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Clampdown on losing taxpayers' money may ease austerity, says watchdog

Published 23/02/2016

The level of detected fraud was around 0.02 per cent of Government spending in 2014-15
The level of detected fraud was around 0.02 per cent of Government spending in 2014-15

Cracking down on the amount of taxpayers' money lost to fraud may help ease the burden of austerity, a public spending watchdog has indicated.

The National Audit Office (NAO) said reducing fraud is "an opportunity for the Government to make potentially significant savings" but suggested that significant amounts of swindling may be going undetected.

In 2014-15, the level of detected fraud was around 0.02% of Government spending, compared with estimates of between 3% and 5% in the United States and other EU countries.

Excluding tax credit and benefit fraud, the cost was between £27.6 million to £72.9 million from a total expenditure of £306 billion.

"There is a large disparity between the level of fraud and error that is reported and the level that other available estimates suggest might be occurring, which needs explaining," the report said.

"The UK figure of 0.02% of expenditure compares with estimates of 3% to 5% in the European Union and United States.

"While these comparisons need to be treated with caution, they suggest that there could be significant fraud and error that is unreported or undetected and losses that are not being adequately addressed.

"Given current fiscal challenges, reducing the level of fraud is one potential way of making savings while protecting services."

The NAO report highlighted a series of cases involving fraud committed by people working inside the Government.

An individual who was employed in the public sector for six months used another log-in and password to access the department's finance system to transfer £35 million to a third party bank account.

The report said t his was recovered after the bank contacted the department involved. A second payment was identified and also recovered.

In another case a former secretary submitted false expense claims amounting to more than £100,000, of which £85,500 was stolen in her last four days in the role. In 2015, she was convicted and sentenced to 22 months in prison.

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