MoD recovers 'less than half' of money spent on tackling fraud

A National Audit Office (NAO) review found that for every £1 the MoD spent on counter-fraud work over four years, it recouped 48p on average.

Counter-fraud work includes efforts to prevent, detect, investigate, and recover losses from fraud, theft, bribery, and other forms of economic crime within the Ministry’s operations.

Between 2021-22 and 2024-25, the MoD reported spending an average of £5.7 million a year on counter-fraud work, recovering £2.8 million annually, half from actual fraud and half from errors.

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Major challenges include low trust between counter-fraud and police teams and a disjointed structure that hinders investigations.

In the last financial year, the MoD’s fraud recovery improved thanks to one-off recoveries from a 2023 review and new data analytics for procurement, which made large savings, the national spending watchdog found.

The report also alleged “whistleblowing disclosures to the NAO indicate that individual allegations can take a long time to resolve or do not reach a satisfactory resolution”.

The audit office said the MoD had improved outcomes by better assessing risks, placing police officers in counter-fraud teams, and working on a joint approach to investigating economic crimes.

Gareth Davies, head of the NAO, said the department could make “significant savings” if it better managed its losses.

“Using this resource more effectively will require the MoD to reform the way it goes about tackling fraud and other economic crime, but would enable it to achieve real savings that could be used to enhance the country’s defence capability,” he said.

Recommendations from the report include better triaging of cases, setting a department-wide goal to reduce financial losses, and appointing a senior official to represent the department when it suffers financial crime.

The MoD has been contacted for comment.