Public sector fraud in Scotland up almost 50%, watchdog finds

Public sector fraud identified in Scotland has risen by almost 50%, Audit Scotland has said.

As part of the UK-wide National Fraud Initiative (NFI) – which cross-matches data from more than 110,000 public bodies across the country and flags instances of potential fraud – a total of £21.5m was identified north of the border in 2022-23.

The NFI in Scotland is administered by Audit Scotland – the country’s public sector watchdog.

This increased from £14.9m in 2020-21 – the last time figures were released.

The exercise sorts fraud into three types, actual savings, estimates of future savings and notional outcome estimates – which do not feature any specific cash amount, such as relating to a blue badge or a housing waiting list, but the value is estimated.

In the most recent year, forward savings estimated made up the highest amount, with £8.9m, compared to £6.8m in notional estimates and £5.7m in actual savings.

The exercise found 1,075 free bus passes had been used despite the owner having died, costing just over £300,000 in fares and around £180,000 in reimbursements, while their cancellation is estimated to have saved £700,000 in the future.

A total of 5,140 blue badges were cancelled, at an estimated notional value of £3.3m.

Data obtained by the watchdog also led to 280 applicants being removed from council housing waiting lists, up from 187 in the previous exercise and representing around £1.2m of notional value.

The NFI also looked at pensions, saving £500,000 on payments made to someone who had died, with an estimated £5.1m saved into the future.

Councils withdrew £1.8m worth of single persons discounts as a result of cross-matching with the electoral register and other data to find more than one person living at an address, while a further £2.7m is estimated to be saved in the future.

The number of cases relating to single person discounts reduced from 3,720 and 3,419 in the two most recent exercises, continuing a downward trend since 2016-17.

Housing benefit was also assessed, finding £2.2m in total savings, £1.8m in overpayments and £400,000 in forward savings.

John Cornett, the executive director of audit services at Audit Scotland, said: “The detection and prevention of fraud using the National Fraud Initiative remains vitally important to financial management across the public sector.

“To make the most of the NFI, public bodies need to ensure they have appropriate levels of resources in place to effectively follow up on matches.”

A spokesman for the Scottish Government said: “The Scottish Government has robust measures to ensure only people and businesses entitled to receive grants and benefits do so.

“The National Fraud Initiative exercise is one tool to aid with the detection and recovery of fraud and error.

“Alongside Audit Scotland, we continue to encourage public bodies to take part.”

Scottish Conservative social security spokesman Miles Briggs said the figures represent a “substantial rise” which Scotland can “ill afford”.

He added: “Audit Scotland express concern about whether public bodies have satisfactory arrangements and adequate funding to tackle abuses.

“At a time when the SNP Government are making savage cuts to essential services, it’s crucial that taxpayers’ money is responsibly allocated and that fraud is stamped out.

“The SNP has a poor record when it comes to ensuring that public funds are properly managed. They must take heed of this report and provide resources effectively to prevent waste and criminality.”