Fraud reshapes UK policy and policing playbook

Good morning. In Friday’s newsletter I looked at the context behind the policing reforms needed in the UK. I wrote that our ageing population, coupled with a global fall in most forms of crime, meant the UK’s shortcomings with policing were not quite as simple as “spending went down from 2010, therefore outcomes got worse”.

As I said then, I left one big aspect of the UK’s crime story out of the picture: fraud. I did that because I didn’t want the newsletter to collapse under the weight of too many commas and caveats. So now, some thoughts on fraud and computer-related offences.

I told you that story so I could tell you this one

One happy consequence of our ageing population, and indeed the general global decline in crime rates is that we ought to, if we make the right policy choices, be able to spend less on policing than we did 30 years ago and achieve as good or better results. (But that’s not much comfort if you are, say, Rachel Reeves, since the budget for fighting crime has always been much, much smaller than that for healthcare.)

But what about fraud, particularly fraud that takes place in the digital realm (ie most of it)? This is the most commonly experienced form of crime in the UK and I’m sure that we all have had some kind of brush with it, whether it is a phone call from a scammer, or a relative being hacked on social media.

According to the City of London police’s estimates, about half of reported fraud and cyber crime is linked to organised crime. This suggests that fraud poses a more “traditional” threat than you might think — and so we are not necessarily having to reinvent the wheel when it comes to tackling it. One challenge, not just for the UK but for all states is that large amounts of fraud actually takes place overseas. This is a big problem for catching and punishing fraudsters, which of course erodes trust in the state.

In many ways, it means that the fight against fraud within countries creates additional cost pressures not on the public purse but on the private one. An awful lot of the heavy lifting in fraud reduction is going to have to be done with regulation, whether it is placing certain obligations on companies to purchase a basic level of cyber security or imposing responsibilities on financial services institutions.

There are exciting things you can do to combat fraud with large language models, because one of the biggest tools in fighting fraud is the ability to do things at speed, by shutting down fraudulent accounts rapidly. Using neural networks, LLMs (on which generative AI tends to rely) can help by learning patterns, context and relationships from their vast amounts of data.

But a lot of that is going to be done by the private sector rather than being funded by the state. So that’s the good news for the government directly.

However, there’s a twist here, which is that an additional cost on business is inevitably a cost for everyone and a constraint on what governments can ask businesses to pay in tax. So while fraud may have fewer costs for governments than the forms of crime it is replacing, it comes with secondary costs of its own.

Now try this

I had a terrific time this weekend seeing the last bits of the London Jazz Festival: I have a lovely haul of new records and saw some great gigs. I went for a mixture of people I had heard of and venues I wanted to go to. One total punt that I’m delighted I took is Marilyn Mazur’s Shamania at the Barbican’s Milton Court concert hall, which I largely picked because it is one of the nicest places to listen to music in the capital. I think it was my favourite single gig at the festival this year, though it had a very strong set of performances this time around.

You can listen to their album here, and every piece of music I’ve recommended in this newsletter is in this increasingly wide-ranging playlist here.

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