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Cabinet Office permanent secretary Alex Chisholm has told MPs a National Audit Office report suggesting that some officials are “reluctant” to pursue fraud and corruption cases because of reputational damage to their departments is at odds with his personal experience.

Chisholm, who is also civil service chief operating officer, said that his own department has t undertaken measures in recent months to ensure it is “amongst the best” government agencies at tackling fraud.

The report, published in March, said some counter-fraud professionals had told the watchdog that “senior officials” in government feared prioritising the detection and pursuit of fraud and corruption on the grounds that it could harm their organisation.

The watchdog found that fraud in government spending had almost quadrupled to £21bn over the past two years and most public bodies could not demonstrate they had appropriate resources to deal with the risks they faced – including new technology to deal with emerging challenges such as those created by the growing use of cryptocurrency.

Chisholm, who is also permanent secretary of the Cabinet Office, was asked about the NAO's findings on tackling fraud and corruption against government at a Public Accounts Committee evidence session this week.

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He said he did not dispute the NAO’s integrity in relating comments from officials it had interviewed. However, he told MPs he did not recognise the picture of departmental leaders failing to pursue cases because of reputational concerns.

“That’s certainly not been my experience in any of the departments that I’ve worked in,” said the top official, who was previously permanent secretary of the now-defunct Department of Energy and Climate Change and the Department for Business, Energy and Industrial Strategy. “Certainly everything that I do under my own control and authority is to encourage reporting of fraud, both because if you can’t see it you can’t deal with it. But also if there are consequences from that it provides a good deterrent to prevent it happening again.”

Chisholm said the Cabinet Office’s own fraud work had been given a poorer assessment than the department was comfortable with about a year ago.

“We thought that, because we are also the home of the Public Sector Fraud Authority (PSFA), we ought to be amongst the best, so we put in place a whole load of new measures and brought some new people in with extra training,” he said. “We adopted a new strategy and a new plan. And then we got the auditors and the Cabinet Office Audit Risk Committee to look again at it, and they said ‘right, you’ve done all the things we expected’. They’ve agreed to de-escalate the risk setting and they’re now happy that we are within our risk appetite for fraud.”

Chisholm told MPs he would expect other departments to do something similar if they were faced with underperformance.

“Someone finds something against you; you say ‘gosh, OK, fair enough, we could be better at that’,” he said. “We put in place a programme and said ‘are we better now?’ And they’ve said ‘yes, we’re happy with what you’re doing’.”

The PSFA was set up within the Cabinet Office last year to use data analytics and other technology-centric techniques to help departments understand and tackle the threat posed by fraud.

March’s NAO report noted recognised the creation of the authority, as well as the establishment of the government counter-fraud function and counter-fraud profession. But it also warned that departments and public bodies lacked robust assessments of their fraud risks and cannot demonstrate that their counter-fraud resources are appropriately matched to the risk.

The NAO said there was danger that higher levels of fraud against taxpayers could be viewed as “normal and tolerated”.

It added that public confidence in the integrity of public services could be damaged by perceptions that the UK had become more corrupt than it was before the Covid-19 pandemic.

At the PAC session, Chisholm acknowledged the perception risks, which were based on a survey by the Transparency International organisation. It showed the UK's ranking in a table of 180 nations had fallen from eighth position in 2017 to 18th in 2022, reflecting an increased perception of corruption among businesses and members of the public.

“I am concerned that there is a risk to public confidence there,” Chisholm said. “As the NAO report does say, the overall ratings for the UK from Transparency International have gone down a bit year-on-year.

“It’s incredibly important that citizens and taxpayers do have confidence in public expenditure and reports like that obviously do give rise to real concern. That’s behind the very significant efforts taken by the government in the past two years to invest more and strengthen our capabilities in counter-fraud.”