Fraud epidemic costs the UK £110bn annually: report
The latest research from national audit, tax and advisory firm Crowe Clark Whitehill, together with the University of Portsmouth’s Centre for Counter Fraud Studies (CCFS), has revealed a national fraud pandemic in Britain, totalling £110bn a year.
For context, that figure would cover the annual budget for every single local authority in England combined. Put differently, the figure would cover the UK’s Brexit divorce bill almost three times over, or cover the salaries of 4.8 million nurses for a year.
The report, The Financial Cost of Fraud 2018 estimates that the UK economy could be boosted by £44 billion annually if organisations step up efforts to tackle fraud and error.
Globally, fraud is costing an estimated £3.24tn each year, a sum equal to the combined GDP of the UK and Italy.
The report, which is the only one of its kind, draws on 20 years of extensive global research from 40 sectors, where the total cost of fraud has been accurately measured across expenditure totalling £15.6tn.
A threat growing in scale
Since 2008, there has been a startling 49.5% increase in average losses with businesses losing an average of 6.8% of total expenditure. Driven by technological advances and increasing digitisation, businesses now face a threat which is growing in scale and mutating in complexity.
Fraud is the last great unreduced business cost. Included in the report are examples where fraud has been accurately measured, managed and losses minimised, including a major mining company which reduced losses due to procurement fraud by over 51% within a two-year period, equating to $20m at a time when commodity prices were falling.
Jim Gee, head of forensic and counter fraud at Crowe Clark Whitehill, said: “The threat of fraud is becoming increasingly like a clinical virus – it is ever-present and ever-evolving. The bad news is that digitalisation of information storage, and process complexity, coupled with the pace of business change, have created an environment where fraud has thrived, grown and continued to mutate. The better news is that there are examples where organisations have measured and minimised fraud like any other business cost and greatly strengthened their finances.”