Tens of billions have been lost to fraud and error in the UK Government’s Covid-19 support schemes, according to a hard-hitting Commons investigation into the distribution of cash during the pandemic.
The powerful Commons Public Accounts Committee has warned that an estimated £27 billion was lost through the bounce back loan scheme available to businesses during last year’s lockdown.
Another £5.5 billion in fraud and error was lost in Universal Credit payments between April 2020 and March 2021, an all-time high and up £3.8 blllion from the previous year.
The government “significantly increased” taxpayers’ exposure by its twin decisions to drop basic fraud and error checks in paying out Covid-19 loans, and to support people and businesses that it had no prior relationship with.
MPs found the checks and controls were set aside in schemes rolled out “at pace” as the economic crisis followed the health alert.
The PAC chair Dame Meg Hillier MP said: “Fraud is never acceptable, and when so many were suffering as a result of Covid the Government needs to tackle the fraudsters robustly.”
Under the bounce back loan scheme, the Government said that banks could lend up to £50,000 to businesses, and if companies did not pay back the taxpayer would cover the lender’s losses.
It unleashed a huge amount of support, much of it lifesaving for small companies across the UK. But the Government now thinks that up to 60 per cent of the £46.5 billion banks lent under the scheme may never be repaid.
The committee said that banks, who are responsible for chasing payments, simply did not have the incentives to go after borrowers because they know the Government will step in.
