The government has saved £12m in the past six months by using technology such as advanced data analytics and text messaging systems, as the Cabinet Office Counter Fraud Taskforce seeks to reduce the £21bn lost annually to fraud.
The taskforce has run several pilot schemes since its inception last October, based on new approaches to public sector fraud.
An interim report published on Wednesday estimates that a further £1.5bn could be saved over the next two to four years.
Cabinet Office minister Francis Maude said in the report that he was shocked by the amount of fraud the previous government had failed to tackle.
"No business in the world would put up with this scale of fraudulent activity. It has numerous guises, such as overpayments to suppliers, fraudulent benefits claims and false applications for public grants," he said.
"The taskforce has made a good start and has already demonstrated that immediate savings can be made from common sense checks. We must take this further and work together to combat fraud across all public sector organisations."
The report outlines how the goverment intends to improve on this work, such as stopping departments putting data in silos and sharing it to help provide a more complete picture of those that try to exploit the system.
"All parts of the public sector must work together by sharing intelligence on fraudsters, developing cross-cutting capabilities, initiating joint projects using data analytics, and ensuring that we jointly procure data analytics to drive down costs," the report said.
One of the pilots was based on better screening of information provided by prospective claimants on tax credit application forms, which the HMRC estimates has saved £10m in the past six months alone.
The Department for Transport saved £500,000 by commissioning a data analytics company to detect and recover overpayments to suppliers, while the Home Office saved £4m doing likewise.
Finally, HM Revenue & Customs used mass text messaging technology to contact 31,500 citizens about late tax payments, prompting 1,575 to pay on time and helping to raise £180,000 that would otherwise have had to be chased by staff.
The government is also aiming to make significant savings on technology spending by using the size of the government's purchasing power to get the best deals on items such as laptops and printer cartridges.
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