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Let’s shine a light on fraud to fight it

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Fraud is a problem that affects the whole of society, and as the guardian of substantial amounts of taxpayers’ money, local government must do its utmost to understand the problem and protect the public purse.

There have recently been large fluctuations in the amount that the National Fraud Authority estimates was lost to fraud in the UK - £38bn estimated in 2011, £78bn in 2012 and then £52bn in 2013.

This massive difference year on year can make good headlines as fraud “doubles/ halves/shrinks/grows”, but it doesn’t provide the certainty, hard facts and data needed by those trying to tackle fraud and especially those trying to protect public finances.

Fraud is difficult to measure. By its very definition it is a crime of deceit. Therefore much does go undetected and estimates of fraud loss can present a statistical hazard. It can be far too easy for the media, commentators, regulators and politicians to call for action or condemn inaction based on uncertain estimates and illustrative examples.

Parliament has been trying to get to grips with fraud in the public sector, with the communities select committee holding hearings recently on the subject.

They should be commended for trying to tackle this issue and Cipfa has contributed both evidence and a witness to the process and welcomes the scrutiny.

However, fundamentally no one knows everything about fraud in the public sector or elsewhere. The latest estimate from the NFA put losses to fraud at £20bn within the public sector and specifically £2bn in local government.

However, the Audit Commission’s latest research found just £178m of reported fraud within local authorities.

Ian O’Donnell, executive director of corporate resources at Ealing LBC and Cipfa’s witness to the recent parliamentary select committee, is an expert on fraud. As the chair of Fighting Fraud Locally and an experienced council officer he believes that if we are to explain or understand this discrepancy we need more and better information.

We urgently need to try to tackle this crime that could cumulatively be depriving the state of valuable resource. But the key word here is “could”.

Until we have the means to really understand the extent of the problem we will not be able to put in place the skills, systems and processes needed to tackle it.

That’s why we need urgent action to better understand and evaluate fraud in the UK. Let’s prioritise the resources needed now so that we can get a clear picture of fraud in the UK and shine a light on an area that could be costing us dearly.

Otherwise we will continue to fight on in the dark.

Rob Whiteman, chief executive, Chartered Institute of Public Finance & Accountancy

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