Government loses £52bn to fraud – FOUR TIMES the £12bn its tax hike will raise
FRAUD is costing the taxpayer up to £1 billion every week – more than four times the amount expected to be raised by the looming national insurance hike.
When Treasury Minister Lord Agnew dramatically quit last month, he cited the Government’s abject failure to prevent criminals from stealing £29billion each year.
Staggeringly, a newly unearthed official report reveals the true cost may be as much as £52billion – the equivalent of more than £1,600 a second and more than the budget of the Ministry of Defence.
Critics said the increase in NI – which will raise £12billion a year to help hospitals clear waiting lists and support social care – would not be required if Ministers got a grip on the fraud epidemic.
The revelation comes days after Business Secretary Kwasi Kwarteng appeared to downplay the impact of fraud by suggesting it was not a ‘crime that people experience in their day-to-day lives’.
Labour peer Lord Sikka, an accountancy expert who unearthed the report, said last night: ‘This is horrendous given that even the poorest people are being asked to pay more in tax and national insurance and given the vast queues we have for the NHS. It is utter negligence.’ The projected fraud losses are detailed in the Cross-Government Fraud Landscape Bulletin, a report disclosed by Cabinet Office Minister Lord True following a question by Lord Sikka.
‘The estimated fraud cost to the Government outside of the tax and welfare system is £2.5billion to £25 billion per year,’ it says.
‘This increases to £29.3billion to £52billion when fraud against the tax and welfare system is included.’
Astonishingly, the estimate was made before the pandemic and so does not take into account the eyewatering sums lost to criminals who fraudulently obtained Covid grants and loans.
Meg Hillier MP, chairwoman of the Commons Public Accounts Committee, accused Ministers of having a ‘laissez faire’ attitude towards fraud, adding: ‘This is taxpayers’ money, they work hard to earn it and they give it over rather reluctantly but in the hope that it is spent properly. There needs to be a much more serious attitude from the Government.’
Tory MPs also voiced their anger, particularly given the 1.25 per cent rise in NI contributions for employers and employees from April. The rise will cost a worker on a £30,000 salary around £255 a year.
Former Conservative leader Sir Iain Duncan Smith said: ‘I don’t believe in tax hikes. The Government has got to redouble its efforts to get the fraud losses back.’
MPs on the Treasury Committee have urged Ministers to consider setting up a single law enforcement agency to investigate fraud amid concerns over the ‘bewildering’ number of bodies charged with policing economic crime.
Analysis by The Mail on Sunday shows that 28 organisations are responsible for tackling fraud, including the National Crime Agency, the City of London Police and the Serious Fraud Office.
According to the Office for National Statistics, fraud and computer misuse costs more than all other types of crime put together, yet only around 1 per cent of police resources and personnel are devoted to tackling it.
Lord Sikka said: ‘My suspicion is that the total losses are probably even bigger because they don’t seem to have any comprehensive system for assessing it.’
The NHS claims that it loses more than a billion pounds to fraud each year, but the Centre for Counter Fraud Studies at the University of Portsmouth estimated in 2017 that the real figure was £3.4billion.
A Government spokesman said last night: ‘Fraud is totally unacceptable. We are taking firm and coordinated action across Government to crack down on it.’