Thank you, convener.
I think that this is the fourth time that I have come to a Public Audit Committee meeting to talk about the national fraud initiative, which you may recall is a biennial data-matching exercise, for which Audit Scotland acts as the co-ordinator. It involves matching various data sets from across the public sector, with the objective of trying to identify matches that may indicate the presence of fraud or error.
Public spending systems are quite complicated and there are high volumes of transactions. Using computer-based techniques is a very efficient way of looking through large volumes of data to identify matches that may indicate fraud or error, but the computer systems cannot be definitive about that because they do not know all the circumstances of the cases. For every match that is reported back to a body, we expect that body to do further work to identify whether it really is an indicator of fraud.
Since we last reported in May 2012, further outcomes with a value of about £16 million have been identified. That takes the total from the NFI in Scotland to around £94 million over the past eight to 10 years and the total in the UK as a whole to just over £1 billion. In the exercise, we work very closely with the Audit Commission and the other audit agencies so that we can get across geographic boundaries. Fraud does not recognise organisational or geographic boundaries, and data matching on a co-ordinated basis across the UK is one of the ways in which we can combat it.
This time round, 127 Scottish bodies took part, which is more than ever before. In particular, we brought in a significant number of central Government bodies and one of the new, larger further education colleges. Just under 600 data sets were used, and they generated about 380,000 matches. We do not expect the bodies to investigate all of those. We provide them with tools to filter those matches to identify the ones that are most likely to yield a result.
This time, we also tried to identify matches in cases in which the outcome was of benefit to the sector as a whole rather than to the body that was submitting the data. One of the issues that we have had in previous exercises is that some bodies have found that they have not got much out of the process, but their data has been extremely helpful to other bodies. For example, if it was discovered that an NHS employee was claiming housing benefit unduly, the NHS would not see the result of that but the local authority would. Therefore, we encouraged those bodies that might not benefit directly to recognise the wider benefit of the exercise.
As members may know, the Audit Commission, which has been co-ordinating the NFI since it started, is to be abolished from 1 April next year. Its data-matching powers are being transferred to the Cabinet Office, so the exercise that is just starting—the 2014 exercise—will continue pretty much as is. There will then be further reviews of how the NFI will continue. One of the big issues for us is that when universal credit finally comes in, housing benefit will be taken out of the NFI remit. As housing benefit is one of the areas with the biggest impact, that will challenge us to look at the value of the rest of the exercise. Having said that, depending on what happens with the final agreement on further devolution to Scotland, it may be that other data sets will come within our remit, which might make continuing the NFI an extremely worthwhile exercise.
I will be very happy to answer committee members’ questions.