Less than two per cent of £1bn lost to Covid fraud recovered in three years
Ministers have only recovered around £20m of the more than £1bn lost to Covid fraud in the three years since the start of the pandemic, a high-profile group of MPs has said.
Parliament’s public accounts committee (PAC) which scrutinises the value for money of government projects, has unveiled a report into the losses from business support schemes.
MPs found of £22.6bn provided to companies an estimated £1.1bn had been lost to Covid fraud or error – and of that just £20.9m had been recovered by May 2023, or less than two per cent.
Dame Meg Hillier, committee chairwoman, said the government should not wait for the Covid-19 inquiry to conclude to learn lessons from the pandemic.
“Never again should a national emergency find policy written as we go along,” she said.
“Lack of planning meant a door was left wide open to fraudsters who took shameful financial advantage of schemes that were designed with national solidarity in mind.”
The report, published today, also stated: “When we challenged officials… we were told checking payments is very expensive, there are legal questions about the ability to recover some payments, and it will be ‘incredibly hard’ to recover much of the losses.”
But the PAC is urging government to set out how it will tackle fraud, recover funds and restore trust – as well as finding out how much of the £22.6bn may not have been needed.
And it is also warning that likely underinvestment due to financial pressures faced by local councils made it harder to deliver coronavirus support schemes for some authorities.
Central government’s distance from the practical realities on the ground meant confusion, delays and uncertainty for small businesses and local government, the report found.
Hillier added: “It is simply not good enough to give up on recovering this money because it is difficult to do so. Public trust is harmed if the government shrugs its shoulders at criminals lining their pockets with state support.”
MPs found the government distributed money quickly and “made compromises” on how targeted the support to firms would be and was not “sufficiently aware” of risk management.
Recommendations included creating clear Treasury guidelines on national emergencies; a review into recovering lost money; and improved understanding of small businesses’ needs.
And MPs also called for a shared approach to grant management, for the Treasury to outline its learnings from offering firms support and for business support contingency plans.
A government spokesperson: “It was only right that we stepped up to support the country in unprecedented times – saving businesses and jobs.
“We are working with local authorities to recover payments made to businesses who weren’t eligible for the grant scheme and have recovered nearly £33m, and a further £4bn of taxpayer’s money in funds held by local authorities.
“We have also taken decisive action to recoup more than £12m of taxpayers’ money linked to fraudulent Covid-19 bounce back loan scheme applications, and a recent raid in West Yorkshire led to four people being arrested.”