UK to ‘put counter-fraud at the heart of decision-making’ after concerns over lost COVID cash

By on 23/03/2022 | Updated on 24/03/2022
Chancellor Rishi Sunak holding the Spring Statement document
Chancellor Rishi Sunak holding the Spring Statement document Photo: HM Treasury flickr

The UK government has announced the creation of a new Public Sector Fraud Authority after concerns were raised across the political spectrum over money that was lost through the coronavirus response.

Chancellor Rishi Sunak announced £48.8m (US$64.4m) would be invested in setting up the authority over the next three years, as well as in enhancing counter-fraud work across the British Business Bank.

The creation of the new agency comes after the government’s former Treasury minister Lord Agnew resigned over the lack of action in tackling fraud and error in the range of support schemes launched in response to COVID-19. According to estimates from government, £4.9bn (US$6.4bn) of business support loans made during the pandemic could be lost to fraud, while the Department for Business, Energy and Industrial Strategy has concluded that around £17bn (US$22.4bn) could be lost in total, when including money owed by businesses that are unable to repay.

Agnew said that the lack of oversight for support schemes meant that it was “happy days if you were a crook” at the start of the pandemic. He characterised efforts to tackle fraud as a “Dad’s Army” operation, and predicted that the cost of COVID loan fraud would significantly surpass government predictions. The opposition Labour party has also criticised the government over the issue, with shadow chancellor Rachel Reeves claiming that Sunak had “left open the vaults for widespread waste, crony contracts and a frenzy of fraud” during COVID.

Read more: Harnessing fintech in governments’ fight against financial fraud

Although there are limited details of the formation in the new agency in the Treasury documents setting out the new agency, it may effectively entail re-establishing the National Fraud Authority, an executive agency of the Home Office that existed between 2008 and 2015 and was tasked with increasing protection for the British economy from the harm caused by fraud.

Other measures announced in the statement included providing an additional £12m (US$15.8m) for the UK’s tax and benefits agency HM Revenue and Customs to help prevent error and fraud in tax credits, and support a smooth transition to social security payment programme, Universal Credit.

This was one of a series of public sector announcements in the Spring Statement, which was dominated by tax announcements, including an increase in the threshold at which people pay the National Insurance (NI) payroll tax. Sunak had previously announced that the NI rate would increase by 1.25 percentage points from April, but has now announced the threshold at which people will have to start paying the levy will rise from £9,800 (US$12,900) next month to £12,570 (US$16,600) from July.

Upcoming event: Global Government Fintech Lab, including how can fintech help governments tackle fraud, error and debt

Efficiency reviews take shape

Other elements for the public and civil service included guidance for a series of reviews of arm’s-length bodies, which are departmental agencies that deliver public services. These reviews will scrutinise the work and effectiveness of these agencies, with an aim to deliver savings of at least 5% of their resource budgets, or £800m (US$1bn), to be reinvested in other areas. An efficiency programme for the UK’s National Health Service was also confirmed, with a proposed increase in scope from making 1.1% in savings to 2.2% a year. This is intended to free up £4.75bn (US$6.27bn).

Sunak also announced he would chair a new cabinet committee on efficiency and value for money with the aim of ensuring that departments “demonstrate clear value for money for the taxpayer in government spending”.

However, there was no update on Sunak’s plan, set out in the Budget in October, to reduce what the Treasury called the “non-frontline civil service headcount” to 2019-20 levels by 2024-25, helping to fund increases to frontline roles.

Read more: UK civil service urged to develop workforce plan before making up to 55,000 job cuts

According to the Institute for Government think tank, reducing the UK civil service to its 2019-20 headcount would mean cutting approximately 55,000 jobs by 2025. If around half the workforce are defined as ‘frontline’ – although the government has not yet defined what it means by non-frontline – it would still leave around 28,000 roles to be cut. This needs to be done “without undermining the government’s capability or restricting skills the government wishes to prioritise in the future,” the institute said.

About Richard Johnstone

Richard Johnstone is the executive editor of Global Government Forum, where he helps to produce editorial analysis and insight for the title’s audience of public servants around the world. Before joining GGF, he spent nearly five years at UK-based title Civil Service World, latterly as acting editor, and has worked in public policy journalism throughout his career.

One Comment

  1. Lee Jones says:

    Disappointing to see that there is mention of efficiency and value for money, but no mention of transparency, fairness or accountability. Will this also apply to government ministers and their dealing on questionable open platforms, and will it review historical transactions which relate to covid?

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