Deloitte: Fraud costs UK Government 20.43 billion

31 October 2014 2 min. read

Fraud will this year cost the UK government more than £20 billion, according to a new report from professional services firm Deloitte and Reform. Not surprisingly, the authors point out that action must be taken to reduce the massive loss of income as a result of criminal activity.

The State of the State
Professional services firm Deloitte, together with think tank Reform, recently released the third edition of their annual ‘State of the State’ report. For the study, which provides an independent assessment of the operation of the UK public sector, the firms analysed material from different public sources, such as government’s accounts, public spending data and official economic forecasts, and complemented this data with insights from discussions and interviews with executives. This year’s report focuses on the challenges the UK Government faces in successfully completing the deficit reduction plan.

Fraud against the public sector

One of the areas the consulting firm and think tank looked at is the impact of fraud on the Government’s operations. They find that in the year 2014-2015, the Government is expected to lose out a massive £20.43 billion on income by fraud, which roughly equates to 25% of the Government's deficit.

More than half (70%) of the fraud occurs with Tax; more than £14 billion is expected to be defrauded in the area. As Tax represents the largest part of the UK Government’s income (Tax delivers the Government £167 billion in income, which is almost 26% of the total income), the authors highlight that it represents a "key area of concern" and that countermeasures should be taken as soon as possible, in particular in the light of UK's growing public sector debt (currently £1.4 trillion).

UK Government - Deloitte and Reform

Recommendations include better fraud prevention, simplification of Tax schemes and improved fraud detection techology.

Other large areas prone to fraud are procurement, grants and payrolling.