UK authorities lacks ambition to combat tax fraud, says PAC
The UK’s Public Accounts Committee (PAC) has accused the federal government of missing the “modernising ambition” to make use of know-how to combat tax fraud and error, as taxpayers proceed to lose anyplace between £55bn and £81bn each year, the majority of them within the tax and welfare techniques.
In a report printed immediately, the PAC stated using legacy know-how and an absence of management persevered, and public our bodies have been failing to embrace the chance to deploy new information analytics know-how. The physique declared itself sceptical of the federal government’s capacity to make any type of enchancment and not using a strong plan.
Although Westminster has stated utilizing information analytics to deal with the issue may save taxpayers as much as £6bn yearly, the PAC stated it didn’t imagine all public our bodies have been set as much as obtain such financial savings, and there may be not but sufficient element on how this will likely be achieved.
It pointed to the delayed roadmap for contemporary digital authorities – printed earlier in 2026 – which stated the federal government would embrace synthetic intelligence (AI) and exchange outdated know-how, however didn’t go into element about how, or handle how this may deal with fraud and error.
“Our committee has lengthy recognized a failing in digital management and fragmented information throughout authorities as one of many predominant blockers in authorities’s capacity to ship,” stated PAC chair Geoffrey Clifton-Brown. “Our proof means that authorities has loads of information, however no data. Some of the apparent areas through which new know-how may shield the taxpayer’s pound is in error and fraud.
“However whereas this authorities has talked an enormous recreation on embracing new know-how, its delayed roadmap on fashionable digital authorities fails to even point out how this can deal with fraud and error, and it continues to battle with the lifeless weight of legacy know-how,” he added.
“We’re not satisfied that the federal government is making finest use of fast-moving know-how akin to AI to deal with the troublesome topic of fraud.”
The PAC stated the obvious lack of planning in authorities mirrored a backdrop of longstanding points with legacy know-how – earlier stories have highlighted a swathe of out-of-date techniques throughout authorities, and famous that this has been the case for years.
An obvious lack of digital management just isn’t serving to issues, it added. In 2023, it really helpful that each one authorities departments have a digital knowledgeable on their boards, which has not come to move, and the Division for Science, Innovation and Know-how’s (DSIT’s) resolution to not in any case appoint a government-wide chief digital officer (CDO) represented a “severe shortcoming”, stated the PAC, as it could have given the division extra clout throughout authorities when it got here to digital transformation.
Warnings and limitations
The most recent PAC report additionally repeats a warning from March 2025 over the federal government’s obvious opacity concerning algorithmic decision-making. This time final 12 months, simply 33 data had been printed on a particular web site set as much as enhance transparency on this space, and as of the time of writing, there are simply 125, of which solely 11 point out fraud, and of which solely two have been filed this 12 months – each by the Info Commissioner’s Workplace (ICO).
The PAC stated DSIT had admitted that not all of the anticipated instances have been recorded and stated it was clear departments weren’t doing sufficient to be clear or construct public belief in authorities’s use of knowledge analytics to combat fraud, calling on DSIT to work to make sure all authorities our bodies report their use of algorithms.
The PAC stated it had additional recognized a legislative limitation in relation to the deployment of knowledge analytics methods in opposition to fraudsters, in that as a result of the regulation doesn’t permit for particular person profiling, the federal government can’t flag recognized dangerous actors as an indicator for future work on fraud, whereas Nationwide Fraud Initiative information can solely be retained for 2 years.
The report additional recognized a limitation in present laws in how authorities can deploy fashionable information analytics methods to combat fraud. The regulation doesn’t permit for particular person profiling, which means that authorities just isn’t allowed to flag recognized fraudsters as an indicator for future fraud detection work, whereas Nationwide Fraud Initiative information can solely be retained for 2 years.
Subsequent steps
The PAC report makes six suggestions for the federal government:
- The Treasury ought to require public our bodies to incorporate data on what they’re doing to deal with fraud and error of their annual fraud, and set out the varieties of counter-fraud exercise they’re endeavor. This reporting ought to embody data on targets agreed with the Public Sector Fraud Authority (PSFA) and steps to enhance future efficiency;
- The Authorities Digital Service (GDS), PSFA, and Authorities Finance Perform (GFA) ought to talk a plan to cooperate on chopping fraud losses with using information analytics know-how, which ought to embody targets and milestones, and extra readability on how authorities means to maneuver from a system that detects and recovers losses from fraud, to at least one that stops it to start with;
- Reflecting issues that neither the digital functionality nor the senior management capability to realize change exists, DSIT ought to mandate digitally-skilled leaders at board stage in all departments and any arms’ size our bodies (ALBs) through which know-how performs a key position. Furthermore, DSIT ought to appoint a authorities CDO at everlasting secretary stage and equip this individual with the mandatory authority to impact change. DSIT must also higher set out the way it means to hit its goal of getting 10% of civil servants by digitally skilled;
- Inside six months, the PSFA ought to report back to the PAC on progress in the direction of constructing a library of counter-fraud controls, and set out steps to handle information sharing points by way of the Digital Economic system Act. DSIT must also set out additional data on the only information platform, particularly a timetable for completion and anticipated advantages round tackling fraud and error. And collectively, the Treasury, DSIT and the PSFA ought to determine which components of the Nationwide Fraud Initiative may very well be helpful inside central authorities, and apply them accordingly;
- DSIT ought to do extra to make sure authorities our bodies adjust to the Algorithmic Transparency Reporting Commonplace to seize all related makes use of of AI and machine studying in a trend than regularly screens, updates, and ensures compliance round transparency to be as upfront as doable with out by chance making a reference library for cyber criminals;
- Lastly, the PSFA ought to evaluation laws that impacts its mission to implement fraud and error analytics, and work with DSIT on a evaluation of the regulatory regime round fraud and error actions and talk to Parliament any areas through which extra powers or legislative adjustments may be useful.
“There are particular actions which this committee will proceed to lift which authorities may take to again up its loud ambitions,” stated Clifton-Brown. “It may allow higher data sharing throughout departments; DSIT may acquire the heft a small division with such an enormous accountability wants by appointing a authorities chief digital officer; and it may transfer with extra pace to position digital specialists on the high decision-making desk of every division, a PAC advice authorities has already accepted.
“We hope to see a strong plan from authorities on this space. With out one, authorities will solely be capable of mouth its disapproval as billions in public cash proceed to roll out of the door into the palms of fraudsters.”
