UK foots £190bn annual fraud bill
The annual cost of fraud in the UK is put at £190bn currently, down from an estimate of £193bn in 2016, mostly due to reduced levels of expenditure in key areas such as procurement, according to a research study compiled by Crowe Clark Whitehill, Experian and the Centre for Counter Fraud Studies at the University of Portsmouth
13 Nov 2017
The analysis suggests private sector fraud cost the UK economy £140bn, while fraud in the public sector is estimated at £40.4bn in 2017. Fraudulent activity aimed at individuals amounted to £6.8bn, while charities suffered to the tune of £2.3bn.
While private sector fraud is still the bigger problem, the amount lost dipped from £143.6bn in 2016, which researchers say is largely related to a significant reduction in general procurement expenditure by large companies.
A significant proportion of the costs of fraud in the report are attributed to procurement fraud, and the report says the rise in the incidence of fraud in registered charities is largely attributable to an increased expenditure on procurement.
In the 2016 report, fraud in registered charities was estimated at just under £1.9bn, but has now risen to an estimated £2.3bn. Payroll fraud rose by £4m and grant fraud fell by £35m compared to the previous year, suggesting much of the £400m increase was due to an increased expenditure on procurement.
The analysis estimates overall procurement fraud at £121.4bn (4.76%) of the £2.5 trillion of total expenditure in the private sector. Total losses from payroll expenditure are estimated to be £12.7bn (1.7%) from an expenditure of £748bn. The combined loss is close to £134bn.
Public sector fraud has experienced a £2.8bn increase (up 7.5%) in one year, from £37.5bn in the 2016 report. The increase in the cost of fraud is largely due to increased procurement fraud (up by £1.7bn) – as the government spent more than the previous year – and increased tax fraud losses (£800n). There were some significant reductions too, such as grant fraud which was £541m lower than the previous year.
The report’s authors say new trends have emerged that impact demography and type of fraud victim. Online banking fraud has grown by 226% and telephone banking fraud by 178% in the past year, with many millennials increasingly being drawn into the fraudsters’ net.
Annual Fraud Indicator 2017 is here.
Report by Pat Sweet