In total, the National Fraud Authority estimates that fraud costs the public sector in the UK £21 billion a year of which £2.4 billion is lost to procurement fraud and £515m is lost to grant fraud. The Department of Work and Pensions lose more than £1 billion each year to benefit fraud. Local government loses £2.1 billion pounds each year to fraud. And Her majesty's Revenue and Customs (HMRC) estimates a whopping £15 billion each year is not paid to the Exchequer due to tax fraud.
The crisis in the health service is that it is expected to find £20 billion in efficiency savings over the next 4 years. Were fraud eliminated this would not be necessary.
How well is the government doing in eliminating fraud?
HMRC recently implemented a "fraud firewall" designed to identify fraud and error through new screening techniques. This pilot scheme is detecting up to 90 per cent of estimated error and fraud in new claims, saving £260 million over four years as a result. Last month George Osborne announced that HMRC had stopped more than £1billion of fraudulent and incorrect tax credit payments in 2010/11 – a 60 per cent increase on the year before. The Spending Review invested £917m in HMRC to tackle evasion, avoidance and criminal fraud – this will bring in £7bn extra over the Parliament.
Still a long way to go then.