National Audit Office report on Lessons learned: Tackling fraud and protecting propriety in government spending during an emergency

The National Audit Office (NAO) has published a series of recommendations for tackling fraud and protecting propriety when spending public money during a national emergency.

Drawing on its reporting on public spending during the COVID-19 pandemic, the UK’s independent public spending watchdog says there is more government can do now to ensure that it is better prepared to protect taxpayers’ money in future crises.

Emergency spending can carry a higher risk of fraud and impropriety, whether this is to support individuals and businesses or to purchase goods and services to support government's emergency response.

Achieving propriety in public spending means meeting high standards of public conduct, including robust governance and meeting relevant parliamentary expectations, especially in terms of transparency. This includes managing the risk of fraud and ensuring that the right amount of money reaches the right people and businesses.

The amount of fraud reported in the accounts the NAO audited rose from £5.5 billion in the two years before the pandemic to £21.0 billion in the two years after. £7.3 billion of the £21 billion related to temporary COVID-19 schemes, with the bulk of the rest of the rise attributed to benefit fraud.

The impact of actual or perceived impropriety may persist for some time after the emergency. This is true even if perceived impropriety is proven to be incorrect, undermining public trust. By the time an emergency has started, it is usually too late to take all the steps needed to respond in a way that protects propriety.

The lessons learned report published today by the NAO sets out seven lessons with recommendations on what the government can do now to better prepare for spending in the next emergency.

The seven lessons are:

1. Be clear on governance and rules - public bodies may need to streamline their usual decision-making and governance arrangements so they can make faster decisions, but they need to do so in ways that still allow for robust oversight and are within normal public spending rules.
2. Prioritise, but be open about when you will come back to obligations. Accounting Officers cannot forgo responsibilities to protect propriety, and need a framework to make decisions on competing issues.
3. Embed the fraud risk management cycle, as it is crucial that the government sets a clear tone from the outset as to how the risk of fraud will be managed during a crisis.
4. Create flexible counter-fraud capability with the right people and skills across government, who can be deployed at pace.
5. Plan for the data you will need as there can be insufficient time to collate or agree how data can be shared during an emergency. Consider what inter-departmental data sharing arrangements can be set up now.
6. Increase transparency as emergencies require the need to know who has been the recipient of funding via grants and contracts.
7. Plan how to buy in a seller’s market. In emergencies, government will have reduced leverage and may have to deal with many suppliers they are not used to dealing with. A clear playbook is needed for buying in this situation.

Gareth Davies, head of the NAO, said:

“There is evidence of the government learning lessons from recent emergencies and improving its approach to better prepare for future emergency spending. However, there is more to do to complete this analysis and bring it together.

“The NAO has set out lessons where action can be taken now by government to prepare for future emergency spending. This includes clearer communications around rules and decision-making, improved management of staff and data, and increased transparency.

“If government makes these changes now, it will be better placed to protect public spending, and public confidence and trust in it, the next time we face an emergency.”

ENDS

Notes for Editors:

1. A summary of the seven lessons and supporting recommendations can be found in Figure 1 of the report.
2. Propriety is one of the four fundamental standards that public spending should meet, along with regularity, value for money, and feasibility. HM Treasury defines propriety as meeting high standards of public conduct, including robust governance and the relevant parliamentary expectations, especially transparency.
3. This report focuses on protecting propriety in an emergency. It does not look at wider aspects of responding to an emergency. It draws on lessons from our work and what the government has already done to identify lessons itself. The report does not seek to repeat our previous audit findings to assess how well government managed recent emergencies. Instead, it sets out lessons and recommendations for how the government can go further to improve its approach for protecting propriety in future emergencies.