Report: £21 billion of public money lost in fraud, and most will never be recovered

According to the National Audit Office (NAO), tens of billions of pounds have been lost to fraud since the start of the COVID pandemic, with little chance of the majority being reclaimed.

More than £7 billion of the £21 billion identified by the NAO as lost by the government is linked to pandemic-related schemes.

It also states that it is “very unlikely” that the majority of the taxpayers’ money will be recovered.

Fraud nearly quadrupled in the two years following the pandemic, rising from £5.5 billion two years before the pandemic to £21 billion.

According to the NAO, many public bodies are unaware of the extent of fraud they face, with the HMRC pursuing a slew of COVID employment scheme fraudulent claims.

HMRC expects to recover £1.1 billion out of an estimated £4.5 billion by the time its taxpayer protection taskforce – a group of more than 1,200 tax specialists who respond to errors and fraud – is scaled back.

The report says: “The Department for Work & Pensions generated fraud and error savings of £500 million through its retrospective review of Universal Credit claims made over the height of the pandemic, but at least £1.5bn of fraudulent claims that started during that period were still being paid in 2021-22.

“DWP is now planning targeted case reviews to detect and recover as much of the rest as it can.”

Head of the NAO, Gareth Davies, said: “There has been a substantial increase in the level of fraud reported in the annual reports and accounts we audit.

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“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.”

A government spokesperson said: “We are overhauling how we tackle public sector fraud to ensure we chase down every pound stolen from British taxpayers.

They went on to say that the Government Counter Fraud Profession is “expanding,” with more technology and training available to “further protect the public purse.”