03/05/23

Reaction to Government’s new Fraud Strategy from the Royal United Services Institute (RUSI).

Press release from Royal United Services Institute (RUSI) on Wednesday 3 May, 2023.

Experts from RUSI’s Centre for Financial Crime and Security Studies welcome the new Fraud Strategy and its aim of reducing fraud volumes. However, they raise concerns around the lack of a bolder policing reform plan and stronger measures to reduce the role technology companies play in facilitating fraud.

Fraud is the most common crime type in the UK, representing 41% of crime in the UK, according to government figures. The UK’s National Crime Agency estimates that fraud losses in the UK may be as high as £190bn per annum1; this includes £40bn against the UK public sector, a figure roughly equivalent to the UK’s annual defence budget2. In recognition of this, the UK government reclassified fraud as a threat to national security in February 20233.

Long delayed, the publication of the Fraud Strategy is welcomed. However, RUSI’s experts highlight concerning gaps in the response, which may reduce its impact in practice, including:

• Policing reform: The strategy lacks a vision for reforming the policing response and allocates only 400 new officers to the new effort. Although the staffing uplift is welcome, it does not lift the resource allocation above the current 1% of police resources allocated to fraud4.
• Role of social media and tech companies: The measures in the strategy to reduce the outsized role played by social media and tech companies in facilitating fraud and scams are voluntary and do not go far enough.
• Sustainable resourcing of the response: The long-term funding of fraud reform is uncertain and unsustainable beyond the current spending round and there is no plan to increase funding in the future.

Reacting, Helena Wood, Co-head of RUSI’s UK Economic Crime Programme, said: “Fraud ruins the lives of millions of people in the UK, yet the government has repeatedly failed to include fraud statistics in its estimations of crime levels. When included, crime is clearly rising and not falling.” She continues: “Although the strategy includes extra resources for policing fraud, these levels are not commensurate to the scale of the threat. They are certainly not enough to turn around decades of under-investment in the enforcement response to the crime affecting more British citizens than any other.”

“The current epidemic of fraud continues to have a hugely damaging effect on the UK’s economy,” added Kathryn Westmore – Co-head of RUSI’s UK Economic Crime Programme. “It is clear that certain sectors, notably the technology and telecoms sectors, need to up their game in the fight against fraud. These sectors need to be incentivised, or mandated, to commit more resources to fighting fraud. The introduction of a fraud levy on those sectors which facilitate so many of the scams we see would be one possible solution. Without that, it is hard to see how the government will meet the ambitious targets that it has for cutting fraud.”

Charles Bott KC, Head of Advocacy at BVI law firm, Martin Kenney & Co, said:

"There are some sensible proposals here, but they are in limited areas and don’t begin to match the scale of the problem. 

"Fraud investigation has been pitiful in the UK for many years and hasn’t been a priority for government or the police.

“Action Fraud became a fraud on the public. Shockingly high fraud figures aren't included when ministers claim crime is falling. We need something far more radical than what’s being proposed here to make a real difference.

"Serious fraud, which undermines markets and financial systems, is almost out of reach at the moment and nothing in these proposals will change that.”

1. https://www.nationalcrimeagency.gov.uk/what-we-do/crime-threats/fraud-and-economic-crime
2. https://commonslibrary.parliament.uk/research-briefings/cbp-8175/
3. https://www.telegraph.co.uk/news/2023/02/04/fraud-set-upgraded-threat-national-security/  
4. https://publications.parliament.uk/pa/cm5803/cmselect/cmpubacc/40/report.html#:~:text=Despite%20making%20up%2041%25%20of,recruit%2020%2C000%20new%20police%20officers.