The Home Office has no complete or up-to-date estimate of the cost of fraud to the economy and a limited understanding of who commits the crimes, a report has found.
Public spending watchdog the National Audit Office (NAO) said the current estimate of the cost of fraud to individuals being used by the government department is based on data and prices from six years ago.
And it found that the Home Office has no reliable estimate of the cost of fraud to businesses, or how much firms are spending on tackling the crime.
Fraud made up 41% of crime in the year to June 2022 and 987,000 fraud offences were recorded by police in England and Wales.
It does not have the data it needs to understand the full scale of the problem, and it is not able to accurately measure the impact of its policies on this growing area of crime— Gareth Davies, head of the NAO
However, only a fraction end with a criminal charge or summons to appear in court – 4,816 cases in the year ending March 2022.
The NAO report said: “The Department (Home Office) does not have a complete or up-to-date estimate of the cost of fraud to the economy.
“Its most recent estimate of the cost of fraud to individuals is £4.7 billion (in 2015-16 prices).
“This is based on 2015-16 data and the Department is currently working on a more up-to-date estimate.
“It does not have any reliable estimate of the cost of fraud to businesses.
“It also has a limited understanding of the perpetrators of fraud or those who enable it by their action or inaction.”
It also found that the Home Office does not have a complete picture of what is being spent on tackling fraud by businesses or the public sector, and how effective that spending is.
There are also “inherent tensions” between the Government and the private sector over some anti-fraud schemes that can “slow the customer journey”.
Head of the NAO Gareth Davies said: “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 is not able to accurately measure the impact of its policies on this growing area of crime.
“For its planned Fraud Strategy to succeed, the Home Office must be vigorous in leading a cross-Government response that is informed by a thorough understanding of what works in combatting fraud.”
The NAO recommends that the Home Office should complete and publish its anti-fraud strategy as soon as possible; get up to date estimates of the cost to individuals and businesses; and improve its understanding of international work to combat fraud.
It said that 10 separate public communications campaigns are being run by different parts of Government about fraud, despite previous warnings that this could cause confusion.
Meg Hillier MP, Chairwoman of the Committee of Public Accounts said: “Too many citizens and business face a significant and growing threat from fraud.
“In 2017, the Committee warned Government of the urgency of this overlooked and mounting problem.
“I am concerned that the Home Office still hasn’t set out a clear funded plan for how it will tackle it. While its recent efforts are welcome, they do not go far enough or fast enough.
“The 3.1 million victims of fraud deserve action, leadership, and a plan that galvanises partners across Government, not more words on a page.”
Rocio Concha, Which? director of policy and advocacy, called on the Government not to delay the Online Safety Bill, which would tighten the rules around paid-for financial services advertising online, any further.
She said: “The UK is in the grip of a fraud epidemic. Billions of pounds are lost to this crime every year and it takes a devastating financial and emotional toll on the lives of victims.
“The lack of an effective joined-up approach between the Government, banks, tech firms and telecoms companies is holding back efforts to prevent fraud.
“Improvements to the way businesses share vital data on scams should be a priority in the Government’s forthcoming fraud strategy.
“The Government must take a crucial step in the fight against fraud by ensuring the Online Safety Bill is not delayed any further.
“If this opportunity is missed, we will likely be waiting years for alternative action to tackle the scourge of online fraud infiltrating search engines and social media platforms.”
A Government spokesperson said: “This Government is absolutely committed to cracking down on fraud and economic crime, spending an additional £400 million over the next three years to tackle it.
“We thank the NAO for this report and recognise more can be done to understand the threat we face and how best to tackle it.
“We have reflected their recommendations in our upcoming Fraud Strategy, which sets out how we will work together – with industry, law enforcement, courts, and the third sector – to make sure there is no safe space for fraudsters.”
