Ministry of Defence failing to tackle ‘normalisation of fraud’ with losses totalling around £1.5bn a year
The Ministry of Defence is not doing enough to combat the “apparent normalisation of fraud”, an influential committee of MPs has warned.
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The Commons Public Accounts Committee (PAC) called for a “change of culture” in tackling the MoD’s fraud risk, estimated to amount to £1.5 billion a year.
In a report published on Friday, the PAC said the department had recovered only 48p for every £1 it spent on tackling fraud and economic crime, well below the Government’s expectation of recovering £3 for every £1 spent.
And it questioned the MoD’s estimate of its fraud risk, saying the £1.5 billion-per-year figure was not “reliable” and the department lacked a “credible understanding” of its potential losses.
PAC chairman Sir Geoffrey Clifton-Brown said the department was “far behind the curve in preventing the loss of precious public funds which could be spent on keeping our nation safe”.
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Sir Geoffrey’s committee highlighted defence procurement as highly vulnerable to fraud, but said there was “little evidence” that the MoD’s handling of contractors “deters or penalises dishonest behaviour”.
The PAC said the department had stopped £400 million of invalid contract payments in 2024/25 that contractors had submitted despite the MoD having access to their financial data.
It said the figure suggested suppliers “may regularly and repeatedly claim more than they are entitled to” and the MoD “does not do enough to deter this behaviour”.
Sir Geoffrey added: “There must be a radical change of culture within the MoD if the flow of funds lost to fraudulent activity is to be stemmed.
“The apparent normalisation of fraud in the procurement process is symptomatic of a wider issue; there is no overarching strategy within the MoD of how to tackle fraud and economic crime.”
An MoD spokesperson said the figures in the report “primarily relate to a period under the previous government”.
They added: “We are turning that around, and last year we saved £1.34 for every £1 spent on counter-fraud measures, significantly increased on 33p for every £1 spent in 2023/24, and we expect this to be further improved this year.
“The Defence Secretary is driving the biggest reforms to defence in over 50 years, fixing procurement, increasing accountability and tackling waste. As part of this, he has appointed the first-ever national armaments director, with a remit that includes driving improved value for money from defence contracts.”
“We have zero tolerance for fraud and corruption and we will continue to strengthen our controls, exploiting the latest technology to prevent and detect fraud and protecting taxpayers’ money as we help keep the UK secure at home and strong abroad.”
The department expects to meet the target of a £3 return for every £1 spent on counter-fraud work by 2028.
Shadow defence minister David Reed said the Government should “show it has a credible plan not only to increase defence spending, but to ensure that money is safeguarded from fraud, waste and commercial abuse”.
He said: “At a time of war in Europe and instability across the Middle East, every pound spent on defence must be properly protected and targeted towards capability.”