Fraud could be costing the UK a staggering £193 billion a year, far higher than previous government estimates which put the figure at around £50 billion in 2013.
According to a new report, more than £6,000 lost per second every day of the year, equivalent to more than £3,900 per adult in the UK.
The Annual Fraud Indicator 2016 has been overseen by the UK Fraud Costs Measurement Committee (UKFCMC), supported by Experian and PKF Littlejohn and is based on research by University of Portsmouth’s Centre for Counter Fraud Studies.
The private sector has been under the biggest attack from fraudsters, with both SMEs and large enterprises losing an estimated total of £144 billion a year.
By far the biggest source of fraud for these businesses relates to procurement – an whopping £127 billion.
Procurement fraud includes crimes such as the submission of false invoices or the awarding of contracts in exchange for bribes.
Nick Mothershaw, director of fraud and identity solutions at Experian, said: “The startling figures that have come out of the Annual Fraud Indicator illustrate the scale of the fraud problem currently facing the UK. £193bn per year underlines that there is much more still to do, despite evolving anti-fraud measures.
“And it’s not just a problem for UK government, businesses and charities. It has an impact on every individual in the UK. Although 95% of the fraud taking place is not a direct to end consumer cost, those lost funds are passed on to individuals in the form of higher costs on products and services. Every transaction we make, whether that is buying a washing machine or putting money into a savings account, is affected by the fraud epidemic.”
The biggest types of fraud impacting UK businesses identified by the Annual Fraud Indicator include:
-Payroll fraud, which accounts for losses of £12 billion per year – 8 per cent of the total cost of fraud to the private sector
-The charity or third sector is hit with fraud costs of £2 billion per year
-Mortgage lending, which suffers losses equivalent to £1.3 billion annually and in which 84 applications out of every 10,000 are suspected to be fraudulent
-Insurance sector fraud, costing £1.3 billion a year through illegitimate claims with an estimated 350 frauds every day
Fraud in the public sector of around £37.8 billion is equivalent to just 5.5% of the £694 billion spent annually. Central government bears the majority of this cost at around £30 billion per year. Procurement fraud is again a major source of losses, costing central and local government a combined £10.5 billion per year.
Other key areas include:
-Tax fraud costing £15.4 billion every year, equal to 3% of the total tax revenue
-Fraud losses in the NHS relating to income and expenditure amounting to £2.5 billion
-Housing tenancy fraud, which is estimated to cost £1.7 billion
-Benefit and tax credit fraud, which are estimated at £2.4 billion
-Grant fraud, which is estimated to cost £2.7 billion