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Procurement Fraud Drives Costs Soaring In Ministry Of Defence

Fraud has set the MoD back by almost £1billion in 14 years (Alamy)

3 min read

Procurement fraud has sent costs soaring at the Ministry of Defence (MoD), after new figures revealed it had led to 90 per cent of detected fraud value since 2020.

A written question, tabled by Maria Eagle in April, required the Government to find cases of fraud in the MoD since the Conservatives came to power 14 years ago. 

Defence fraud has cost the Government almost £1 billion since 2010.  Cases of procurement fraud appeared to be the main driving force for the rising costs over the last four years. It accounted for more than 90 per cent of the total figure of just over £600 million costs since 2020.

Procurement fraud was broadly defined in 2011 by National Fraud Authority as covering a wide range of "illegal activities from bid rigging during the pre-contract award phase through to false invoicing in the post-contract award phase". 

A 2021 Public Accounts Committee report found the MoD's procurement system was "broken", and repeatedly wasting billions of pounds of taxpayers' money. This was backed up by a 2023 Defence Committee report, which found it was "highly bureaucratic, overly stratified, far too ponderous, with an inconsistent approach to safety, very poor accountability and a culture which appears institutionally averse to individual responsibility."

In recent years there have been allegations that the MoD paid millions of pounds to a firm that being was used as a conduit for secret payments to Saudi officials, along with warnings that a £3.2bn delayed battlefield system could become a "disaster".

Theft of defence assets has also increased, from costing the Government £19,000 between 2019/2020 to £1.38million between 2023/24. From 2019 the detected cost of fraud in the MoD shot up considerably, driven by rising procurement fraud costs. From 2019/2020 the costs rose to £52.97m; they were then £57.27m in 2020/21, before rising to £147.24m between 2021/22.

Recruitment fraud was not recorded on the data set published by the Ministry of Defence until 2020. But when it was included in the data there was a noteable increase. Costs associated with recruitment fraud increased from £89,000 between 2020/2021 to 283,000 between 2021/22. This figure fell between 2022/23 to £193,000 but sharply rose between 2023/24 to £772,000. 

Labour’s Shadow Minister for Defence Procurement, Maria Eagle MP, said: “The Conservatives have failed in defence for fourteen years – losing over £900 million to fraud whilst continuing to hollow out our Armed Forces.

“Since 2010, successive Conservative governments have failed to get to grips with deep challenges in defence, wasted at least £15bn of taxpayers’ money, and ministers are still cutting the British Army to the smallest size since Napoleon.

“In government, Labour will use National Audit Office expertise to conduct an across-the-board audit of MoD waste to ensure value for taxpayers’ money”.

A MoD spokesperson said:“As these figures reflect, we have significantly improved our measures  to detect fraud in recent year, including procurement fraud which is the highest priority.  To safeguard taxpayers’ money, all cases are thoroughly investigated and, where necessary, referred to the police.

“We are committed to tacking fraud more widely, from establishing a dedicated Public Sector Fraud Authority (PSFA) which delivered £311 million in audited counter fraud benefits in its first year, launching an Online Fraud Charter and introducing a national public awareness campaign to make it easier for people to spot fraud.”  

“We will increase UK defence spending to 2.5% over the next six years, making us the biggest defence power in Europe, and have already overseen the largest sustainable defence spending increase since the end of the Cold War.”

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