Cross-Government Report Shows Quadrupling of Detected Fraud and Error in Two Years

Why It Matters

The sharp rise highlights growing financial risk in public spending and underscores the need for stronger fraud‑risk controls across government programmes. It also signals that counter‑fraud measures are beginning to yield higher recovery and prevention outcomes.

Key Takeaways

• Detected fraud and error hit £1.7 bn in 2023‑24
• Error rose £327 m, fraud only £21 m increase
• Energy scheme errors £411 m, 51% of total error
• Covid loan fraud accounted for £673 m, 82% of total
• Estimated public‑sector fraud range now £51‑81 bn

Pulse Analysis

The latest Cross‑Government Fraud Landscape report paints a stark picture of public‑sector financial integrity, with detected fraud and error soaring to £1.7 bn in 2023‑24. While the headline figure suggests a crisis, the underlying data reveal that most of the increase stems from error rather than deliberate fraud, driven by the closure of energy‑affordability support schemes. This nuance is crucial for policymakers, as it indicates that tighter programme design and post‑implementation reviews could mitigate similar spikes in future initiatives.

Recovery efforts have shown marked improvement, climbing from £311 m in 2021‑22 to £770 m in 2023‑24, largely thanks to the Department for Energy Security and Net Zero’s aggressive error recoupment. Meanwhile, prevention figures, after a dip caused by stricter reporting standards, rebounded to £413 m, reflecting the impact of the Government Counter‑Fraud Functional Strategy 2024‑2027. The shift toward externally assessed, data‑driven prevention underscores a broader move within the civil service toward evidence‑based risk management, though gaps remain in identifying inherent vulnerabilities.

Beyond the detected amounts, the report’s "iceberg" estimate places total public‑sector fraud and error between £51.3 bn and £81.0 bn, far exceeding the £9.7 bn actually identified. This widening gap signals that undiscovered losses remain a systemic challenge, amplified by higher government spending and the legacy of Covid‑19 support schemes. For auditors, consultants, and technology providers, the expanding estimate creates a market for advanced analytics, AI‑driven anomaly detection, and robust fraud‑risk frameworks that can close the detection gap and protect taxpayer funds.

Cross-government report shows quadrupling of detected fraud and error in two years

By Tevye Markson · 18 Feb 2026

Central government departments reported a record £1.7 bn of fraud and error in 2023‑24, more than four times the amount found two years earlier in 2021‑22. Most of the increase is due to fraud associated with extraordinary events, including the Covid‑19 pandemic.

The £1.7 bn figure is revealed in the Public Sector Fraud Authority’s latest Cross‑Government Fraud Landscape report, published this week, which sets out the levels of fraud and error detected, recovered, and prevented in 2022‑23 and 2023‑24. It excludes tax and benefits‑related fraud involving the Department for Work and Pensions and HM Revenue and Customs, which are subject to a different reporting regime.

The £1.7 bn detected in 2023‑24 was the highest value of detected fraud and error reported in a single year to date, with the figure for 2024‑25 yet to be published. It represents an increase of 27 % on 2022‑23, when departments reported £1.3 bn of detected fraud and error.

Most of this increase is due to detected error increasing by £327 m, with fraud rising by a comparatively small £21 m. The main driver of this was the Department for Energy Security and Net Zero (DESNZ) reporting £411 m of detected error through energy‑affordability support schemes, which are now closed, equivalent to less than 1 % of the schemes’ total value. This accounted for 51 % of total cross‑government reporting of detected error.

The 2022‑23 figure of £1.3 bn is a huge 198 % increase on the £438 m detected in 2021‑22. The main reason for this increase was Covid‑related fraud, with the British Business Bank reporting £673 m of suspected fraud in its Bounce Back Loan Scheme, accounting for 82 % of the cross‑government total.

Meanwhile, recovered fraud and error has more than doubled since 2021‑22, rising from £311 m to £486 m in 2022‑23 and then up to £770 m in 2023‑24. The increase in 2023‑24 was largely due to DESNZ’s recovery of £406 m of error, mostly through the aforementioned energy‑affordability support schemes.

There is a slightly different picture when it comes to fraud prevention, which dropped from £334 m in 2021‑22 to £201 m in 2022‑23 before rising to £413 m in 2023‑24.

The main reason for the dip in 2022‑23 was a change to reporting guidance. From 2022‑23, it became mandatory for departments to assure all estimated or modelled savings through the PSFA Prevention Panel. Departments could also only report prevented error if it resulted from proactive detection, such as fraud measurement or data matching, rather than as a result of business‑as‑usual activity.

The report says the PSFA has “more confidence in the prevention numbers from 2022‑23 onwards and that they are being driven by counter‑fraud activity, as these are now externally assessed by a group of counter‑fraud experts, before they can be reported”.

Counter‑fraud performance ‘improving’ but ‘can go further’

The report says the figures indicate that counter‑fraud performance is improving, with “positive trends in the detection of fraud and error, the achievement of financial targets and the prevention of further losses”.

When excluding extraordinary events, detection surpassed pre‑Covid levels for the first time in 2023‑24. The report says this indicates that “good work is being undertaken to understand and identify the problem”.

Collectively, in‑scope departments prevented and recovered £914 m of fraud and error in 2023‑24. When adjusted to exclude extraordinary events, their performance stands at £341 m, exceeding the financial target of £331 m set for the period. This compares to £202 m prevented and recovered in 2022‑23.

The report also says that encouraging results “are beginning to emerge from the preventative approach championed by the Government Counter Fraud Functional Strategy 2024‑2027”, with 60 % of organisations reviewed against the Government Functional Standard (GovS 013: Counter Fraud) attaining a minimum rating of ‘Good’ in at least half of the sections in the standard.

It adds that public bodies may benefit from going further in two critical areas: identifying inherent fraud and error vulnerabilities and implementing more robust fraud‑risk assessments to address threats effectively.

Fraud and error ‘iceberg’ growing

The report also sets out the fraud and error “iceberg” for 2022‑23: an estimate of the fraud levels in the public sector including the tax and welfare system (DWP and HMRC), but excluding Covid schemes.

It says the total estimated fraud and error level per year is £51.3 bn to £81.0 bn (including tax and welfare but excluding Covid), compared to a detected amount of £9.7 bn.

This is a significant increase on the “between £39.8 bn and £58.5 bn” estimated in 2021‑22.

The report notes that in previous years the “ceiling” of the estimate has remained broadly flat, while the latest modelling shows this is no longer the case, with both the “floor” and “ceiling” of the estimate rising, and the estimated range widening.

“Higher government spending and estimates of fraud and error have contributed to this increase,” the report says.

The report also notes that the estimated fraud and error in Covid schemes is £10.9 bn, and that “updated evidence has significantly improved our understanding of the nature of error and fraud in the Covid‑19 support schemes”.