Fraud hits UK economy ‘£38bn a year’

News Article - 07 February 2011
Category: Business

Fraud is costing the UK economy £38bn a year with over half this figure felt by the public sector, according to official estimates. The National Fraud Authority (NFA) suggested that every UK adult would be £765 worse off if the overall figure was broken down across the population.

Cabinet Office minister Francis Maude said the £21bn cost of public sector fraud could potentially pay for 800 new secondary schools or 615,000 nurses.

"Contrary to what many people think, fraud and error are not just confined to benefits and revenue. It affects every government department and impacts on the government's ability to deliver better public services, while stripping the civil service of vital resources. We can't and won't allow this to happen anymore," said Maude.

Many businesses have been affected by cons including marketing scams, fake lotteries, bogus operators, rental crimes and online ticketing.

There are a number of ways in which businesses can avoid elaborate scams:

• Don't be rushed into any online deal
• Ensure you have full contact details for any trader you deal with
• Password protect company bank details online
• Use a credit card for extra protection on purchases over £100

One of the growing trends of public sector fraud is corporate hijacking. This is a process which sees fraudsters register as company directors with businesses at Companies House and purchase goods and services from suppliers that they have no intention of paying for. Businesses should store sensitive documents in a secure place to guard against criminals accessing registered company records.

Brendan Herdan, of the NFA, said the authority's annual fraud indicator was a "blueprint" for work to tackle the "rising tide" of fraud.

"We want to develop a stronger counter-fraud culture, which helps to disrupt fraudulent activity across the UK and globally," Mr Herdan said.

Companies must also battle against internal fraud, such as expenses fraud. Without taking measures to ensure submitted expenses receipts are legitimate, firms may fail to stop overinflated claims eating into profits.

Firms must ensure full financial transparency throughout to negate the dangers of fraud and assist recovery efforts should the worst happen. Access business software can help in several ways; the Expense Management module, for example, helps companies put into place robust procedures for claiming expenses to help prevent fraudulent claims being made.

For more information, please call Access on0845 345 3300.

Article keywords: UK economy, National Fraud Authority, NFA, Cabinet Office, Francis Maude, online fraud, corporate hijacking, Companies House, Brendan Herdan, expenses fraud, Access business software, Expense Management module

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