The paper stresses that the level of fraud and corruption has increased in the UK public sector. This is due to the following factors:
- Weakened controls over public expenditure during the COVID-19 pandemic;
- Lack of regular assessment of fraud and corruption risks in public procurement in most public bodies and poor reliability of the findings of fraud analysis under the Fraud Measurement and Assurance (FMA)* programme;
- Lack of anti-fraud and anti-corruption professionals that have undergone specific training and exercising necessary influence in their respective public bodies;
- Poor anti-fraud and anti-corruption law enforcement;
- Lack of coordination between national and local authorities on anti-fraud and anti-corruption;
- Digital technologies development that enables organised crime to use hidden identities (for instance, in cryptocurrencies), phishing and other methods.
In order to reduce the increased level of fraud and corruption, the government has already taken the following steps:
- The HM Treasury has obliged a number of authorities to compensate the expenses incurred by organisations to counter fraud and corruption: at least three pounds for each pound invested therein;
- The Public Sector Fraud Authority (PSFA)** has increased the number of its personnel from 60 to 150 persons;
- The number of personnel of the Treasury responsible for measuring fraud and corruption has increased from 99 to 180 persons;
- The Initial Fraud Impact Assessments (IFIA) procedure aimed at detecting fraud and corruption at the initial phase of implementation of government initiatives has become compulsory;
- The Government Counter Fraud Function (GCFF) and the respective Counter Fraud Functional Standards containing minimal requirements to be met by public bodies to ensure effective action against fraud, bribery and corruption, and the Government Counter Fraud Profession (GCFP) standard defining the requirements to the competencies of those responsible for countering fraud and corruption in the public sector have been developed and implemented; compliance with these standards is foreseen to become a mandatory requirement for the Treasury to approve government spending;
- A bill prohibiting the participation of persons that have been convicted of fraud and/or corruption in public procurement has been drafted etc.
In order to further reduce fraud and corruption in the public sector, the authors of the report put forward the following recommendations:
1) To the Treasury:
- In cooperation with the Cabinet Office, prepare and submit a list of measures adopted by the government to restore public trust in institutions and encourage top executives to demonstrate their personal commitment to the fight against fraud and corruption;
- Develop a list of measures to implement IFIA in formal processes of government spending adoption, a list of and procedure for imposing sanctions in case of infringements, and provide public bodies with advice on IFIA;
- Provide public bodies with necessary assistance in recovering proceeds of fraud and corruption;
- Compile a list of measures on how to detect shortcomings in tackling fraud and corruption at the regional and local levels and to encourage regional and local government bodies that effectively detect and counter fraud and corruption;
2) To the PSFA:
- Ensure the publication of annual analytical reports on the level of fraud and corruption in the public bodies, including major risks and challenges;
- Provide the Committee with information on the annual staff assessments and effectiveness of performance of public bodies, including the anti-fraud and anti-corruption measures adopted, provision of adequate resources to the respective processes and achievement of objectives in the area;
- Develop an interagency communication strategy to enhance cooperation between public bodies in tackling fraud and corruption and exchange experience on how to hold perpetrators liable for the offences, monitor the implementation of the strategy.
* The FMA was launched in 2014 by the Counter Fraud Centre of Expertise (CoEx) of the UK Cabinet Office. This programme assists public sector bodies and organisations in detecting fraud in high-risk sectors, as well as flaws in the control system. The programme, in particular, provides for:
1) Fraud risk assessment in government spending to define three high-risk areas;
2) Detailed analysis of fraud risks in the selected areas;
3) Testing and measurement of fraud and mistakes with regard to control in those areas.
Since 2014 the government has undertaken 53 measures to measure the scope of damage inflicted by fraud.
**The PSFA was established in 2022 as an expert centre to counter fraud and corruption in the public sector subordinate to the Treasury and the Cabinet Office. The PSFA functions include:
- Supervise anti-fraud and anti-corruption action of public bodies, verify bodies’ compliance with the Counter Fraud Functional Standards;
- Assess the scope of fraud and corruption in public bodies and carry out relevant research;
- Ensure exchange of experience between anti-corruption and anti-fraud experts in different public bodies, develop professional standards and undertake capacity-building activities under the GCFP;
- Provide advice to public bodies and officials;
- Develop intergovernmental policy aimed at improving anti-fraud and anti-corruption measures;
- Organise the International Public Sector Fraud Forum to exchange experience;
- Create a service providing support to public bodies in understanding and assessing fraud and corruption risks they face, assist in developing measures to counter relevant offences, and monitor their implementation and effectiveness;
- Establish a National Counter Fraud Data Analytics Service to aggregate relevant data and advanced and innovative technologies to tackle fraud and corruption;
- Impose civil liability for fraud and corruption and prepare materials for criminal actions;
- Coordinate the use of professional standards GCFF and GCFP.