The public “perceived that fraud was rife and people were getting away with it” during the pandemic, according to the final report by the Covid Counter Fraud Commissioner, Tom Hayhoe.
It states: “Preparations for future crises should include communications directed towards reducing fraudulent behaviour, reminding people that fraud and abuse of public spending programmes are not victimless crimes, and demonstrating that perpetrators will be pursued and punished.”
Hayhoe, the ex-chair of the West London NHS Trust, was appointed by Chancellor Rachel Reeves last year to investigate the amount of public money lost to Covid-related fraud.
The government’s response to the pandemic included “enormous outlays of public money which exposed it to the risk of fraud and error”, the report says.
“Most public organisations were unprepared for a crisis that required spending on such a scale and with such urgency. Consequently, some measures to protect against potential fraud were inadequate,” it adds.
Only a fraction of the money lost has been recovered and there is no prospect of getting the rest back, according to the report, released this week.
“Of the estimated £10.9bn lost to fraud and error from Covid-19 spending, £1.8bn has been recovered. Much of the shortfall is now beyond recovery,” it warns.
In a statement issued in response to the report, Reeves pledged: “We will leave no stone unturned in rooting out the fraudsters who profited from pandemic negligence.”
The report cites how some government departments use “behavioural or nudge interventions” with people suspected of fraud, where individuals are approached and given the chance to repay the money back.
“Such compliance campaigns are cheaper, quicker and reduce burden on the courts compared to immediately using criminal or civil penalties,” it says.
But the report warns that some parts of government are “extremely risk-averse about proactive communications to debtors who are suspected of committing fraud, due to perceived legal and reputational concern”.
It also states that the government was not able to inform the public about every fraud prosecution relating to the Bounce Back Loan Scheme as it happened. This meant it “could not create any real deterrent effect through its communication about Covid-19 fraud”.
The report recommends that the Government Communication Service (GCS) work with the Public Sector Fraud Authority and other government organisations “to develop a pre-prepared communications framework for future emergency spending programmes”.
The framework should “consider behavioural science insights such as ‘nudge’ principles to deter fraudulent behaviour” as well as “evidence-based messaging that demonstrates fraud is not victimless and that perpetrators will be pursued”.
The report adds: “GCS should also establish protocols for timely communications about enforcement activity during crises.”
A government spokesperson said: “We are grateful for the Commissioner’s work on this important issue and will respond to the report’s recommendations early in the new year.”
They added: “The Government Communication Service works with teams across government, including the Public Sector Fraud Authority, to encourage effective communication that protects public funds.”
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