industry focus
Full scale of fraud threat still unknown
The Home Office still does not know the full scale of the fraud threat posed to individuals and businesses and is not yet leading an effective cross-Government strategy to tackle it, according to the National Audit Office (NAO).
In its 50-page report entitled ‘Progress Combating Fraud’ the NAO concluded that little or no progress had been made in the five years since it had concluded that fraud had been largely “overlooked” by the Government, law enforcement and industry.
Since 2017, the threat from fraud has increased and evolved, but the number of fraud offences resulting in a charge or summons has fallen. Crime figures show that fraud was the largest category of crime in England and Wales in the year ending June 2022, amounting to 41 per cent of all crimes against individuals compared to 30 per cent in the year ending March 2017. While bank and credit card fraud are still the most common types, other forms of fraud – among them advanced payment fraud – are increasing rapidly.
The estimated number of incidents of actual and attempted fraud against individuals in England and Wales rose by 12 per cent from 3.4 million in the year ending March 2017 to 3.8 million for the year ending June 2022. However, the number of fraud offences resulting in a charge or summons fell from 6,402 in 2017 to 4,816 in 2022.
According to the NAO, there are still “significant gaps” in the Home Office’s understanding of the threat from fraud. Based on 2015-2016 data and on 2015-2016 prices, the Home Office estimates that the cost of fraud to individuals is £4.7 billion. It doesn’t harbour any reliable estimate of the cost of fraud to businesses. The Home Office also has what the NAO asserts to be a “limited understanding” of who actually commits fraud and those who enable it by their action or inaction.
The Government has launched different strategies covering fraud and economic crime but has not yet established what outcomes it wants to achieve. Strategies have covered a range of topics including cyber security, anti-corruption and serious and organised crime, making it somewhat challenging for the Home Office to focus and co-ordinate the activities of partners.
The Home Office was solely or jointly responsible for five actions related to fraud in the 2019 Economic Crime Plan, but these were expressed as activities or aspirations rather than outcomes. In April last year, the Home Office announced its desire for a Fraud Action Plan to set a national approach between 2022-2025. However, in March 2022, Government instead unveiled plans for a new Fraud Strategy, which has yet to be published.
Again, according to the NAO, the Home Office has “limited influence” over many of the organisations required to successfully combat fraud. Addressing the threat of fraud depends on the Home Office building relationships with a wide range of partner bodies and influencing the behaviour of the public and businesses. Its relationships with partner bodies vary in maturity. “There can also be tensions in what the Home Office is expecting partners to do. For example, the steps it asks the private sector to adopt to prevent fraud can slow down the customer journey.”
The Home Office “does not understand” the full extent or impact of resources dedicated to combating fraud. In 2017, the NAO found that the Home Office needed to improve the way in which it measured its work on fraud. It still does not have a complete picture of what’s being spent on tackling fraud by its partners in the public and private sector or how effective this spending is in the real world.
However, the Home Office has made some improvements to its collation and monitoring of fraud data. It’s in the relatively early stages of working more closely with international partners on fraud but has a “limited understanding” of the international response and how the UK’s response compares to other countries. It’s the NAO’s view that, without a better understanding of the impact its policies are having, the Home Office will not be able to prioritise or adapt its approach.
Gareth Davies, head of the NAO, commented: “Five years on from our last report on this subject, the Home Office has taken limited action to improve its response to fraud. Its approach has lacked clarity of purpose. It does not have the data it needs to understand the full scale of the problem, and it’s not able to accurately measure the impact of its policies on this growing area of crime.”
Davies added: “In order for its planned Fraud Strategy to succeed, the Home Office must be vigorous in leading a cross-Government response that’s informed by a thorough understanding of what works in combating fraud.”
