Home Office rapped for ‘disappointing’ fraud failings

MPs voice litany of concerns over coordination of national efforts to combat major strand of crime

By Jim Dunton

04 Apr 2023

The Home Office has been heavily criticised for its work on coordinating national efforts to combat fraud, in partnership with the police and other government departments.

Members of parliament’s Public Accounts Committee said fraud is a “significant and growing” problem that accounts for 41% of crime against individuals and businesses in England and Wales.

But in a new report, the committee said police and law-enforcement agencies lack the resources to tackle fraud. MPs added that if the Home Office continues with its strategy of relying on voluntary charters with the banking, technology, telecoms and retail sectors to fight fraud, efforts will remain “sluggish” and likely to be “outmanoeuvred” by criminals.

The committee flagged that while the cost of fraud to individuals was estimated at £4.7bn in the 12 months leading up to May last year, the Home Office had been unable to give even an estimate of losses to business. Some 3.8 million incidences of fraud or attempts were believed to have taken place, however.

MPs criticised the Action Fraud reporting service, which was launched in 2009. It noted that the service had become dubbed “Inaction Fraud” because fewer than 1% of the 900,000-plus cases referred each year result in criminal proceedings being launched.

Nationally, the City of London Police leads on fraud work and oversees Action Fraud. The Home Office paid the force £28.6m for fraud-related work in 2021-22, £12.4m of which was for Action Fraud. A further £4.65m was paid to the National Crime Agency to tackle fraud the same year.

The Public Accounts Committee said that although the majority of fraud cases are suspected to have an international element, the UK’s relationships with overseas criminal justice agencies are “immature and threatened by the UK’s lack of domestic capacity”.

MPs said the NCA reported that it is looking to improve multilateral cooperation to prevent and disrupt fraud – working with counterparts in countries such as Ghana, Nigeria, and India. But they said the City of London Police is “scaling back its international capacity-building work” because of “insufficient resources”.

MPs acknowledged that the Home Office chairs the Joint Fraud Taskforce, which brings together the City of London Police; the National Cyber Security Centre; the Serious Fraud Office; the Department for Culture Media and Sport; the finance, technology and telecoms sectors; and international partners.

But they said the department needs to engage better with other government departments, the private sector, and global partners. MPs noted that the Home Office’s new fraud strategy has yet to materialise, despite being announced in March 2022.

Elsewhere in the report, MPs criticised the effectiveness of the government’s fraud-awareness campaigns. They said public recognition is “worryingly low”, with the NCA reporting that most of its active campaigns are recognised by fewer than one in 10 people.

PAC chair Dame Meg Hillier said the MPs were “deeply disappointed” with the government’s slow progress in its approach to fraud over the past five years.

She said law enforcement is not set up to tackle the challenges presented by fraud, while the volume and complexity of fraud is overwhelming the capacity of both Action Fraud and local police forces.

Hillier added that while public trust in the capacity of law-enforcement to deal with fraud cases has been damaged, police morale is also being undermined by the time it takes to investigate and prosecute fraud – and the relatively short sentences handed out when prosecutions are successful.

“Given the pervasive and damaging effects of fraud on business, individuals and society, it is extremely poor performance that government still isn’t even able to fully grasp the extent let alone reduce the prevalence or harms,” she said. 

“There is just no sign that government has a grip on fraud or an adequate strategy to address it, while victims are left to pay the price. 

“Becoming a victim of fraud can cause lasting psychological damage. It can mean losing a lifetime’s savings, your whole retirement plan, or even your current business and livelihood.

“The system is so poorly resourced and coordinated compared to the problem it’s addressing that victims feel lost in the system and without hope of recourse. Opportunities to prevent further harm are being missed and public trust in law enforcement is undermined.”

A Home Office spokesperson said ministers have committed hundreds of millions of pounds in additional funding to combat fraud and that a “new and improved” replacement for Action Fraud is due to be launched next year.

"This government is absolutely committed to cracking down on fraud and we will shortly publish our fraud strategy, which will establish a coordinated response from government, law enforcement and the private sector to better protect the public and increase the disruption and prosecution of fraudsters,” the spokesperson said.

“We have also committed £400m over the next three years to bolster law enforcement’s response to fraud and economic crime.”

The Home Office said the £400m is in addition to the funding that the departmet commits each year to the National Economic Crime Centre in the NCA and police forces.

It said the cash will “strengthen” fraud-investigative capabilities by allocating specialist resource for the City of London Police and the Regional Organised Crime Unit network, and enhance the intelligence capabilities of the NCA and national security community. 

Last Thursday, the day before the PAC’s report was published, prime minister Rishi Sunak announced a machinery of government change that shifts ministerial responsibility for the Fraud Act 2006 to the Home Office from the Ministry of Justice.

Sunak said the move would “enable a single department to hold responsibility for policy and legislation relating to fraud against individuals and businesses, enabling the Home Office to best tackle fraud and reduce inefficiencies”.

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