Mar 29, 2023
Fraud Against UK Taxpayers Rose Fourfold In Covid, Watchdog Says
(Bloomberg) -- Fraud against the UK taxpayer almost quadrupled in the two years of the coronavirus pandemic, according to the National Audit Office.
The estimate rose from £5.5 billion ($6.8 billion) in the 24 months through March 2020 to £21 billion in the equivalent period afterward, the official public spending watchdog said.
The figures underscore the scale of the problem facing the government, which set up the Public Sector Fraud Authority last year in response to concerns about the lack of a coordinated response to massive criminal theft during the pandemic.
Government departments are trying the recoup the losses but “it is very unlikely that most will be recovered,” the NAO said.
Covid support schemes, including loans and grants for businesses, accounted for £7.3 billion of the £15.5 billion increase in fraud over the two years.
But the biggest single hit was benefit fraud, which rose by over £7.9 billion and cost £6.5 billion last year alone. The welfare bill including pensioners totalled £170 billion.
The NAO said its headline figures exclude £10 billion lost to tax fraud in illegal evasion and criminal attacks, and £1.2 billion against the National Health Service. The Ministry of Defence loses around £1.3 billion annually on procurement and staff costs.
“There has been a substantial increase in the level of fraud reported in the annual reports and accounts we audit,” said Gareth Davies, head of the NAO.
‘Normal and Tolerated’
“In addition to the loss of taxpayer money, it creates the risk that people come to perceive fraud and corruption across government as normal and tolerated. If not tackled, this could affect public confidence in the integrity of public services.”
“Government has more to do to understand the scale of the problem it faces and cannot yet demonstrate that it is tackling fraud effectively.”
The government spends over £1 trillion a year and raises over £900 billion in tax. Most of the fraud occurs under the watch of HM Revenue & Customs and the Department for Work and Pensions.
HMRC expects to claw back just a quarter of the £4.5 billion lost to fraud on emergency Covid loans and has recovered only 1% of the £1.1 billion of fraudulently claimed business grants.
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