Rt Hon. Suella Braverman MP Home Office
2 Marsham Street London SW1P 4DF
cc: Rt Hon. Brandon Lewis, Secretary of State for Justice Rt Hon. Michael Ellis, Attorney General
14th October 2022
Dear Suella, Brandon and Michael,
Following yesterday’s debate on the Economic Crime Bill, we wanted to ask you collectively to address a fundamental problem that neither your predecessors nor any other ministers have been willing to grasp in recent years, as highlighted again by yesterday’s debate, namely the lack of any official estimate of the current cost of fraud across all households and sectors in the UK.
Fraud is now the highest volume and fastest growing crime in the country, wrecking people’s lives and dreams across our country on a daily basis, yet the government has failed for the past decade even to assess the scale of that challenge, never mind rise to it.
It was deeply concerning to hear the Home Secretary’s party conference speech focus on “overall crime, excluding fraud and online theft”, as though such an exclusion makes any sense to the millions of victims of fraud in the UK. Clearly, no lessons have been learned since Kwasi Kwarteng dismissed fraud earlier this year as not being a “crime that people experience in their day to day lives”.
We recently asked the House of Commons Library to give us their best estimate of the current total cost of fraud in the UK, but they responded that there was no “recent official or comprehensive data” available, and that it was not “possible or advisable” to splice together estimates in different specific categories to produce one, given the risks of misclassified, missing, incomplete or overlapping data.
We then tabled questions to all the departments that could reasonably be expected to take an overview of the impact of fraud on the UK to ask what assessment they might have made behind the scenes, but were told in each case that no such estimates were available now, nor even in the pipeline.
Across the board, these responses were all too reminiscent of the picture painted by the Royal United Services Institute last year of “a systemic ‘responsibility vacuum’ in the UK government response to fraud, with ownership fragmented across different departments and law enforcement and criminal justice agencies”, resulting in a situation where fraud is “everybody’s problem but no-one’s priority.”
In fact, the House of Commons Library told us that the most relevant, recent estimate covering the total cost of fraud across all sectors in the UK came not from a government department or law enforcement agency, but rather a group of lawyers, insurers and academics1, who took up the challenge after Theresa May’s decision to abolish the National Fraud Authority (NFA) in 2013.
The ‘UK Fraud Costs Measurement Committee’ (UKFCMC) produced two editions of their ‘Annual Fraud Indicator’ in 2016 and 2017, with the latter providing the estimate of £190 billion for the total annual cost of fraud in the UK that was widely referenced in yesterday’s debate, despite now being five years old, and for some of its analysis, reliant on data from as far back as 2014.
That £190 billion figure obviously does not reflect the explosion in online fraud seen in recent years, particularly since the start of Covid-19, nor does it reflect the significant increase in fraud against the public purse, which – while clearly exacerbated by the pandemic – shows worrying signs of persisting beyond it, as we can see in the DWP’s latest estimates of welfare and benefits fraud in 2021/22.
We therefore await with great interest the UKFCMC’s new edition of the Fraud Indicator report, due to be published later this year, which may start to reflect some of these recent developments. Nevertheless, it remains a matter of tremendous concern that we are having to rely on external bodies for this kind of analysis, rather than getting it on a regular basis from the government itself.
This lack of up-to-date, comprehensive information on the scale of fraud in the UK is unsatisfactory enough on its own, but unfortunately, it is coupled with equally worrying gaps in knowledge on the proportion of that fraud being perpetrated by gangs and scammers based overseas2; and the extent to which the fraud we are currently experiencing in the UK is linked to organised crime.3
In the government’s latest National Economic Crime Plan, the very first ‘key performance question’ is: “How comprehensive is our understanding of economic crime threats and vulnerabilities?” Based on the fundamental gaps laid out above in the government’s knowledge both of the scale and the nature of the fraud crisis, the answer to that key question must surely be: ‘Not at all’.
That wilful ignorance cannot continue. There is clearly a cross-party consensus for action to tackle the fraud epidemic at every level it is affecting our country – as shown by the calls on all sides yesterday to strengthen the law on corporate criminal liability – but that will be impossible as long as you remain unable to tell us the overall scale of fraud, where it is coming from, and who is responsible.
We therefore ask you to raise these concerns with your colleagues in the Cabinet Office, HM Treasury, BEIS and other relevant departments, and agree an immediate review to establish:
1. An up-to-date, comprehensive and official estimate of the total financial impact of fraud on all households and sectors in the UK;
2. An official assessment of the value and proportion of fraud committed against UK entities by perpetrators based overseas, including the main locations from which this fraud originates; and
3. An up-to-date, official assessment of the extent to which fraud in the UK is being committed by serious and organised crime groups, including any regional concentrations and variations.
Until you take the necessary action to address these information gaps, we will not be able to win the battle against the parasites that are defrauding our businesses, undermining our public services, and robbing our workers and pensioners of their hard-earned wages and savings. We therefore urge you to begin that work right away, before billions more are lost at a time our country can least afford it.
Rt Hon. Yvette Cooper MP, Shadow Home Secretary
Steve Reed MP, Shadow Justice Secretary
Rt Hon Emily Thornberry MP, Shadow Attorney General
1 Made up of analysts from Crowe LLP, the University of Portsmouth’s Centre for Counter Fraud Studies and Experian.
2 In February, then security minister Damian Hinds admitted “we do not currently hold data on online fraud emanating from overseas”: https://questions-statements.parliament.uk/written-questions/detail/2022-02-21/126600
3 The last Annual Fraud Indicator, published by the NFA in 2013, cautiously estimated the amount of fraud perpetrated by organised crime gangs at £18.9bn, just over a third of its estimate for the total scale of fraud in that year.