A secret government dossier has revealed that more than £28 billion ($35.84 billion) of British taxpayer money was appropriated by terrorists, organised crime groups, and hostile states over a six-year period, according to details published by the UK Telegraph.
The internal Cabinet Office report, commissioned in 2023 but never released publicly, examined government grants, foreign aid, and Covid-era financial support schemes between 2015 and 2021. It concluded that vast sums intended for development assistance and emergency economic relief ultimately fell into the hands of actors linked to national security threats, including Russia, Islamic State, and transnational criminal networks.
The findings, described by sources as so sensitive they were withheld to avoid political fallout, represent the first known systematic attempt to quantify how much public money may have been diverted into activities hostile to UK interests. The report, compiled through analysis of grant data, academic consultation, think tank input, and open-source reporting, suggests that weaknesses in due diligence processes left significant gaps in oversight across multiple funding channels.
According to the dossier, grants were issued to companies linked to the Russian state, while Covid loan schemes were accessed by individuals connected to Islamic State in Syria. It also highlighted cases where research funding was directed to companies associated with the Chinese military. The report further found that counter-terrorism and welfare-linked funding mechanisms were in some instances exploited by extremist networks and individuals espousing anti-Western ideology.
A significant portion of the misappropriated funds was also linked to organised crime. The dossier details cases involving human traffickers claiming housing benefits and disability allowances, alongside broader fraud patterns involving criminal networks operating across borders. Intelligence sources cited in the report indicated that some organised crime groups may have overlapped with hostile state interests, including a network linked to Eastern Europe that allegedly coordinated efforts to access UK public funds while facilitating illegal migration into the country.
The scale of the findings reflects a period in which the UK maintained one of the world’s largest overseas aid programmes, committing 0.7 per cent of gross national income to international development. Annual foreign aid expenditure rose steadily during the period covered by the report, including £12.1 billion ($15.49 billion) in 2015, £13.4 billion ($17.15 billion) in 2016, £14.1 billion ($18.05 billion) in 2017, £14.6 billion ($18.69 billion) in 2018, and £15.2 billion ($19.46 billion) in 2019. Funding then declined amid the economic impact of the Covid pandemic, with £14.5 billion ($18.56 billion) allocated in 2020 and £11.4 billion ($14.59 billion) in 2021, when the government reduced its aid commitment to 0.5 per cent of national income.
The dossier’s authors reportedly identified systemic weaknesses in the verification processes governing how grants and loans were distributed. It was initially commissioned following widespread fraud concerns linked to Covid-19 emergency support schemes, but expanded to examine broader patterns of public funding exposure to fraud and misuse. Officials later decided not to publish the findings, with sources suggesting the decision was driven by concerns over political sensitivity and reputational damage.
Rebecca Harding of the Centre for Economic Security, quoted in the UK Telegraph report, said the findings highlighted the evolving nature of financial threats facing the state. She described the situation as one in which adversaries were increasingly using economic systems as tools of influence and disruption, arguing that assumptions about shared economic intent between nations had left vulnerabilities exposed. Her assessment framed the issue as part of a broader pattern of economic competition involving both state and non-state actors operating through commercial and financial channels.
The report also draws attention to concerns over Covid-era lending and grant schemes, which became a central focus of fraud investigations. Separate findings presented to Parliament previously estimated that £10.9 billion ($13.95 billion) was lost to fraud and error during the pandemic response. Tom Hayhoe, the Covid counter-fraud commissioner, attributed those losses to weak accountability structures, poor-quality data, and deficiencies in contracting processes that allowed fraudulent claims to pass through oversight systems.
Specialist fraud recovery teams have since been established to pursue suspected cases and attempt to recover lost funds from pandemic-era schemes. However, the UK Telegraph report notes that national security experts have expressed frustration that similar levels of scrutiny have not been consistently applied across other government funding streams, particularly in relation to foreign aid and research grants.
Security officials cited in the dossier raised concerns that responsibility for assessing national security risks in grant distribution remains fragmented across government departments. While some improvements to due diligence processes have been introduced, including strengthened checks and the National Security Investment Act, the report suggests gaps remain in identifying potential threats at the point of funding allocation.
Academic experts also highlighted structural issues in how fraud is addressed within national security frameworks. Professor Nicholas Ryder, a former adviser to the home affairs select committee and an expert on terrorism financing at Cardiff University, described the findings as “staggering,” noting what he characterised as a lack of integration between fraud detection and counter-terrorism strategies. He argued that fraud and terrorism financing are closely linked, and that stronger collaboration between financial authorities and security agencies could improve disruption of illicit networks.
Ryder also pointed to international comparisons, noting that countries such as the United States and Australia dedicate greater resources to using fraud investigations as part of their broader security strategy. He suggested that improved coordination between agencies such as HM Revenue and Customs and MI5 could strengthen the UK’s response to financial exploitation linked to security threats.
The Cabinet Office, responding to the UK Telegraph’s findings, said the government had intensified efforts to combat public sector fraud. It stated that more than £7.5 billion ($9.60 billion) in taxpayer money had been saved in the past year through enhanced fraud prevention and recovery measures, supported by improved data systems and expanded investigative capacity.
The secret dossier, which was never formally published, ultimately presents a detailed account of how large-scale public funding mechanisms were exposed to exploitation across a range of schemes between 2015 and 2021. Its findings, as reported by the UK Telegraph, point to systemic vulnerabilities in oversight structures during a period of extensive government spending on foreign aid and emergency economic support, with significant sums traced to actors identified as security risks by the report’s authors.
