Public bodies accused of abusing credit cards

Margaret Hodge: Public Accounts Committee chairman says the controls are not strict enough (PA)

Tougher checks to prevent fraud and abuse when public servants buy goods and services with special purchasing cards have been demanded by spending watchdogs.

The Commons Public Accounts Committee suggests a ban on spending on certain items with the cards – including alcohol, five-star hotels and first-class travel. Public bodies, including government departments, the NHS and local councils buy about £320m a year of "low-value" goods and services with the cards, winning rebates of £2m. Savings of £28 per transaction were estimated in 1998, but may have dropped to £5.

The MPs said controls varied widely. The Ministry of Defence accounts for 75 per cent of the spending but the proportion of card purchases it checks could be as low as 5 per cent. The Cabinet Office identified 99 cases of inappropriate use in the past three years but does not know how many resulted in prosecutions.

Margaret Hodge, the committee's chairman, said: "The controls currently applied... are not strict enough to deter and prevent inappropriate use."

Francis Maude, the Cabinet Office minister, said:"Properly used, these cards can save the taxpayer money, and make fraud easier to detect, but we will not tolerate their abuse."