of its annual exposure to fraud.
Pocklington’s comments came at a PAC session last week examining a National Audit Office report on the MoD’s approach to takling fraud and economic crime.
The NAO said the department reported a potential exposure to fraud of up to £1.5bn a year, mostly related to procurement. But it said the MoD only generated an average return of 48p for every £1 it spent on anti-fraud work over the past four years.
While 2024-25's single year recovery figure of £1.34 for every £1 spent was an improvement on the MoD’s four-year average, the government expects departments to secure a return of £3 for every £1 spent on anti-fraud work.
At Thursday’s session, Pocklington told MPs the MoD is making “good progress” with its counter-fraud work. He insisted that the improved figures for 2024-25 were not a one-off.
“In respect of the spend and return on investment, we have already seen a significant upward trend,” he said. “The most recent data showed £1.34 returned on every £1 spend, and that reflected the increased use of new tools and techniques, and better analytics as well.
“We think we are on track to receive the Public Sector Fraud Authority target of 3:1 by 2028, if not sooner.”
Pocklington, who took up post as MoD perm sec in December last year, said the department may have needed to do more to “record the benefits and the impact” of its recovery work in the past.
He added: “We are in no way complacent, and we recognise that we need to do more to capture the benefits and make sure that we are wholly focused on this important issue.”
Pocklington said the MoD spends in the region of £60bn a year on goods and services. He said the £1.5bn annual figure for potential fraud in the NAO report was “quite a theoretical number”, based on academic benchmarking and that it represented “quite a conceptual estimate of the risk”.
He told MPs that the MoD is keen to get a better estimate of its losses to fraud.
“The team are actively looking at what is the best – I will use this word – technology that we can identify to help us get the best possible estimate,” he said.
“Of course, where fraud is detected, it is easy. In 2024-25, detected fraud and error was £6.2m, but that is not the amount of fraud. I am not saying that that is the amount of fraud in the department, but the moment you are looking at something for which you do not have direct evidence, it gets harder.”
Pocklington said the MoD is strengthening systems of accountability in the department and focusing more on how analytics can help with recovery.
“We are investing in new tools and techniques that enable us to leverage technology to really enable us to identify irregularities in the system that need to be explored further by our fraud experts,” he said.
Lack of clarity over reliable fraud estimate
PAC members asked Pocklington when the department will have a reliable estimate of its exposure to fraud.
Pocklington said it would be set out in the department’s upcoming counter-fraud strategy, which is due to be completed by September.
However, MoD director general for finance Aneen Blackmore told the session that a new figure for fraud exposure was likely to take some time to firm up and that September’s strategy would just include expected dates for the work.
“It is not something that we are going to be able to quickly assure ourselves of, on a more detailed methodology, across the whole of defence,” she said. “But what we will be doing over the next year is really focusing in on the areas of highest risk and building out our estimate – and our confidence in that estimate – in that space.”
Blackmore said the strategy would set out the phases of what the department is ”going after”.
“In September we will set out a plan of the phased approach, and we will be focusing in on the areas of the highest risk, in the first case,” she said.
PAC chair Sir Geoffrey Clifton-Brown said he was ”beginning to lose the will to live” after repeated requests for clarity on when the over-arching fraud figure would be available did not get direct answers.
"This is a substantial amount of money, and if your organisations do not think the £1.5bn is accurate, fine, but when will we have an accurate figure?” he asked.
“You can add all the different sections up and come up with an overall figure that the MoD thinks it is losing to fraud each year. Surely that is not impossible. All the committee is asking is when that figure is likely to appear before us.”
Pocklington said he would write to the committee with further details of how work on the over-arching fraud figure is structured and what the MoD’s estimated timetable will be.