The UK government could eliminate the £20bn a year lost to public sector fraud if it took advantage of big data to clamp down on the likes of tax avoidance and benefit fraud.
That is according to business analytics provider SAS, which outlines how big data could be exploited in this way in a new report, Eliminating Public Sector Fraud and Error: The secrets of a zero tolerance approach.
It cites examples of how public sector organisations have already prevented losses through the use of big data analytics, such as the Belgian government working with SAS in order to recoup €1bn a year, a reduction in fraud losses of almost 98 per cent.
The report suggests that £19.9bn – accounting for 97 per cent of public sector fraud – could be saved if the government invested in technology which would detect and identify those committing fraud and even attempt to scare them from continuing through the use of letters, emails or text messages.
"There is no point in hoping that fraud problems will go away with digitisation. This report correctly highlights the need for better data analytics and integration, and its case studies point some way forward to managing these problems down," said Dr Michael Levi, professor of criminology at Cardiff University.
"Whether we like it or not, such fraud management is a permanent feature of the landscape, in the public sector as well as the private sector," he continued.
"But enhancing the accuracy of risk assessments and optimising interventions by administrative control as well as by strategic use of criminal law are a necessary prelude to maintaining both the affordability and legitimacy of government."
The current cost of fraud is equivalent to more than a third of the UK's education budget, but SAS believes the use of big data could be a hammer blow for fraudsters.
"SAS is committed to helping the UK public sector tackle this considerable cost to taxpayers, by using big data analytics to give it the power to know all it needs to know about fraud, so as to enforce a zero tolerance approach," said Amanda Gardiner, public sector fraud specialist for SAS UK.
"These fraudsters can be swiftly identified when the public sector treats its information as an asset, collecting it, valuing it and analysing it in smarter, more efficient and effective ways to tackle this problem."
Certain government departments have already worked with SAS to cut fraud losses, with the Department for Work and Pensions having already made savings of £100m, while HM Revenue & Customs has reportedly cut losses by £7m.
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