This piece is co-authored by Rachel Blake, Labour’s PPC for Cities of London & Westminster, and Joe Powell, Labour’s PPC for for Kensington & Bayswater.
During debates in the Commons following the Autumn Statement, Dame Margaret Hodge highlighted financial mismanagement of the Government, such as the colossal wastage of money on Covid fraud and error, £2.2bn lost from HS2 phase 2, and much more for the “staggering” costs of homelessness, with £18bn spent on 300,000 homeless families, instead of building homes.
Dame Hodge also mentioned the “eye-watering” estimate that £350bn a year is lost through fraud and money laundering. Indeed, government should make the fight against fraud and economic crime a national threat, alongside terrorism, serious and organised crime and violence against women and girls.
Fraud accounts for over 40% of all crime, affecting not just businesses or the economy, but some of the most vulnerable members of the public. This dirty money also funds serious and organised crime, terrorism, hostile state actors and human trafficking. But only 1% of the total policing budget is spent on stopping fraud.
The government’s new Online Charter published in November is welcome but on its own it won’t stop the epidemic of scams. The UK needs a sustained funding programme for police and law enforcement to tackle fraud, enhanced coordination between government, law enforcement and private sector – including tech and telcos – to make the new Fraud reporting system a success.
Martin Lewis, founder of Money Saving Expert, said: “We are in the midst of an epidemic of scams, which not only devastate people’s financial lives, but their mental health and sense of self-esteem too. I’ve long called for regulation and law changes to make these big tech firms step up to the plate and deny these scammers the oxygen of publicity.”
Nine out of ten victims of fraud experienced lower-level scams (but with often high impact). Looking from the perspective of the City of London Police Authority perspective, its deputy chair Tijs Broeke urges government to consider how to hold police forces to account for their local anti-fraud response through inspections by the HM Inspectorate of Constabulary and Fire & Rescue Services. In this context a Labour government should also consider appointing a Minister for Fighting Fraud and Economic Crime – as the current government’s anti-fraud champion model seems to be lacking teeth.
As Which? advocates: “the next government must prioritise the glaring need for regulation in the domains and online advertising sectors or fraudsters will continue to flourish.”
Moving offline, when Labour PPCs Rachel Blake and Joe Powell are talking to voters on the doorstep across the Cities of Westminster and London, and in Kensington, it is clear everyone wants to end the influx of dirty money infecting our economy and fuelling the housing crisis. We must not forget that when dirty money is left unchecked, we may be supporting human trafficking, drug smuggling and the flow of counterfeit goods. This is criminality we simply cannot ignore.
Kleptocracies have long used London property as a safe haven for corrupt funds. In Kensington and Chelsea, for example, there were almost 7,000 properties registered under anonymously-owned companies at the start of the full-scale invasion of Ukraine in 2022.
The new Economic Crime and Corporate Transparency Act was designed to help address this secrecy, but has missed many opportunities. In Kensington & Chelsea 59% of the anonymous properties are hidden behind secret trusts, which the Act did not require to be opened up. This means that even though there is some new data that can be analysed and potentially used to help investigators follow the money, there is a glaring loophole which undermines the new register’s effectiveness.
The Act also includes a new offence of “failure to prevent fraud”, which will hold a large organisation criminally liable if it benefits from a fraud that is committed by a member of staff. The scope is therefore very limited. We welcome the reform of Companies House, introducing identity verification for all new and existing registered company directors, but again it is clear this won’t clean up our economy.
It’s good to hear Emily Thornberry, Labour’s Shadow Attorney General, being crystal clear about the need to address fraud. Responding to the Public Accounts Committee’s recent report on Fraud and Corruption against Government, Thornberry said: “As the party of law and order, Labour would treat this crime with the seriousness it deserves, and deliver a comprehensive plan to get a grip of fraud at every level it is affecting our country, from government departments and major corporations to small firms and ordinary households.”
We need a Labour government to make sure the British people are physically safe from crime but also from fraud and crime online.
To read more from Tijs Broeke, see his previous piece Immigration: Whilst Tories are taken over by division, Labour should stay alert.