The Government is determined to uncover fraud in the public sector and is proud of its record. As part of this, the Government established the Public Sector Fraud Authority (PSFA). In 22/23 the PSFA set a target of delivering £180m of savings to the taxpayer. In fact, the PSFA far surpassed this within the first 12 months by preventing and recovering £311 million.

As it enters its second year, the PSFA has a target of achieving £185 million of savings for the taxpayer. The Government has also announced an additional £34 million to deploy cutting edge tools and Artificial Intelligence tools to help combat fraud across the public sector, saving £100 million for the public purse. This is in addition to existing partnerships between PSFA and the tech sector.

Defra's headline response to countering fraud is set out in the Governance Statement of the Annual Report and Accounts. The Annual Report and Accounts for Defra for the past three years may be accessed here:

Defra Annual Report and Accounts 2020-21 (publishing.service.gov.uk)

Defra Annual Report and Accounts 2021-22 (publishing.service.gov.uk)

Defra Annual Report and Accounts 2022-23 (publishing.service.gov.uk)

Figures used in the cross-Government Fraud Landscape Report show the level of detected error across the group including arm’s length bodies. The figures for 2021-22 and 2022-23 may be found in the following reports: Annual Report and Accounts 2021-22 and Annual Report and Accounts 2022-23.

Steps we have taken are detailed in the annual report and accounts. These include creation of a dedicated grants hub with counter fraud expertise, fraud risk assessments, prepayment checks allowing correction of errors prior to payment, audits of both the control environment and delivery bodies’ counter fraud capability, external assurance, as well as governance forums which routinely consider the risk of fraud and error at both design and delivery stages.

The Government reports a combined fraud and error rate as it is difficult to disaggregate between the two, is cost intensive and may not be the most effective use of limited department resources. The choice is therefore left to the discretion of individual departments.

When found, error would be defined as losses arising from unintentional events, processing errors and official government errors.

The Government Commercial Organisation, is the employer of senior commercial professionals (at Grade 7 and above) within the Government Commercial Function. There are currently 101 vacancies within the Government Commercial Organisation against a budgeted headcount of 1649. This vacancy rate of 6.1% is similar to the 2023 Civil Service vacancy rate of 6.2%.

The Central Digital and Data Office (CDDO), in the Cabinet Office, has established a programme to support departments managing legacy IT. CDDO has agreed a framework to identify ‘red-rated’ systems, indicating high levels of risk surrounding certain assets within the IT estate. Departments have committed to have remediation plans in place for these systems by next year (2025).

It is not appropriate to release sensitive information held about specific red-rated systems or more detailed plans for remediation within the department’s IT estate, as this information could indicate which systems are at risk, and may highlight potential security vulnerabilities.

Specifically in relation to the hon. Gentleman’s local authority, I have been briefed by the National Cyber Security Centre on that incident. He is totally right to say it is a significant and serious incident, and we are working on remediation through the National Cyber Security Centre. To prevent this type of attack from happening in the first place, we invested £2.6 billion in the national cyber strategy, which is about improving cyber-resilience and reducing legacy technology. I have been quite open with the House in saying that the threat is intensifying because we see hostile states creating environments in which cyber-criminals can flourish, both for their own benefit and for the benefit of those hostile states. We are working through our intelligence agencies and the National Cyber Security Centre to continuously improve our performance.

The Department was recently requested to set out the steps it has taken to reduce the costs of fraud in the last three financial years: this response is provided in the Annex below. The Public Sector Fraud Authority (PSFA) defines the difference between fraud and error in relation to the dishonest intent of the individual or organisation involved in the incorrect payment. “Fraud” represents losses to the Department caused with intent by a counterparty. “Error” represents losses to the Department where intent cannot be proven. As the difference between fraud and error relates to the established intent of the counterparty rather than the activity itself, the Department has a single controls and assurance regime over fraud and error, which is set out in the Annex below.

In addition, the Department operates business-as-usual transactional and analytical controls to mitigate and detect risk of financial error caused by administrative errors.

Annex A – Parliamentary Question 22574 To ask the Secretary of State for Transport, what steps his Department has taken to reduce the costs of fraud in his Department in the last three financial years.

Response provided on 23 April 2024

Since the establishment of the Public Sector Fraud Authority (PSFA) in 2022, the Department has been working closely with PSFA to implement the Counter Fraud Functional Standard framework, a common set of standards required by government departments to counter fraud, bribery, and corruption. To support compliance with the Functional Standard, the Department internally published its Counter Fraud, Bribery and Corruption Strategy for 2022-2025 to improve culture and awareness and build on the counter fraud activity delivered since the launch of DfT’s first strategy in 2019.

The following key activities have taken place to drive improvements in reducing fraud by improving detection activity, enhancing fraud prevention and building capability.

To support detection activity the department utilises Spotlight, a due diligence tool provided to departments by the Cabinet Office to help identify areas of risk and potential fraud and error. The department has also commenced a data analytics project utilising artificial intelligence to identify instances of fraud and error within high-risk spending areas. This initiative is providing comprehensive insights into fraudulent activities and errors that can be used to further strengthen controls and seek recovery of funds where fraud or error is identified. The Department’s contract management teams have furthermore increased their focus on fraud risks and detection, resulting in substantial sums recovered and returned to the Exchequer. Detected, prevented and recovered fraud is formally disclosed to the Cabinet Office who report publicly on these results across government in their annual Fraud Landscape Report.

On fraud prevention, a Fraud Risk Assessment (FRA) policy was introduced to enable accountable officers across DfT to take responsibility in ensuring that fraud, bribery, and corruption risks are adequately understood and effectively managed. The FRA process has been embedded into business-as-usual activity and has supported the department in identifying fraud risks, driving control improvements, and fostering continuous improvement in fraud risk management practices.

To build capability DfT has increased its engagement with the PSFA to enhance oversight, prioritisation of risks, delivery against counter fraud functional standards and sharing of best practice. We have increased our collaboration across the departmental group and across government networks to share lessons learnt, horizon scan for new and emerging trends and deliver collaborative best practice workshops, training sessions and awareness campaigns on areas of development e.g. risk assessment.

In 2023 and early 2024, DfT was one of the first departments assessed under the latest framework by PSFA for compliance against the Counter Fraud Functional Standard. The Department is now working with PSFA to take forwards the recommendations from this review to drive further improvements in the Department’s counter-fraud function.

Details of measures the department is taking to prevent fraud and error are set out in the department’s annual accounts.

We are committed to tackling both fraud and error. DWPs quality assurance framework plays an important role in identifying common errors which contribute to over and underpayments. In addition, the department and HMRC has committed to provide assurance this winter over the integrity of the National Insurance records and how they interact with DWP’s benefit system.

The Department launched a robust plan to drive down fraud and error from the benefits system, alongside investment of £900 million that will deliver £2.4 billion of savings by the end of 2024/25. This plan includes proposed powers to require the transfer of data from third-parties, which has been introduced as part of the Data Protection and Digital Information Bill (No.2). This legislation is forecast to save up to an additional £600m over the Treasury scorecard period.

The Department for Science, Innovation and Technology (DSIT) was established on 7^th February 2023. Prior to this date the portfolio for DSIT sat within the Department for Business, Energy & Industrial Strategy (BEIS). The published BEIS Annual Report & Accounts provide a summary of counter fraud activity and respective costs related to fraud. The Cross-Government Fraud Landscape Annual Report 2022 highlights the latest available data relating to fraud and error across government.

The Government is proud of its record in proactively seeking to find and prevent more fraud in the system. We have established the dedicated Public Sector Fraud Authority (PSFA). In its first year it delivered £311 million in audited counter fraud benefits.

Due to the Machinery of Government changes, the Department for Science, Innovation and Technology have not yet produced fraud and error estimates, but this will be published in the 23/24 annual report and accounts.

The Department for Science, Innovation and Technology (DSIT) was established on 7^th February 2023. Prior to this date the portfolio for DSIT sat within the Department for Business, Energy & Industrial Strategy (BEIS). The published BEIS Annual Report & Accounts provide a summary of counter fraud activity and respective costs related to fraud. The Cross-Government Fraud Landscape Annual Report 2022 highlights the latest available data relating to fraud and error across government.

Presently, as for all Government Departments, DSIT counter fraud activity is governed by Government Functional Standards for Counter Fraud, covering both proactive and reactive counter fraud activity, and set out by the Government Counter Fraud Function (GCFF). Adherence to standards is monitored and reviewed by the Public Sector Fraud Authority (PSFA).

In 2022/23 the PSFA set a target of delivering £180 million of savings to the taxpayer. In fact, the PSFA far surpassed this within the first 12 months by preventing and recovering £311 million. As it enters its second year, the PSFA has a target of achieving £185 million of savings for the taxpayer.

The Government has also announced an additional £34 million to deploy cutting edge tools and Artificial Intelligence tools to help combat fraud across the public sector, saving £100 million for the public purse. This is in addition to existing partnerships between PSFA and the tech sector.

The Government is determined to uncover fraud in the public sector and is proud of its record.

Since the establishment of the Public Sector Fraud Authority (PSFA) in 2022, the Department has been working closely with PSFA to implement the Counter Fraud Functional Standard framework, a common set of standards required by government departments to counter fraud, bribery, and corruption. To support compliance with the Functional Standard, the Department internally published its Counter Fraud, Bribery and Corruption Strategy for 2022-2025 to improve culture and awareness and build on the counter fraud activity delivered since the launch of DfT’s first strategy in 2019.

The following key activities have taken place to drive improvements in reducing fraud by improving detection activity, enhancing fraud prevention and building capability.

To support detection activity the department utilises Spotlight, a due diligence tool provided to departments by the Cabinet Office to help identify areas of risk and potential fraud and error. The department has also commenced a data analytics project utilising artificial intelligence to identify instances of fraud and error within high-risk spending areas. This initiative is providing comprehensive insights into fraudulent activities and errors that can be used to further strengthen controls and seek recovery of funds where fraud or error is identified. The Department’s contract management teams have furthermore increased their focus on fraud risks and detection, resulting in substantial sums recovered and returned to the Exchequer. Detected, prevented and recovered fraud is formally disclosed to the Cabinet Office who report publicly on these results across government in their annual Fraud Landscape Report.

On fraud prevention, a Fraud Risk Assessment (FRA) policy was introduced to enable accountable officers across DfT to take responsibility in ensuring that fraud, bribery, and corruption risks are adequately understood and effectively managed. The FRA process has been embedded into business-as-usual activity and has supported the department in identifying fraud risks, driving control improvements, and fostering continuous improvement in fraud risk management practices.

To build capability DfT has increased its engagement with the PSFA to enhance oversight, prioritisation of risks, delivery against counter fraud functional standards and sharing of best practice. We have increased our collaboration across the departmental group and across government networks to share lessons learnt, horizon scan for new and emerging trends and deliver collaborative best practice workshops, training sessions and awareness campaigns on areas of development e.g. risk assessment.

In 2023 and early 2024, DfT was one of the first departments assessed under the latest framework by PSFA for compliance against the Counter Fraud Functional Standard. The Department is now working with PSFA to take forward the recommendations from this review to drive further improvements in the Department’s counter-fraud function.

We are committed to tackling fraud which is why in May 2022 the Department launched a robust plan to drive down fraud and error from the benefits system, alongside investment of £900 million that will deliver £2.4 billion of savings by the end of 2024/25. This plan includes proposed powers to require the transfer of data from third-parties, which has been introduced as part of the Data Protection and Digital Information Bill (No.2). This legislation is forecast to save up to an additional £600m over the Treasury scorecard period. The Department has set out a target to deliver £1.3bn in savings from our dedicated counter-fraud and error resource in 2023/24 as set out in the department’s Annual Reports and Accounts.

The Government is determined to uncover fraud in the public sector and is proud of its record.

As part of this, the Government established the Public Sector Fraud Authority (PSFA). In 22/23 the PSFA set a target of delivering £180 million of savings to the taxpayer. In fact the PSFA far surpassed this within the first 12 months by preventing and recovering £311 million. As it enters its second year, the PSFA has a target of achieving £185 million of savings for the taxpayer.

The Government has also announced an additional £34 million to deploy cutting edge tools and Artificial Intelligence tools to help combat fraud across the public sector, saving £100 million for the public purse. This is in addition to existing partnerships between PSFA and the tech sector.

The Central Digital and Data Office (CDDO), in the Cabinet Office, has established a programme to support departments managing legacy IT. CDDO has agreed a framework to identify ‘red-rated’ systems, indicating high levels of risk surrounding certain assets within the IT estate. Departments have committed to have remediation plans in place for these systems by next year (2025).

It is not appropriate to release sensitive information held about specific red-rated systems or more detailed plans for remediation within the department’s IT estate, as this information could indicate which systems are at risk, and may highlight potential security vulnerabilities.

The Central Digital and Data Office (CDDO), in the Cabinet Office, has established a programme to support departments managing legacy IT. CDDO has agreed a framework to identify ‘red-rated’ systems, indicating high levels of risk surrounding certain assets within the IT estate. Departments have committed to have remediation plans in place for these systems by next year (2025).

It is not appropriate to release sensitive information held about specific, red-rated systems or more detailed plans for remediation within HMRC’s IT estate, as this information could indicate which systems are at risk and may highlight potential security vulnerabilities.

We completed an assessment of our critical systems against the CDDO’s legacy technology measures in July 2023, identifying the red rated system during that process.

HMCTS first assessed the red-rated legacy IT systems in October 2022 as part of their Decommissioning and Legacy Risk Mitigation (DLRM) programme.

I refer the hon Member to the answer given on 29 November 23 to PQ UIN 3658.

We continue to assess our most critical services using the CDDO legacy IT framework. Now that funding has been secured, we are designing phased plans to mitigate risks for the red-rated services identified in the previous assessment. One of the red-rated services has had technical risks mitigated by being migrated to the MoJ's modernisation platform. Additionally, we are continually improving our overall risk management and mitigation approaches.

Within HMCTS, services have also been assessed against the framework, and we are continuing with the delivery of the Decommissioning and Legacy Risk Mitigation (DLRM) programme that is addressing these risks. DLRM is a SR21-funded, Government Major Project Portfolio programme specifically focussed on legacy system risks and is decommissioning, replacing, or moving them onto secure, modern, cloud-based environments.

The Digital and Data Pay Framework is being revalorised to meet market trends for Digital and Data roles, ensuring the Government can attract the right talent for critical roles. It is an internal framework for government use that is not intended to be published externally to protect market sensitivities. 35 organisations have adopted the framework. This is shared directly with their Pay and Reward teams.

The Central Digital and Data Office (CDDO) has convened discussions with Chief Digital and Information Officers and Chief Technology Officers from across government to identify key principles and guardrails for the mobile app strategy. The strategy will be finalised next year, as set out in the 2022 to 2025 roadmap for digital and data.

Alongside this, the Government Digital Service (GDS) is developing a GOV.UK App that builds upon the success of the existing GOV.UK One Login identity checking app, which has been downloaded over 5.7 million times.