Background to the report

Fraud and error in the public sector generally means an incorrect amount of money has been paid out or received by government, or government has made a transaction with an incorrect or ineligible party. We estimate that fraud and error cost the taxpayer between £55 billion and £81 billion in 2023-24.

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Data analytics are a vital tool to make sure the right amount of money goes to the right recipient, and to find potentially incorrect transactions. Such data analytics can range from basic tools that check a public body only paid a supplier once, to using emerging technology like artificial intelligence (AI) to identify risky transactions.

Tackling fraud and error is a good test case for new technologies in data analytics such as AI. In theory, with good-quality linked data, these technologies can deliver more immediate returns on investment, tackling fraud and error without requiring the wider system or organisational reform that fuller digital transformation would require.

Scope of the report

This report examines how well placed government is to seize the opportunity offered by old and new data analytics technologies to tackle fraud and error. We look at what government is already doing and set out the challenges. The report sets out:

  • case studies of how the private sector and government are already using data analytics to tackle fraud and error
  • lessons from these case studies, and our discussions with those involved in implementing them, about the strategic challenges

Conclusions

The use of data analytics to tackle fraud and error has demonstrated that it can achieve significant returns on investment, but to date the savings have been relatively modest compared to its overall potential and the value of taxpayer money lost to fraud and error. There is a clear mismatch between the scale of the problem of fraud and error and the lack of concrete plans to implement better data analytics.

The Public Sector Fraud Authority (PSFA) needs to help government to step up to the challenge by working with departments and their arm’s-length bodies to innovate and generate significant fraud and error savings. But it cannot do this alone.

The Government Digital Service (GDS) needs to make sure its work facilitates fraud and error analytics, as this is such a significant component of its vision for achieving cost savings through digital government. Additionally, other functions need to acknowledge their responsibility to use and implement data analytics to help prevent waste.

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Publication details

Press release

View press release (9 Jul 2025)

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