The Home Office has an incomplete and out-of-date grasp of the cost of fraud in the UK and a poor understanding of who commits the crime, a public spending watchdog has found.
The National Audit Office (NAO) said the current estimate of the cost of fraud to individuals being used by the government is based on data and prices from six years ago.
The NAO found that the Home Office had no reliable estimate of the cost of fraud to businesses, or how much firms spend 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.
However, only a fraction of fraud cases end with a criminal charge or summons to appear in court – 4,816 in the year ending March 2022.
The NAO report said: “The [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 £4.7bn [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.”
The NAO also found that the Home Office did not have a complete picture of what was being spent on tackling fraud by businesses or the public sector.
There were also “inherent tensions” between the government and the private sector over some anti-fraud schemes that could “slow the customer journey”.
The 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 were 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.”
A government spokesperson said: “This government is absolutely committed to cracking down on fraud and economic crime, spending an additional £400m 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.”
