BCL partner John Binns has produced a practice note for LexisNexis exploring the recently launched Public Sector Fraud Authority (PSFA).

Here is a short extract from the article*. If you wish to read the full article, please visit LexisNexis website.

Politics and principles

First raised by the then chancellor, Rishi Sunak, in his Spring Statement earlier this year, the launch of the Public Sector Fraud Authority (PSFA) was formally launched just after his resignation (and that of the prime minister, Boris Johnson) in the summer. There can be no doubt that fraud in the public sector matters to voters-but what makes it different to other fraud, and is the PSFA the way to tackle it?

To start with some principles, the category of public sector fraud includes various distinct phenomena. These include efforts to evade financial responsibilities owed to the state as a matter of law (most obviously tax) and to extract financial gain from the state on a pretext of a legal entitlement (including welfare benefits, tax rebates and reclaims, and so on).

Abuse of support schemes

To the latter subcategory we can add abuse of various government schemes that are designed to support businesses and individuals: an obvious hot topic in the context of the coronavirus (COVID-19) pandemic, in which eye-watering amounts were lost via the furlough and Eat Out to Help Out schemes, although the concept is not unique to that context.

Strictly speaking, we might draw a line between this and the abuse of similar schemes to extract monies from private entities, such as banks; in the case of bounce-back loans (BBLs), of course it is the government's role as guarantor that makes these a public sector fraud. Awkwardly, this puts Mr Sunak's own initiatives, such as the furlough scheme, and his controversial handling of losses from BBLs, firmly in the spotlight.

*This article was first published by LexisNexis on 05 September 2022. If you wish to read the full article, please visit LexisNexis website.

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