Government rejects call to share more fraud intel, saying it 'could increase fraud threat'

Treasury and Cabinet Office refuse MPs' request for annual fraud intelligence report
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By Tevye Markson

16 Nov 2023

The Treasury and the Cabinet Office have refused MPs' request for intelligence on fraud and corruption across government to be published, saying it could lead to more fraud.

The departments have, however, committed to doubling the number of qualified fraud risk assessors in government to address concerns that civil servants tasked with fighting fraud are failing to “exert influence” on senior officials.

In a Public Accounts Committee report published in September, MPs urged the Public Sector Fraud Authority, a Cabinet Office-Treasury joint body set up last year, to produce an annual strategic intelligence report on the level of fraud and corruption across government, including “where the greatest risks and issues lie”.

“The government is flying blind on the levels of fraud and corruption perpetrated against it, despite widespread awareness of the toxic threat posed by these despicable crimes,” PAC chair Dame Meg Hillier warned.

But the centre-of-government departments said in Treasury minute published this week that they disagreed with the recommendation and “will not publish any information that could increase the fraud threat by showing how attacks could be executed”.

They said the PSFA – which works with departments and public bodies to reduce the impact of fraud – “recognises the value in having a strategic picture of the highest-risk areas” and has already committed to creating a high-risk fraud portfolio.

“As this is built, it will provide a common understanding, and strategic intelligence picture, of the highest risk areas that can be shared across government,” they added.

“The government will seek to be transparent. However, it will not publish any information that could increase the fraud threat by showing how attacks could be executed. The PSFA will not publish a separate strategic intelligence report.”

MPs had said the annual intelligence report should “build on the PSFA’s annual [fraud] landscape report and use better targeted fraud measurement and assurance exercises to provide an overall estimate of the extent and location of fraud and corruption by recognising the difference between fraud and error”.

They said the current system of fraud measurement "does not tell us, beyond the well-known problems in tax and benefits, where the problems are or which public bodies are most affected".

"Where government does attempt to measure fraud, it often includes more innocent errors because it finds it difficult to establish the intent behind the misinformation provided. Conflating error with fraud can give the impression that government is underestimating and obscuring where the real fraud problems are," MPs added.

In their response, the departments said the PSFA will continue to publish its annual fraud landscape fraud and landscape bulletins that outline the main risks and issues across government. These include the levels of detected fraud and corruption in departments and public bodies, except for tax and welfare, which are published elsewhere.

They said these estimated levels are based on the “best available evidence” and that the PSFA is working with departments to identify opportunities to improve the quality of data used to make the estimates.

Government will also continue to use "fraud measurement exercises" as a tool to understand fraud and error loss levels in areas of high risk, the Treasury minute response added.

It said: “The PSFA will continue encouraging, and supporting, departments to do more targeted measurement through assurance, training and updating standards, including learning from our international partners. Disaggregating between fraud and error requires determining intent which is cost intensive and may not be the most effective use of counter-fraud resources, so is left to the discretion of individual departments.”

The PSFA's annual report, published this week, said the authority had achieved £311m in savings through counter-fraud schemes designed to prevent and identify fraud across the public sector – comfortably exceeding its target to save £180m in its first year.

Another of PAC's key concerns was that counter-fraud staff often lack the credibility and authority needed to exert influence at senior levels.

Civil servants working in this area “have often struggled to get the attention, understanding and support needed from senior decision-makers," the PAC report said.

PAC had argued this was partly due to the counter-fraud profession being relatively new, only established in 2018, but also because many officials working on fraud “are not members of the profession and have not been trained or assessed against the professional standards”.

The response said the government “is taking steps to ensure departments are adequately resourced to deliver counter-fraud outcomes” including committing to double its numbers of qualified fraud risk assessors and launching the world’s first fraud leadership qualification.

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