What we looked at

The National Fraud Initiative (NFI) is a UK-wide data matching exercise. The UK Government’s Public Sector Fraud Authority (PSFA) leads the NFI at a UK-level and in England, but it is delivered in Wales under the Auditor General’s data matching powers.

Data from various bodies is compared electronically to look for and help address anomalies that may indicate fraud, overpayment, or error. This could, for example, include cases of:

• people receiving council tax discounts or other benefits, being on housing waiting lists, or using blue badge parking permits, when not entitled;
• payments for adult social care or pensions still being made after a person’s death; and
• duplicate payments to suppliers, or people being on two different payrolls at the same time in roles with overlapping shifts.

This report sets out findings for Wales from the most recent NFI exercise. It covers outcomes for the period 1 April 2024 to 31 March 2026. This includes late reported outcomes from the previous exercise. The report also draws on evidence from our engagement with the 50 Welsh public bodies involved.

Why this is important

Making the most of every pound of public spending is essential. While much of the public money spent by Welsh public bodies is well managed, there is still waste, error, and fraud that can be prevented and detected.

Exercises like the NFI – just one way in which bodies can use data analytics – are an important part of the counter-fraud landscape. And if those looking to commit fraud sense a lack of vigilance, the risks could increase. But a data match is only an indicator, so follow-up work is needed before bodies draw any conclusions.

Beyond any financial savings, NFI results can provide assurance around bodies’ systems of internal control. They may also highlight areas for improvement.

What we have found

The NFI continues to support Welsh bodies to prevent and detect fraud, strengthen internal controls, and improve data quality. Since it began in 1996, the NFI has reported outcomes for Wales amounting to £65.2 million. Outcomes being the financial value given to identified cases of fraud,
overpayment, or error.

The latest exercise, NFI 2024-25, reports outcomes for Wales of £8.7 million. This is £1.6 million higher than the previous exercise, with the number of identified frauds, overpayments and errors increasing by 26%. Bodies reported various wider benefits. Data submitted by Welsh bodies has also been linked with £2.1 million of the outcomes reported for bodies elsewhere in the UK.

Overall, bodies’ have engaged better with NFI 2024-25, but there are still areas for improvement. Those areas include:

• completing follow-up work on data matches in a timely way;
• properly recording follow-up work in the NFI system to avoid under-reporting of outcomes – £1.1 million of the total outcomes reported came from corrections following our own review;
• how bodies report locally on their NFI and other data matching work, for example to their audit committees or equivalents; and
• how bodies with access could make better use of the NFI’s application checking tool to prevent some NFI cases up front.

What we recommend

We are not making recommendations in this report. However, bodies can use our NFI checklist to reflect on how they go about their work. NFI results, and what we know about how bodies manage their NFI
activity, might also inform other audit work.

Some more Welsh public bodies are joining the NFI for the next exercise, extending its reach and impact. We intend to continue engaging with bodies to promote an active but risk-based approach to reviewing data matches and to support shared learning.

We also want to make sure that bodies are recording outcomes properly. We can then tell as full a story as possible about the impact of the NFI. And we are continuing to explore how bodies may be able to use data / functions within the NFI system in new ways, such as around claims for ophthalmic services.

Meanwhile, the PSFA is progressing pilot work in areas including business rate and social housing fraud. It is also planning wider NFI system developments, including to support a move to more real-time prevention.