ENJOYING THIS ARTICLE? HELP US TO PRODUCE MORE
Receive the monthly Byline Times newspaper and help to support fearless, independent journalism that breaks stories, shapes the agenda and holds power to account.
We’re not funded by a billionaire oligarch or an offshore hedge-fund. We rely on our readers to fund our journalism. If you like what we do, please subscribe.
The failure of UK regulators to take action on fraud is costing the Government “billions” on contracts where suppliers “may be overcharging or providing poor quality goods and services”, a new report has found.
Research by Good Jobs First and Violation Tracker – a website that tracks regulatory rulings – found that there was a “perilous gap” in enforcement of the law between the US and the UK, and that British companies have “learned to exploit a mismanaged system”.
In certain areas, the US was fining firms at scales that were often tens or hundreds of times higher than the UK, even after adjusting for the population difference, the research found.
The report focused on four main areas: price-fixing and anticompetitive practice, government outsourcing offences, labour market enforcement, and breaches of environmental laws.
In every area analysed, US regulators outperformed the UK. US agencies recovered more than $39 billion since 2010 from firms for outscoring offences or contracting fraud.
The UK’s failure in this area, the report noted, was costing the Government “billions in spending”. The researchers cited a 2017 estimate suggesting that the amount lost just to Local Government procurement fraud between 2013 and 2016 was as high as £4.4 billion.
The report also noted how 57% of entries logged on the Violation Tracker UK website had no monetary penalty, and a further 24% listed figures below £5,000.
The researchers said that one of the main causes of the disparity was the UK’s reliance on self-regulation – something that has been commonplace since the Hampton Review, a Government report commissioned by then Chancellor Gordon Brown into how to reduce regulatory burdens on firms – and worsened by reduced funding and short staffing at UK regulators.
The findings come amid a litany of growing scandals surrounding the failures of UK regulators to hold recidivist companies to account.
One of the most prominent controversies surrounds the ongoing release of untreated sewage into UK waterways by England’s privatised water firms and the failure of Ofwat and the Environment Agency (EA) – the main regulators of the water industry – to address it.
In March, it was revealed that raw sewage was discharged into waterways for 3.6 million hours in 2023 by England’s privatised water firms – more than double the 2022 figure.
Despite that, the EA, facing slashed budgets and with limited powers, has launched very few investigations and fewer prosecutions.
In the Lake District’s iconic Lake Windermere, the regulators signed off on reports by water companies wrongly downgrading the severity of raw sewage releases without even attending the site.
A new Government watchdog ruled in September that regulators’ failure to deal with the scale of sewage dumping may break the law.