The government will establish a new Public Authorities Fraud Investigation and Enforcement Service to recover public sector funds lost to fraud.
The new body, which is also described as a “Public Sector Fraud Enforcement Unit” in the 2025 Budget red book, will be set up “by 2026-27” and will recruit “skilled investigators to pursue recovery of fraud against the public sector”.
It will also trial innovative approaches to enforcement activity for fraudulent Covid loans to accelerate the recovery of pandemic-related fraud, taking over the work carried out by Covid corruption commissioner Tom Hayhoe since December 2024.
As the Covid corruption commissioner, Hayhoe has helped the government to claw back nearly £400m obtained by frausters. The Red Book says the government will “relentlessly pursue more cases” through the new investigation and enforcement unit.
Hayhoe – who was appointed for a one-year fixed term of one year "to use every means possible to recoup public money lost in pandemic-related fraud and undelivered contracts" – found in his first report that failed pandemic-era Personal Protective Equipment contracts cost £1.4bn due to over-ordering and delayed verification.
Following his recommendations, the government launched a three-month voluntary repayment window for ineligible support scheme funds and the Covid Fraud Reporting Site for anonymous fraud reporting.
His second and final report is investigating fraud and error in other pandemic spending programmes such as furlough, bounce-back loans, business support grants and Eat Out to Help Out.
Hayhoe will deliver the report to parliament before his term ends next month.
Cross-government crime taskforce
The Budget also outlines the creation of a new dedicated cross-government taskforce which will help to "clamp-down" on illegal high street operations.
It provides funding of £45m for creating a new High Streets Illegality Taskforce, recruiting more Insolvency Service staff, and enhancing Trading Standards and law enforcement capabilities.
The high streets taskforce "will develop an intelligence-led understanding of organised crime on our high streets, design systemic interventions to disrupt money laundering and related criminality, and set strategic priorities for future operational activity".
Of the £45m pot, £25m will go towards recruiting more Insolvency Service staff to enable the servce to disqualify more rogue directors tackling rogue directors. The government will also, through a future finance bill, amend the Company Directors Disqualification Act 1986 to extend the circumstances in which directors who break the law can be disqualified.
As part of the funding pot, Trading Standards will get "at least" 45 additional law enforcement officers.
HMRC gets new team and tax debt collection funds
HM Revenue and Customs will also be given more capability to target high street crime.
The government will establish a new 350-strong small business evasion and enforcement team within HMRC's Fraud Investigation Service.
The team will carry out targeted criminal interventions tackling the most serious fraud and evasion by small businesses.
HMRC will also get £89m to invest in additional staff and £64m in the department's partnerships with private sector debt collection agencies to help HMRC to collect more tax debt.
Some funding will also leave the department, with the Budget redirecting £10m from HMRC to Border Force in 2026‑27 to enhance operational information gathering capabilities ahead of the introduction of the Vaping Product Duty on 1 October 2026 and to support enforcement at the border.