Cabinet Office: “millions saved” through Counter Fraud Taskforce pilot programmes

IFSEC Insider

Since its first meeting in December last year, the Counter Fraud Taskforce has overseen a series of eight pilots aimed at tackling the cost of fraud against the public sector. Those pilots have already delivered immediate savings of GB pound 12 million in their first few months of operation, with the Taskforce’s zero tolerance approach is driving a step change in how seriously the Government takes fraud.

Now, the Cabinet Office Counter Fraud Taskforce has published its interim report – entitled ‘Eliminating Public Sector Fraud: Counter Fraud Taskforce Interim Report’ – which may be downloaded from the Cabinet Office website (a link is provided at the foot of this article).

That report includes a set of proposals which the Government will take forward immediately to develop the fight against fraud and build on the success of the pilots. The pilots included using data analytics to screen applications for tax credits before any money was paid and the innovative use of behavioural science’s ‘nudge theory’ to encourage late tax payers to pay on time by sending them text message reminders.

Minister for the Cabinet Office, Francis Maude, said: “Fraud is theft of taxpayers’ money. The National Fraud Authority estimates that fraud costs the public sector GB pound 21 billion a year. This is totally unacceptable, which is why I’m really pleased to see our zero tolerance approach to tackling fraud is working. We will no longer allow a culture of ignoring or accepting fraud.”

Maude continued: “It’s time to turn the tide on fraudsters and stop the Government from being seen as a soft touch by criminals. Every pound defrauded from the Government means that there is less to spend on frontline services like healthcare, education, policing and defence.”

In conclusion, the minister stated: “The Taskforce has made a good start and has already demonstrated that immediate cashable savings can be made from doing fairly simple common sense checks. Going forward, we must take this further and work together to combat fraud across all public sector organisations.”

The Government will now roll out the pilots, which are expected to lead to savings of GB pound 1.5 billion over the next 2-4 years, helping departments to deliver the savings set out in the Spending Review.

Further to this, the Taskforce will now expand its work across Government through the proposals laid out in the report to embed for the first time a co-ordinated approach to tackling fraud across Government.

Immediate savings already outlined

• GB pound 10.63 million of error and fraud savings generated from a pilot run between September 2010 and March 2011 through HMRC using a new screening technique for tax applications. By analysing information provided by prospective claimants on their tax credit application forms, officials assessed the likelihood of the application being fraudulent and better prioritised their counter-fraud checks. HMRC expects to save GB pound 256 million over the next four years by rolling this out across all new tax credit applications.
• GB pound 1.5 million saved by HMRC and GB pound 0.5 million to be saved by DWP by commissioning credit reference agencies to verify the circumstances of 20,000 benefit and tax credit claimants each, in order to identify those claimants making incorrect claims. HMRC expects to save GB pound 700 million over the next two years by undertaking the checks across tax credits while DWP expects to save GB pound 490 million over the next four years.
• GB pound 0.5 million saved by the Department for Transport (DfT) by identifying losses from payments made to suprecopliers. DfT commissioned a data analytics company to undertake an audit on their group procure-to-pay systems to detect and recover overpayments to suppliers. The Home Office undertook the same exercise and detected GB pound 4 million in overpayments. Applying these techniques across all departments could identify and recover GB pound 264 million on just one year of spending.
• HMRC prompted 1,575 people to pay their tax on time by sending text messages to 31,500 people who were late paying tax by more than GB pound 1,000 in 2009-2010. The exercise prompted a 5% improvement in behaviour, increasing tax yield by GB pound 180,000. Currently, around one million people are late paying their tax each year, and HMRC estimates a 5% improvement would lead to GB pound 125 million reaching public coffers earlier, with HMRC having to deal with 50,000 fewer debts.

Four central priorities in the report

• Collaboration: silos must be removed… all parts of the public sector must work together by sharing intelligence on fraudsters, developing cross-cutting capabilities, instigating joint projects using data analytics and ensuring the joint procuement of data analytics to drive down costs
• Assess risk and measure losses: fraud risk must be assessed before projects and programmes are underway, while losses should also be recorded and reported via the quarterly data summary
• Prevention: a focus on upfront prevention and detection of fraud through the development and deployment of data analytics (also enabling departments to run preventative checks and data matching between departments and between central and local Government)

Zero tolerance: there is no acceptable level of fraud (to aid this, a cross-Government programme to raise awareness of fraud will be established and a repository of fraud-related information and supporting material made available to departments to help them tackle fraud)

Where the proposals in the report can be implemented immediately the Government will begin putting them into action. The Taskforce will now work towards final recommendations to deliver the above priorities by year end, as well as looking at the issues of error and uncollected debt.

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