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Public Sector Procurement (Fraud)

Volume 524: debated on Wednesday 2 March 2011

The National Fraud Authority estimates that £21 billion is lost to fraud in the public sector each year, on top of which there is a so far unquantified loss from error and from uncollected debt. It is estimated that £2.4 billion of that £21 billion is lost to procurement fraud, and that is unacceptable. The Prime Minister has asked me to chair a counter-fraud taskforce comprising members from government and private sector experts to tackle the issue. We are overseeing a series of pilots, including one on procurement, to drive forward ways to tackle public sector fraud, and we will report our findings in due course.

I thank the Minister for that answer. That figure of £21 billion is truly shocking. Will the Minister update the House on progress towards developing a more robust methodology for quantifying how much taxpayers’ money is being wasted in this way?

It is actually difficult to know exactly how much is being lost. The numbers are increasing each year, but that is largely because there is a better handle on the data. The quality of much Government data is lamentably poor and it is particularly difficult to obtain accurate figures on some procurement fraud, such as collusion or bid rigging. However, in one of the taskforce pilots, the Department for Transport is using data analytics to detect overpayments from the Department’s accounts payable systems. A similar exercise undertaken by the Home Office detected and recovered no less than £4 million in overpayments as a result of fraud or error.