Emerging danger – a new net zero industry?
Can lessons from the pandemic help prevent green fraud?
The UK Government’s Net Zero Strategy could offer major opportunities to fraudsters, as demonstrated by the Government’s own figures on stimulus fraud during the pandemic. These suggest that, for example, £5.2bn (or 8.7%) of the £60bn paid out under the furlough scheme was lost to fraud and error. In addition, 11% of the £47bn of Bounce Back loans paid by banks related to fraud, resulting in a £4.9bn cost to the taxpayer. The total losses from stimulus fraud are likely to be much higher.
Perhaps these losses were unavoidable given the urgency of the situation, but the country can ill afford to shed funds on a comparable scale when implementing its Net Zero Strategy. The many opportunities for green fraud will range from duplicate and fraudulent grant applications and trader scams, to falsifying ESG credentials to gain funding. Judging by the Government’s pandemic fraud figures and its projected net zero budgets, FTI Consulting believes green fraud across public and private sector spending could amount to £3.5bn per annum, and up to £50bn by 2050.
Clearly, such losses would be unacceptable. When it comes to fraud on government spending, taxpayers’ money can be much better spent: just £1bn is enough to pay the salaries of 31,000 nurses and health visitors for a year or to cover the annual budget for one of the UK's biggest hospitals. And, of course, the funds can also be reinvested into the net zero programme, or used to further strengthen the government’s defences against fraud and pay for more police. Fortunately, there is time to prevent green fraud from turning into the next big industry.
In this report, FTI Consulting's experts outline the scale of the problem, the types of green fraud emerging, and essential actions for public and private sectors.
Contact the authors
Andrew Durant, Senior Managing Director - andrew.durant@fticonsulting.com
Piers Rake, Managing Director - piers.rake@fticonsulting.com
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