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A new generation of highly-organised, and technologically-savvy criminals is behind a 142% hike in fraud against the UK Government over the last three years, consultants have warned. A study by experts at KPMG reports that cases of fraud against the Government recorded by the courts, which spiked at £679m in 2006/07, fell to £286m in 2008/09 before soaring back to £693m last year (2010/11). Of these figures, KPMG estimates fraud perpetrated by ‘professional criminals' soared by 90%, from £277m in 2008/09 to £527m in 2011/10 – much of it committed against Whitehall's Revenue and Customs department, or local public bodies. The actual number of cases against professional fraudsters decreased by 15% last year, but the soaring cash figures are explained by a leap in the value of frauds now being committed. The average case value more than doubled last year, from £8m to £18m. Organised criminals are increasingly using technological advances to perpetrate frauds against public bodies, according to the KPMG report. Jeremy Outen, KPMG's UK head of fraud, explained: ‘Financial criminals are now becoming more businesslike and methodical. The current generation of organised crime is targeting fraud – making payment systems, such as banking, tax and benefits vulnerable to attack. ‘Traditionally, criminals have relied on physical acts, such as robbery – they can now commit a fraud and achieve the same returns for less risk.' Mr Outen claimed modern public sector processing techniques, such as the use of call centres to handle benefits payments, had made it ‘easier' to commit large-scale fraud. The report states that as ministers have come under pressure to make the tax and benefits system easier to comprehend, fraudsters have exploited relaxed Whitehall controls and regulations. In one of the most infamous cases of fraud against the Government –the botched launch of tax credits in 2003 – the Treasury's simple-to-use online registration system made it easy for criminals to make illegal claims. Ministers were forced to close the online portal temporarily in 2005 after fraud estimates topped £3bn. Mr Outen's 20 May study, The government fraud barometer, has now uncovered early attempts to defraud the exchequer through more recent public policy programmes, such as carbon trading systems and green taxes. Tax fraud accounted for the majority of public fraud cases which reached the courts in 2009, with 114 cases heard. Tax fraud was valued at £462m in 2010/11, a 72% increase against figures for 2008/09 (£275m). Some frauds covered by KPMG's study of court cases were audacious. One gang planted undercover operatives in the Revenue and Customs offices to harvest taxpayers' identities – and made off with £560,000 before officials uncovered the scam.

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WHITEHALL

Treasury warned as fraud rockets 142%

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