Richard Walton: The Government must act to prevent Coronavirus fraud

12 Jul

Richard Walton is a Senior Fellow at Policy Exchange and a former Head of Counter-Terrorism Command of the Metropolitan Police.

In normal times, the NHS loses £1.27 billion a year to fraud, which is the equivalent of fulfilling the Conservative Party’s manifesto pledge of employing an additional 50,000 nurses. New research by Policy Exchange in a paper entitled Daylight Robbery – Uncovering the true cost of public sector fraud in the age of COVID-19 has found that fraud and error during the Coronavirus crisis will cost the Government an eye-watering sum about three and half times that – in the region of £4.6 billion.

Fraud is only exacerbated in a crisis, such as the pandemic we are facing now. It has been well documented that disasters are a magnet for fraud, as crisis management involves an outpouring of government aid, typically accompanied by low levels of due diligence to allow funds to reach recipients quickly.

In a foreword to the report, David Blunkett warns that criminals will use the Covid-19 crisis to “dip below the radar in order to be able to take advantage of unusual and unforeseen circumstances, and bank on attention and resources being focused elsewhere”.

Detecting and preventing fraud is a key element of sound public finances, and should therefore be a priority for this Government. It is not reasonable to expect the public to hand over a share of their income month after month if it’s not responsibly managed. Considering the pressure that will emerge after the Coronavirus crisis to keep costs down, reducing fraud will be one of the most equitable and achievable options available and will help the Government to achieve other objectives, such as levelling up the UK economy.

Unlike Covid-19, there is a dangerous perception that fraud does not have much impact on victims. There is a particular tendency to see public sector fraud – fraud committed against the government – as a crime that doesn’t affect ordinary people.

This is wrong. It affects the future of children when income tax is diverted from their education and is funnelled towards organised crime networks. It affects the most vulnerable in our society when they have to wait longer to receive benefits, because the Department of Work and Pensions is busy filtering through the almost one in five Universal Credit applications that are fraudulent.  It can even result in substandard treatments from an NHS doctor who lied about his qualifications on his CV. The Government believes that fraud and error cost the taxpayer anywhere between £2.8 billion and £22.6 billion in 2017-18 alone. This level of fraud is damaging to the fabric of society and cannot be allowed to continue.

While the Chancellor’s rapid action to save the economy has been a welcome necessity, the generosity and speed with which support schemes were introduced has left them open to exploitation by fraudsters. Furthermore, the increased use of third parties and digital channels have raised the opportunities for fraudsters to infiltrate the system.

For example, the speed with which Bounce Back Loans are approved (82 per cent of loans approved compared to 50 per cent for the Coronavirus Business Interruption Loan Scheme), and the potential to make multiple applications poses a particular fraud risk, which is compounded by the poor quality of Companies House data.

When face-to-face assessments for Universal Credit (UC) were suspended in July 2018, there was an almost 15,000 jump in the number of monthly referrals of suspected advances fraud over the course of the following year, costing up to £150 million. We can therefore expect the decision to suspend face-to-face assessments again due to Covid-19 to have a similar effect.

The Government has implemented a range of measures to try and tackle this, with the Cabinet Office forming a Covid-19 Counter Fraud Response Team and the NHS Counter Fraud Authority, the Home Office and the National Cyber Security Centre offering advice.

Nevertheless, over the course of the Coronavirus crisis, HMRC has already received 1,800 reports of furlough fraud and the NHS has been subject to numerous PPE scams. Last week, the HMRC Fraud investigation team arrested an individual in the Solihull area as part of an investigation into a suspected £495,000 fraud of the Coronavirus Job Retention Scheme.

The issue of tackling fraud is compounded by the difficulty of detecting it, and the complex nature of recording and reporting it. According to the Crime Survey for England and Wales, almost two thirds of fraud goes unreported, and the Government believes that it is currently detecting less than two per cent of public sector fraud. The services available to report fraud are linked to a complex web of organisations, which must be streamlined to become more effective. Even when fraud is eventually detected, it is underreported as unwittingly complicit employees fear the stigma around fraud, while government departments are wary of the negative media attention it attracts.

Fighting fraud effectively is expensive, but it is imperative that the Government continues to invest in this field, regardless of other fiscal pressures. It will be essential that the Government conducts thorough post event assurance in the wake of this crisis, a process that should be overseen by a new ‘Covid-19 Economic Crime Hub’, run by the National Economic Crime Centre, with a Minister for Economic Crime appointed and accountable for the outcomes.

According to Sajid Javid, who also backed the report, “now is a good time to join up counter fraud measures to keep it to an absolute minimum”. Technology will play a critical role in enabling investigators to operate at a sufficient scale and the Government must make use of the latest innovations in anti-fraud technologies, while ensuring the Covid-19 Economic Crime Hub has access to cross-government data.

Looking beyond the pandemic, it will be vital that the Government learns the lessons from this crisis, which has exposed weaknesses in the UK’s digital infrastructure. In particular, the limitations of public sector identity assurance systems has enabled fraud at a larger scale than necessary.

The Government should therefore accelerate the creation of digital identity solutions, such as the Departmet of Work and Pensions Confirm My Identity scheme. Furthermore, the use of AI and Document Review Technologies, which are the most promising counter-fraud measures available, should be encouraged. In one Serious Fraud Office case, these saved 80 per cent of the costs and time required for an investigation, which settled for £671 million.

However, these programmes rely on high-quality data to operate effectively and their success will also be dependent on improved public and private sector data-sharing practices. The constantly evolving nature of fraud will require continuous investment and commitment from the Government to fighting it.

Chris Greany, a former UK National Police Coordinator for Counter Fraud & Economic Crime described to Policy Exchange the scale of the challenge of public sector fraud as needing a joined up effort with “real bite”  to “recoup lost funds, prevent further crime and deter others from this unlawful and immoral behaviour”. The Government will need to act quickly to prevent fraud scandals emerging from the embers of the Coronavirus crisis.

Chris Skidmore: Churchill, Colston – and the new polling shows that most of us are proud of our history. We need to study it more.

28 Jun

Chris Skidmore is a former Universities Minister, and is MP for Kingswood.

Why does history matter? Well, as I wrote on this site nearly a decade ago, history can give us a common, shared body of knowledge and values which we then pass on to the next generation.

In recent weeks, however, it has become clear that there are vast gaps in that knowledge for too many people. A sense of national, shared values seems to be breaking down, as the vandalising of Churchill’s statue in Parliament Square so amply demonstrated. Graffiti labelling him a “racist” speaks volumes about how some on the political extremes approach our history.

The good news, revealed in Policy Exchange polling – published today to mark the launch of its History Matters Project – is that there is more consensus on our history today that one might imagine.

When asked if Churchill’s statue should stay put in Parliament Square, four out of five people said yes. Even among 18 to 24-year-olds, there was a large majority in favour of leaving him alone, despite what the leaders of recent protests have had to say on the subject.

In general, the polling revealed, British people are proud of our history, with only 17 per cent saying it is something of which to be ashamed. The vast majority recognise that it makes little sense to judge historical figures according to contemporary mores.

Yet there is serious concern that a minority of activists are being given too much of say over what happens to our national and local monuments. Who gets to decide which statues remain, and which are toppled? It surely cannot be the loudest voices, or an angry mob that chooses on the spur of the moment.

Companies and public institutions should also be wary of rushing to appease the noisiest activists. As Trevor Phillips, Chair of the History Matters Project, has noted, too much is happening too quickly. He urges a pause for reflection – “to consider what is being done, why and with what effect”. We might also remember the late Roger Scruton’s words here: “good things are easily destroyed, but not easily created.”

With that wisdom in mind, what should we be trying to create? Difficult though it may be, I would argue for a greater understanding of our history that must begin at school. Some 60 per cent of those polled, I’m pleased to note, were in favour of children learning history to GCSE. This is a position I have supported for more than a decade, not only because I am a historian myself.

I also recognise that the humanities, these so-called ‘soft’ academic subjects, are worthwhile in themselves and can also lead to high-status careers. I applaud the excellent new “Shape” initiative, supported by the British Academy, which stands for “social sciences, humanities and the arts for people and the economy”, and will promote these subjects, and the sort of reasoning skills and wider perspective they can offer school pupils and university students. “Shape” is not in opposition to Stem, but should hopefully serve to remind people of the UK’s strong creative economy and the job opportunities within it.

The truth, sadly, is that while about a third of children take GCSE history, as Government research indicates, subjects like it are “much  more  likely  to  be  taken  by  pupils  from  less  deprived backgrounds”. The same research also shows that over a quarter of schools do not even offer history GCSE.

As I discovered in 2011, in 159 schools, not a single pupil was entered for GCSE History, with 13 per cent of comprehensives entering less than one in ten pupils for the subject. How can we possibly expect to have a shared body of knowledge and values if we do not give children the opportunity to learn about our past? There are still vast blackspots in the education system where history is inaccessible, especially to disadvantaged children.

What might help address this is history that has a local as well as national approach. Children should learn about their local area, as well as Britain’s national story. Field trips and hands-on activities should be encouraged. History should not be a dry and dusty subject, but seen as a living study, with local elements that they can see for themselves.

Children should also learn that revisionism and intelligent criticism of past historical works is central to the academic process. It is wrong to say we can’t change our history. We can: history is an ever-changing study of the past, with its multiple narratives and biases. It’s the past that we can’t change.

Those who don’t want to study or debate the past but tear it down should be strongly resisted. Emmanuel Macron put it well when he said France “will not erase any trace, or any name, from its history… it will not take down any statue.” Instead, he argued, “we should look at all of our history together”, with a goal of “truth” instead of “denying who we are”.

This is what worries me about those who cherry-pick historical figures, such as Edward Colston in Bristol, and decide that they must be erased from public memory, like a disappearing commissar in an airbrushed, Stalin-era photograph. How many Bristolian children will have heard of Colston in 20 years’ time? Far better, I think, that they should learn of him as in some respects a hero and a villain, a product of his time, whose life was exceptional in ways that today are considered both good and bad.

Unfortunately, there seems to be little room for nuance in the recent debate around history, which has become the latest front in a culture war between left and right. But those of us in politics should remember – as today’s polling indicates – that there is a large, silent majority who value the UK’s history, want to protect it, and fervently wish that more of us could learn more about it.

Stephen Booth: While UK-EU talks gather momentum, Britain should continue to diversify its trading relationships.

25 Jun

Stephen Booth is Head of the Britain in the World Project at Policy Exchange.

There are signs that the UK-EU negotiations on the future relationship may be gathering some momentum.

Last week’s stock take meeting between the Prime Minister and Ursula von der Leyen and Charles Michel, the European Commission and European Council Presidents, respectively, confirmed there will be no UK request to extend the transition period beyond December 31 this year.

Both sides agreed to inject fresh impetus into the negotiating process, with talks set to intensify in July, August and September. This marks the make-or-break period to reach a trade agreement and new arrangements in other areas such as cooperation on policing and security.

In my previous column, I argued that the nature of the impasse – essentially whether the EU is prepared to cut a deal under which the UK would be free to leave Brussels’ regulatory orbit – means that it is incumbent upon the EU to move on the key sticking points.

These are fishing and the demand for ongoing UK alignment with EU law on the “level playing field”, particularly with regard to state aid. Important UK-EU differences remain but there are encouraging signs that this is now happening.

Following her meeting with Boris Johnson, von der Leyen signalled in a speech to the European Parliament that the EU was prepared to compromise without, of course, putting into question “our principles and the integrity of our Union”.

In her speech, von der Leyen made no mention of the EU’s initial demand to maintain EU boats’ access to UK waters on the basis of the status quo. “No one questions the UK’s sovereignty on its own waters,” she said. “We ask for predictability and guarantees for our fishermen and women, who have been sailing in those waters for decades.”

Neither did von der Leyen mention the demand for ongoing alignment with EU law on state aid or a role for the Court of Justice (ECJ) in overseeing the level playing field. “It should be a shared interest for the EU and the UK to never slide backwards, and always advance together towards higher standards,” she said.

Notably, she limited her remarks on the role of the ECJ to the part it should play “where it matters” in the area of police and judicial cooperation, rather than in the wider trade deal. If the UK wishes to retain access to EU crime and policing databases, these are underpinned by EU law and there is no escaping that the Court has the role of interpreting how law applies on the EU side.

Though, as the UK has pointed out, the EU has consistently agreed treaties with non-EU countries on policing and judicial matters without requiring the ECJ to settle disputes between the two parties. Equally, the Government has said it will not agree to the extraordinary EU demand for treaty provisions that would oblige the UK to maintain its existing implementation of the European Convention of Human Rights in domestic law.

Meanwhile, there is speculation that a compromise on the level playing field is being explored, under which Britain would assert the right to deviate from the EU rules that it will inherit after the transition period expires. And, in return, the EU would have the ability to apply tariffs on British exports if regulatory divergence amounts to unfair competition.

Neither side has formally adopted the idea yet, but there are reasons to suggest it might have legs. The UK would regain regulatory independence (and the consequences), while the EU would retain the ability to control access to its market in instances where it perceived the UK was lowering standards.

Brussels would need to give up on its desire to export its regulatory model to the UK indefinitely by treaty and the UK would need to compromise on its current position that any commitments on subsides, labour and environmental rights should be exempt from dispute resolution.

It is also an idea hiding in plain sight. The EU’s draft UK trade agreement text already proposes so-called “temporary remedies” and “interim measures” in the event of non-compliance with treaty commitments.

Such a model would not be without difficulties. The UK and EU would still need to agree on the relevant benchmark for identifying a breach of level playing field commitments. The UK could insist that evidence should be required to show that the effects of divergence are harmful to open and fair competition. The EU could continue to insist that the letter of EU law is the benchmark.

Equally, the prospect of the EU using tariffs or market restrictions as a political tool to secure leverage over the UK in other areas of the agreement cannot be discounted. This has been a feature of the EU-Swiss relationship in recent years. However, this needs to be weighed against the prospect of UK-EU trade facing the full panoply of tariffs on day one, if talks break down completely and trade reverts to World Trade Organisation terms.

Critics have noted that rather than providing for managed divergence, such a mechanism would create perpetual conflict. But, ultimately, while it would be nice to avoid it, the likely reality is that the UK and the EU will face disputes in the future, just as they have in the past. This is a feature, rather than a bug, of an independent UK. Some disputes may be easily resolvable through treaty dispute mechanisms, others will require political resolution.

One way for the UK to insure itself in the event of such disputes is to diversify its trading relationships outside of the EU. And negotiations with the UK’s priority non-EU markets, the US, Australia, New Zealand and Japan, are also intensifying over the coming months.

This week, Hiroshi Matsuura, Japan’s chief trade negotiator, called for a UK-Japan deal to be secured in just six weeks to be ready for ratification in the Japanese parliament. The challenge is to replace the existing EU-Japan agreement, which is due to expire at the end of the Brexit transition period, and Japan is insisting on a bespoke UK deal rather than a simple rollover of the existing EU agreement.

This may mean that the deal is less ambitious than the UK would like on agricultural tariffs but Japan and the UK could go further than the EU was prepared to in areas of mutual interest such as services and digital.

Unlike the Japanese deal, the talks with the US, Australia and New Zealand are about fresh deals and the talks are expected to run into next year. UK accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership is next on the agenda. India would be another potential candidate for the future.

With this week marking the fourth anniversary of the EU referendum, the contours of the UK’s international trade policy are beginning to take shape.