Ministry of Defence accused of failing to tackle ‘normalisation of fraud’ after £1.5bn annual loss
The Ministry of Defense (MoD) is failing to adequately address what an influential parliamentary committee has branded the “blatant normalization of fraud” in its operations, with annual losses estimated at £1.5bn.
In a scathing report published on Friday, the Commons Public Accounts Committee (PAC) called for a “culture change” to address the significant fraud risk at the Ministry of Defence.
The committee said the department had recovered just 48p for every £1 spent tackling fraud and economic crime, falling well short of the government’s target of £3 for every £1 recovered.
The PAC also cast doubt on the Ministry of Defence’s own £1.5bn annual fraud estimate, calling it unreliable and suggesting the department lacked a “reliable understanding” of the potential harms.
PAC chairman Sir Geoffrey Clifton-Brown criticized the ministry, saying it “falls far short of expectations in preventing the loss of valuable public funds that could be spent keeping our nation safe”.
The committee noted that there was “little evidence” that DoD’s contractor management effectively “deterred or punished dishonest behavior,” noting that defense contracting was highly susceptible to fraud.
Further evidence of this vulnerability came as it was revealed that the Ministry of Defense had withheld payments on invalid contracts worth £400 million in 2024/25.
These payments were made by contractors despite the Department of Defense having financial data, leading the PAC to conclude that suppliers “may regularly and repeatedly charge more than they are entitled to” and that the Department of Defense “failed to do enough to deter this behavior.”
Sir Geoffrey reiterated the need for “a radical change of culture within the Ministry of Defense if the flow of funds lost through fraudulent activity is to be stopped”, adding that “the apparent normalization of fraud in the procurement process is symptomatic of a wider problem; there is no overarching strategy within the Ministry of Defense for how to combat fraud and economic crime”.
Responding to the report, a Ministry of Development spokesperson maintained that the figures cited “primarily relate to a period under the previous government”.
They claimed the Department had “turned this situation around”, citing a significant improvement in recovery rates, with £1.34 saved for every £1 spent on anti-fraud measures last year, a significant increase from 33p for every £1 spent in 2023/24. They expect further improvements this year.
The spokesman added that the Defense Secretary had led “the biggest reforms to defense in more than 50 years, fixing procurement, increasing accountability and eliminating waste”, including the appointment of the first national armaments director to improve value for money from defense contracts.
The Department of Defense maintains “zero tolerance for fraud and corruption” and has vowed to “continue to strengthen our controls by leveraging the latest technology to prevent and detect fraud and protect taxpayers’ money.”
The department aims to achieve the government’s target of a return of £3 for every £1 spent on anti-fraud efforts by 2028.
David Reed, the shadow defense secretary, said the Government must “demonstrate that it has a credible plan not only to increase defense spending but also to ensure that money is protected from fraud, waste and commercial abuse”.
He said: “At a time of war in Europe and instability in the Middle East, every pound spent on defense needs to be appropriately protected and directed towards capacity.”
