Fraud and Compliance
Public Sector Expense Fraud – and How To Fix It
New research has revealed the scale of expense fraud in the UK public sector. What’s more, huge numbers of people in the sector admit to doing it. But prevention is an option.
From Brexit to Covid-19 and now a cost of living crisis, supply chain issues, rising energy costs and a looming recession – it’s no secret that central and local government budgets are under a relentless sea of pressure.
In short, the public sector has – in real terms – less money to spend than it has for a long time, so every penny and every pound is more important and more precious than ever, as the sector strives to continue delivering frontline public services.
Expense Fraud in the UK Public Sector: The Cultural and Technical Cost
Discover the impact of fraud on the public sector’s culture and talent retention.Read the Research
Threats on all fronts
Yet despite this pressure on every pound available, it’s the effects on healthcare, education, central and local government organisations that continue to see considerable losses through fraud.
The government estimates, for example, that fraud around the Bounce Back Loan Scheme introduced to support the recovery from Covid-19 has cost the government £1.1bn in lost money
But it’s not just fraudsters on the outside who are causing loss of vital government funds.
Police recently launched an investigation at Norfolk County Council after it reported suspected cases of fraud and corruption involving the public and council staff.
A recent report has revealed 13 referrals of alleged fraud or corrupt practices were made to the county council's internal auditors in 2021/22.
Expense fraud – the startling truth
Furthermore, research recently conducted by SAP Concur reveals that some public sector organisations could save valuable funds by stamping out expense errors and fraudulent expense claims.
For example, our research reveals that 42% of UK public sector decision-makers admit they have committed expense fraud.
Instances were particularly high in the NHS (40%), the civil service (32%) and the education sector (31%) – showing that such actions are a genuine threat to public finances and frontline resources.
Our research also revealed that more than two-thirds – 69% – of those who have committed an expense fraud say they did so deliberately. And that’s despite 83% of public sector employees understanding the risks and repercussions for them personally being associated with submitting a false/fraudulent expense claim – suggesting fear of being caught is not deterrent enough.
In fact, 66% of public sector decision-makers say that their organisation has witnessed and acted against an employee who submitted a fraudulent expense claim – a figure that rises as high as 75% in the civil service. Yet expense fraud continues.
The solution: tech and automation
So, with fear of being found out not deterrent enough and a large proportion of fraudulent claims being deliberate – what can central and local government organisations do to stop this huge drain on public money?
The answer rests, as often, with tech and automation.
It’s clear that the public sector has made good progress in many areas when it comes to digital transformation.
However, most are lagging in their use of technology when it comes to invoice and expense management.
Only a quarter of organisations have substantially adjusted their expenses policy since the pandemic. And only a similar percentage have implemented more stringent checks and/or audit processes in that time.
What’s more, over a quarter (28%) of respondents to our research say that their expense process is not digitalised, making it harder to audit – a figure that was particularly high in education, where it was cited by 38% of those surveyed.
And that’s despite the large majority of overall respondents (78%), and 86% of civil servants, agreeing that digital technology is highly important to their organisation. Some 74% of education respondents and 71% of those in the NHS agreed this was the case.
Technology and digital processes have the ability to help the public sector tackle fraud and become more efficient.
They can drive efficiency and save time – and money – on expense processing.
They can set and automate parameters, processes and procedures to reduce accidental errors and false claims.
They can ensure compliance with rules and procedures to reduce deliberate fraud.
And they can help transform the culture of the organisation by delivering real-time data and statistics that demonstrate the importance of compliance and the impact on the organisation.
At a time when government money is stretched as much as ever – and when every penny counts – expense technology and automation can provide the much-needed boost that local and central government teams need right now.
To learn more about the findings of this research, you can get your copy here