UK fraud higher than estimates

Experts warn public sector fraud is much higher than estimated by UK’s National Fraud Authority (NFA) in its first annual fraud dictector.

NFA released its first fraud indicator last week, estimating fraud costing Britons £30bn ($A54.38bn) a year, 58%, or £17.6bn, of which was public sector fraud, but Jim Gee, a director of counter fraud services at chartered accountants MacIntyre Hudson and chair of the Centre for Counter Fraud Studies, put it much higher, at more than £27bn.

He told Public Finance, a UK publication for public sector managers, the MacIntyre Hudson estimate was based on an average 4.57% shortfall across all public sectors,

Gee, who is former chief executive of UK’s NHS Counter Fraud Service, noted the NFA’s estimates of the fraud costs were ‘puzzling’ and the losses for the health service, which the NFA estimated at £263m ‘extraordinary’.

He said the fraud calculated by the NFA in UK’s National Health Services (NHS) was only 0.27% of its budget compared with a global average of 5.59% for health care systems, according to recent findings by Macintyre Hudson.

‘I would be very interested in how that was calculated. If we assume the NHS is at the bottom of the global range of losses and as good as or better than any other country then it should still be losing £3.3bn,’ he said.

Gee said the average losses to frauds in the NHS until 2006 when he left was just exceeding 4%. The NHS has not published figures of fraud losses since the end of 2006.

The NFA said their new indicator was the most accurate and comprehensive yet, but admitted that it was ‘likely to underestimate the full financial impact of fraud’, particularly in the private sector because figures were not available for some industry areas or data only included reported losses.

‘As improvements are  made in the quality and availability of fraud loss estimates, it is likely that the overall fraud estimate will increase,’ Anne Jefferies, NFA head of measurements and analysis, said.

Andrew Davis, Experian head of public sector fraud, said fraud in local authorities was much more widespread than implied by the NFA indicator, which concentrated mainly on social housing tenancy and single person council tax discounts.

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