Tackling Fraud and Error: A Central Perspective Mark Cheeseman 21 st April 2016

2-- OFFICIAL -- Improving overdue debt management across HMG Debt owed to HMG is managed fairly, efficiently and effectively. Reducing fraud and error losses across HMG HMG has the skills and products to identify, understand and reduce Fraud and Error loss Reducing admin costs and improving the effectiveness of Government grants Grants are appropriately allocated, efficiently managed and effectively used FED in Cabinet Office FRAUD & ERROR DEBTGRANTS Each area challenges, supports and collaborates with other public and private sector bodies to achieve results. Dealing with Fraud in Government 2

3-- OFFICIAL -- Detected fraud and error represents that which the public sector finds and deals with. Much of this is within welfare, with limited detected fraud across the rest of Government. Detected loss is £2.2bn. In the more mature and scrutinised areas, such as welfare and some areas of health, there are estimates of the level of fraud and error. Estimates outside of these areas are limited but increasing. Estimated loss is £4.8bn. In many parts of government expenditure (including grants and procurement) little is known, and it is not possible to accurately estimate the potential losses. The available comparators (EU, US) suggest that there is significant unknown loss. Extrapolation of the losses using the comparators, suggests this could be between of £1.7 - £13.5bn per year. Local Government losses would be in addition to this. TAX – Fraud and error through tax loss, although not included in this representation, operates in a similar fashion, although definitions vary. Getting to grips with Fraud and Error Loss Detected Estimated Unknown? Welfare Health Grants / Procurement

4-- OFFICIAL -- Challenges 4 How do we incentivise dealing with fraud? What is the right amount to do? Broad range of disciplines Establishing the scale of the problem Still quite silo’d Challenge of being an educated consumer Demonstrating outcomes and business impact Constrained by the Status Quo? Overly reactive Limited understanding of the area Scared of finding fraud Use of Data

5-- OFFICIAL -- Our Approach 5 Our Future Approach Work with departments to: Find more fraud and error Ensure changes are made to prevent fraud and error wherever possible Ensure all counter-fraud remedies are accessible to deal with loss Seek common solutions to cross-cutting issues Ensure HMG HQ can provide a strong, informed and timely support and advice to the centre and departments on fraud and error activities, driving progress and providing products and advice

6-- OFFICIAL -- Counter-Fraud Framework General Fraud Awareness General Organisational Level Functional Management Level Specialisms Level All Staff Policy Officials Process Managers People Managers Management and Strategy An awareness across all specialist areas and the capability to define an effective counter-fraud response and how to deploy the specialisms in the business Management and Strategy An awareness across all specialist areas and the capability to define an effective counter-fraud response and how to deploy the specialisms in the business Detection Risk Assessment Sanctions, Redress and Punishment Investigation Intelligence and Analysis Measurement Prevention and Deterrence Use of Data and Analytics Sub Disciplines Cyber Fraud Grant Givers Board Members Culture Disruption Bribery and Corruption Criminal Justice Money Laundering Organisational Standards

7-- OFFICIAL -- Addressing Internal Fraud in Government Research (2014) highlighted issues: Investigations abandoned following resignation. Fraudsters free to move around public sector undetected - no central data held. Progress and next steps Early Adopter is live, covering 41% of the Civil Service. We will onboard central government first, then ALBs, NDPBs and contractors and eventually all of WPS. Amend Baseline Personal Security Standard to incorporate check of IF data. Update disciplinary policy & guidance and communicate advice on adverse references. No zero tolerance approach and only £1.6m loss detected across 52 cases (2014) Introduce a central register of staff dismissed for fraud. Ban staff from employment for 5 years. PS sign off for investigations/disciplinary abandoned. MCO announced in February key aims:

8-- OFFICIAL -- Find More Fraud And Error Collaboration as a Default Understand and Communicate Our Impact Increase Capability Identify How to Better Use Data