Contribution
My Lords, if Amendment 68 demands that the Government publish the scale of the fraud, Amendment 68D goes further. It would require public authorities to understand where fraud risks actually lie. Without that, any national figure is a guess: unverified, unanchored and easily manipulated.
The reason that this matters is not theoretical. It has already gone wrong. HMRC once claimed that just 3.6% of R&D tax credit claims involved error or fraud. After proper scrutiny, the truth emerged: 16.7% of all claims were in fact fraudulent or incorrect, costing the taxpayer over £1.1 billion a year. This was not an isolated failure. The National Audit Office found that of 63 official fraud and error assessments conducted since 2014, nearly half were unreliable. That covered £224 billion of public spending. No Government can claim to be serious about fraud while tolerating this level of ignorance in their own accounts.
Amendment 68D would stop all that. It would impose specific legal duties on every public body that spends more than £100 million a year. It would introduce a new clause placing clear, enforceable fraud risk management duties on public authorities responsible for major spending programmes. It would set out a practical and proportionate framework for improvement in the Bill, improving fraud risk management in public authorities and allowing clearer oversight of how departments are working to counter fraud in their own operations. This builds on the principle that we made clear on the first day in Committee: that the Bill should encourage public authorities l to develop their own counter-fraud capabilities and cultures. The PSFA should be a mechanism through which this process is facilitated, not offloaded.
Our amendment seeks to further incorporate this purpose in several ways. First, it would introduce a registration requirement. All public authorities overseeing schemes with annual disbursements over £100 million would be required to register those schemes with the Public Sector Fraud Authority at the start of each financial year. This would ensure visibility and that large, high-risk schemes do not fall through the cracks. Secondly, it would require each public authority to assess fraud risks involved and submit those assessments, which would be a detailed analysis, to the Public Sector Fraud Authority. This practice would work to further a public authority’s appreciation for the risks it faces and the measures it is obliged to take, and would share out the workload of the PSFA by allowing risks to be identified early and early intervention to occur.
Thirdly, the amendment would require authorities to prepare an annual fraud measurement plan, using statistically valid methods, not guesswork or unverified assumptions. If we are serious about reducing fraud, we must be serious about measuring it properly. What gets measured gets managed.
Fourthly, and crucially, the amendment would give the Public Sector Fraud Authority the power to independently verify each public authority’s reported fraud rates and to publish its findings side by side with the authority’s own figures. That transparency is vital. Parliament and the public deserve to know not only what departments say about their fraud levels, but what an independent review actually shows. It must evaluate the quality of the public authority’s fraud risk controls, and then assign them a green, amber or red rating. These ratings will need to be published annually in each authority’s accounts. This drives accountability and allows Parliament to see at a glance where strong practice is in place and where urgent action is needed. When there are significant discrepancies or poor performance, the amendment would empower the authority to require corrective action and brings in the Comptroller and Auditor-General to provide independent audit and scrutiny.
This is about embedding a whole-system approach to risk, from the point of registration to external audit. This holds public authorities to account not only for the fraud they suffer, but also for the action they take to identify and prevent it. These are clear and reasonable demands, and they should be welcomed by the Minister as a complementary system which would make the work of the PSFA easier and more effective.
This is not red tape; this is basic stewardship of public money. If a private sector organisation with £100 million in outgoings failed to properly assess risk, measure loss or independently verify results, we would call it negligence. Why should the public sector be held to a lower standard? This amendment offers a road map to real improvement, not through centralisation or command and control, but through transparency, accountability and independent oversight. It would create a clearer line of sight from fraud risk to fraud response, helping us to target prevention, improve data and strengthen public confidence.
In conclusion, Amendment 68D seeks to deliver something that the Bill must ultimately be judged by— not the breadth of powers granted to central government but the clarity and strength of the systems we put in place to prevent fraud in the first place. This amendment is not about adding burdens; it is about embedding responsibility. It would ensure that public authorities responsible for large-scale spending schemes take ownership of their fraud risks and are held accountable for how they assess, monitor and manage them.