Local government procurement is big business, and in England alone costs the taxpayer £55 billion a year. Even more staggering is the amount lost to fraud each year which is estimated to be between £275 million and £2.75 billion.
A recent report by the Ministry of Housing, Communities & Local Government Department, in line with the UK Anti-Corruption Strategy 2017 – 2022, highlights the huge impact whistleblowers have in identifying and deterring fraud, stating: The majority of cases of fraud and corruption relating to procurement come to light as a result of someone making a report or raising a concern”.
Fraud in public services isn’t just about money, it can mean that public safety is put at risk; or lead to the closure of vital services – when there simply isn’t enough funding to go around. Last year, 5% of the calls for advice received by Protect were in relation to concerns about local government.
The overarching recommendation from the report is that organisations should develop a compliant culture where whistleblowing is supported.
John Penrose MP states in the report foreword:
“The only constants are the need to bake in a counter fraud and corruption culture from top to bottom of every Council, so whistleblowers know they will be supported rather than victimised, and wrongdoers know there’s a good chance they’ll be caught and punished too.”
However, despite recognising that more must be done to support and protect those who raise concerns, the report is silent on what reforms to the Public Interest Disclosure Act 1998 could be considered to advance this objective. The report states: “The Government continues to listen to stakeholders and will review the recent reforms once there is sufficient evidence of their impact.”
Protect say it will be difficult to gauge impact, when the recent reforms aren’t even enforced and Protect’s Policy Officer Laura Fatah said, “Victimisation of whistleblowers is rife, and individuals who speak up in the public interest must know they can rely on the law to protect them in times of need. Protect will continue to urge the government to reform the current legislation, highlighting the cracks that whistleblowers are falling through, and the desperate need for mandatory standards to be established for both employers and regulators.”
See full details of Protect’s legal reform campaign.
The report presents some interesting findings in relation to whistleblowing:
- Of the 86 councils responding to the survey as part of this review, 23% reported having experienced cases of fraud and corruption within procurement in the 2017-2018 financial year
- Whistleblowing and tip-offs: are often the source of procurement related cases. More needs to be done to encourage individuals to come forward, including from the supplier side
- Many cases of fraud and corruption that impact procurement are discovered as a result of a whistle blower coming forward or someone raising a concern. If whistleblowing arrangements were strengthened across the board, this could encourage more individuals and business to come forward to raise their concerns
- More needs to be done across the board to encourage individuals to come forward and to protect them from harm afterwards. Concerns may be raised by staff members, suppliers, or other individuals. To encourage reporting by these individuals, the channels available need to be accessible and both confidential and perceived to be confidential
The report found council’s particularly vulnerable to fraud and highlighted the following:
- Suppliers are often relied upon to provide progress reports and data to support their delivery against KPIs, sometimes self-certifying that results have been achieved and payment is due. Without appropriate oversight and monitoring by councils, this can be abused
- The impact of deterrence needs to be taken into account, as without the threat of punitive action, council’s risk being perceived as a soft target
- Often there is no incentive to take legal or civil action if funds have been recovered. This approach may present councils as a ‘soft touch’ where the worst sanctions is the return of funds by a supplier
If you are a local authority seeking to improve your whistleblowing arrangements and reduce the risk of fraud, you can call our business team for a confidential consultation on 020 31172520, pressing option 2, or via email firstname.lastname@example.org
 National Procurement Strategy for Local Government in England 2018, LGA, page 5 https://www.local.gov.uk/national-procurement-strategy-local-government-england-2018
 Cabinet Office Cross-Government Fraud Landscape Annual Report 2018 https://www.gov.uk/government/publications/cross-government-fraud-landscape-annual-report-2018