Press release

Fraud crackdown saves taxpayers £6.5 billion

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government

Measures introduced by this government to cut fraud and error have saved £6.5 billion - nearly £400 for every working family in the country.

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Measures introduced since the last General Election cut fraud and error against the public purse by £6.5 billion last year, ministers revealed today. Better fraud prevention and reducing errors in the tax and benefits systems, along with more fraudsters being prosecuted, saved nearly £400 for every working family in the country. This is on top of the £10 billion saved last year by taking radical decisions to strip waste out of Whitehall so Britain can compete in the global race.

In February 2011, the government revealed that the public purse lost as much as £30 billion to fraud and error each year. The Fraud, Error and Debt Taskforce, chaired by Francis Maude, Minister for the Cabinet Office, and including key ministers and officials, set out the first ever cross-government approach to tackle the problem. Today’s figures are savings made in 2012-2013 as a result of the first stages of the plan. Further reforms will make it much easier to catch fraudsters and generate even greater savings in future.

Francis Maude, Minister for the Cabinet Office, said:

Every government promises a crackdown on fraud and error but we are delivering – £6.5 billion saved last year alone. That’s nearly £400 saved for every working family. But there are still too many cracks for fraudsters to slip through. Hard-working families expect us to address this. Our priority is to enable different parts of government to share data about fraudsters and work as one to catch them. This will ensure we further reduce the shocking losses to fraud and error much faster.

David Gauke, the Exchequer Secretary to the Treasury, said:

The government is investing nearly £1 billion in an unprecedented clamp down on those who commit tax fraud. This investment will bring in an additional £9 billion a year in tax revenue by 2014 to 2015 and build on HMRC’s strong record of compliance and help drive down the deficit.

Lord Freud, Minister for Welfare Reform, said:

We’ve done a great deal to prevent fraud from entering the benefit system and to detect and punish those who try to play the system. With the introduction of Universal Credit we’re making it harder than ever for cheats to steal from the British taxpayer, reducing benefit fraud by £200 million a year.

Her Majesty’s Revenue and Customs alone generated £6 billion of the additional savings through tax compliance. In 2012 to 2013, more than 5,000 staff were redeployed into new or different compliance roles. Tax avoidance schemes have been closed down protecting £1 billion. Specialist taskforces have been set up for 28 industries in specific locations from restaurants on the South Coast to the motor trade in Scotland. Offshore tax evasion is also being tackled through actions including the UK/Swiss Agreement on Tax Cooperation, which saw Swiss banks pay a first instalment of £342 million in January and new agreements with the Isle of Man, Guernsey and Jersey, which are expected to bring in £1 billion over 5 years.

The Department for Work and Pensions also cut hundreds of millions of pounds of fraud and error in the benefits system by making greater use of data matching, reviewing and correcting claims and imposing tougher penalties on those who seek to cheat the system.

At the same time, a number of smaller gains were made by departments trialling innovative approaches which will be important in generating further savings in the future. For example, the Department for Business Innovation and Skills saved £13 million by introducing new checks on student loan applications. The Ministry of Defence saved £11 million by carrying out a spend recovery audit on its accounts to reclaim duplicate or overpayments to suppliers of services and goods. The Department for Transport saved £1 million by working with the Cabinet Office Behavioural Insights team, also known as the ‘nudge unit’, to redesign a standard letter used to call in debts.

Notes to editors

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Published 20 August 2013