The UK public sector is poorly equipped to combat fraud, with civil servants not being given the necessary training to help detect the estimated £20.6 billion lost every to fraud, says big data analytics firm SAS.
SAS says it has already worked with HM Revenue & Customs to reduce fraud losses by a claimed £7 billion, as well as the Department for Work and Pensions, where savings of £100 million are said to have been made.
In a report entitled "Eliminating public sector fraud and error: the secrets of a zero tolerance approach", the company says of the estimated £20.6 billion a year lost to public sector fraud, just £702 million (three percent) had been identified - that is fraud actually measured in some way. The other £19.9 billion (97 percent) "remains hidden", SAS said.
In comparison, the report says, the private sector identifies 27 percent of its £21.2 billion a year lost to fraud, so it is able to try and tackle it.
SAS said: "There is a need for a cultural change in the public sector, changing from cautious, siloed and largely manual systems to innovative, collaborative and automated approaches."
It added: "The government also needs to invest in technology that can automatically detect and deter the lower-level threats and 'would-be' fraudsters, with letters, emails or SMS messages."
Amanda Gardiner, public sector fraud specialist at SAS UK said: "The current cost of fraud to the public sector is equivalent to more than a third of the UK's education budget.
"Fraudsters can be swiftly identified when the public sector treats its information as an asset, collecting it, valuing it and analysing it in smarter, more efficient and effective ways to tackle this problem."
Michael Levi, professor of criminology at Cardiff University, said: "There is no point in hoping that fraud problems will go away with digitisation.
"Enhancing the accuracy of risk assessments and optimising interventions by administrative control, as well as by strategic use of criminal law, are a necessary prelude to maintaining both the affordability and legitimacy of government."
But SAS research shows that awareness of skills and training in counter-fraud approaches is seriously lacking in the public sector, with almost 46 percent of civil servants saying they are unsure whether their department had carried out any research into its losses through fraud over a 12-month period.
And only around one in four (26 percent) said they had received training in tackling fraud and error.