UK to lose at least £15billion on Covid support due to fraud and error, MPs warn
Britain’s future generations will have to pay for the ‘unacceptable’ billions of pounds of taxpayers’ money that has been ‘risked and lost’ by ministers in fraud and error in Covid-19 support schemes, MPs say .
The estimated loss from fraud and error across all state-backed Covid-19 business schemes is expected to be at least £15billion, according to a report by the House Public Accounts Committee on Wednesday. of the municipalities.
This includes losses from the furlough scheme, various state-backed loan schemes, grants, the “eat out to help” initiative and universal social protection payments.
The committee said the government had “clearly exposed the taxpayer to substantial long-term financial risk”. He added that “vast amounts – now amounting to several billion pounds – of taxpayers’ money will be lost through fraud and error”.
The furlough scheme is expected to lose £5.3billion due to fraud and error, the committee said, or around 8.7% of funding distributed through the scheme.
Meg Hillier, chair of the public accounts committee, said that “lack of preparation and planning, combined with weaknesses in existing systems across government, has led to an unacceptable level of error, waste, loss and openings for fraudsters, all of which will end up depriving current and future taxpayers of billions of pounds”.
She said some of the repayments would be spread over more than 20 years, meaning ministers must be held accountable for the costs and ‘making sure lessons are learned for the next big crisis, be it climate, health or financial”.
The National Audit Office said in September that the government had spent £261billion in response to the pandemic, but that is expected to rise to £370billion over the lifetime of the various schemes.
The Rebound Loan Program, for example, can be repaid over a 10-year period, while repayments from the Cultural Recovery Fund can span 20 years. The report says that as a once-in-a-lifetime investment in the arts and culture sector, it “will require competent oversight and careful management for years to come”.
The estimated loss in state-backed loan schemes from Covid-19 could be as high as £21billion, the report said, when all loans that could not be repaid were included. The majority of those losses are expected from rebound loans, which offered state-guaranteed loans of up to £50,000 with only light checks on the borrower.
The committee said it was concerned that the Treasury did not plan to separate the cost of Covid-19 from normal departmental costs in the future, saying that “as the UK recovers from the pandemic, it is more vital than ever that the government maintains accountability for public money and transparency on what is spent”.
“We are concerned that HM Treasury intends to adequately monitor and update the ongoing cost of Covid-19 to the taxpayer,” the committee said.
“Tracking planned costs and actual expenditures related to Covid-19 is crucial for parliamentary oversight and for holding departments accountable for their use of taxpayers’ money.”
The committee said the Treasury had increased its investment in detecting and recovering from fraud, but officials had been unable to estimate the expected return on investment or the amount of fraud and error.
MPs have called on the Treasury to write to the committee by the end of the financial year with its estimate of how much taxpayers’ money is lost and how much it expects to recover.
The Treasury said it rejected the report’s claims. “No fraudulent payments have been reversed and the Taxpayer Protection Task Force is set to recover up to £1billion from fraudulent or incorrect payments. Our support programs have been rolled out in times of national crisis, protecting millions of jobs and businesses when they needed it most.