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MOD overpaid suppliers by £11 million

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Posted on 21/08/2013 by Wayne Brophy FCILT

The Ministry of Defense overpaid its suppliers by a total of £11 million in the last financial year. according to a recent audit.

Figures show that the MoD saved £11 million by carrying out a “spend recovery audit” on its accounts to claw back overpayments to suppliers.

The amount was ignored in announcements to the public about the success of new anti-fraud and processes to reduce errors in procurement within the government.

Francis Maude, the Cabinet Office minister, said that fraud prevention, better systems and a new focus on avoiding Whitehall accounting errors had saved a total of £6.5 billion last year. This works out at around £400 for every working family in the UK.

During the audit, officials found duplicate and overpayments for many common goods and services procured by the government, including everyday items like stationery, accounted for the huge overspend.

“Every government promises a crackdown on fraud and error, but we are delivering, with £6.5 billion saved last year alone,” Mr Maude said.

“But there are still too many cracks for fraudsters to slip through. Hard-working families expect us to address this. Our priority is to enable different parts of government to share data about fraudsters and work as one to catch them. This will ensure we further reduce the shocking losses to fraud and error much faster.”

The figures illustrate the impact poorly organised or convoluted payment and procurement systems can have on a company. Working to streamline processes and prevent duplicates and errors can provide serious savings.

HM Revenue and Customs contributed the most to the savings pot – generating £6 billion by clamping down on tax avoidance and evasion. However, many other departments found process improvements generated savings. The Department for Business, Innovation and Skills saved £13 million by introducing more checks on student loan applications, while simply redesigning a standard debt letter saved the Department for Transport £1 million.

All government departments will be required to carry out spend recovery audits.

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