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Fraud is costing the UK over £38bn a year, according to the latest figures from the National Fraud Authority (NFA).

Its Annual Fraud Indicator report released today, breaks the loss into four sectors: public, private, individuals and charity. Public sector is the largest loser with a loss of £21bn – a whopping 55 per cent of the total figure. This includes procurement (£2.4bn) and grant fraud (£515m).

Private sector fraud amounted to £12bn, with individuals losing £4bn and charity £1.3bn. In the private sector, the financial services recorded the highest loss with £3.6bn, online banking fraud cost £60m, mortgage fraud cost £1bn, insurance fraud £2.1bn and SME fraud £780m.

Dr Bernard Herdan, chief executive of the NFA, said: "Victims of fraud are found in all sections of society. Whether it is the public, private and charity sectors or as individual citizens, it is vital we join together to take action to stem the rising tide of fraud. The Annual Fraud Indicator is our blueprint. It enables us to gain a perspective and judge the scale of the problem, and target our actions accordingly.

"Tackling fraud will not solely be achieved through more investigation, prosecution and punishment of fraudsters. The NFA is working with its partners to promote greater fraud awareness and self protection, encourage organisations to adopt fraud proof systems, enable fraud reporting and facilitate better sharing of intelligence on fraudsters. We want to develop a stronger counter fraud culture, which helps to disrupt fraudulent activity across the UK and globally."

To combat fraud, the Cabinet Office has set up a cross-government counter-fraud taskforce, which is overseeing a number of pilot schemes to establish effective anti-fraud techniques.

Francis Maude, minister for the Cabinet Office, said: "The latest NFA estimate shows that 55 per cent of fraud, a massive £21bn, is committed against the public sector. That is the equivalent of building 800 secondary schools, or employing over 615,000 nurses and it's a problem that we are not going to ignore. Ripping off the taxpayer will not be tolerated.

"Contrary to what many people think, fraud and error are not just confined to benefits and revenue. It affects every government department and has an impact on the government's ability to deliver better public services, while stripping the civil service of vital resources. We cannot and will not allow this to happen anymore. Our counter fraud champions will begin work immediately to crack down on fraud across government and public services," he said.

Mike Cherry, policy chairman at the Federation of Small Businesses, said the organisation had worked closely with the NFA to count the true cost of fraud to small firms.

"[Fraud costs] around £2,800 per business, per year. These costs can hamper enterprise for small firms when in fact the government are looking to them for economic growth and job creation. The FSB is calling on small businesses to report fraud to the Action Fraud team - in the knowledge that this information will be used to build up a full picture of fraud with prosecutions as a result.

"Despite public sector cuts, small businesses still need to see an improvement in the capability of the police when dealing with these issues locally. Importantly too, we must see an end to the passing-the-buck scenario when a fraud involves more than one police force," said Cherry.