Covid fraud losses could go even higher than £4.9bn, MPs warn

Covid fraud losses could go even higher than £4.9bn, MPs warn
Goverment urged to explain exactly how it plans to recover funds

The “eye-watering” amount of taxpayers’ money lost to fraudsters who exploited Covid support schemes could be even higher than previously feared, MPs have warned.

The Department for Business, Energy & Industrial Strategy (BEIS) has estimated that £4.9bn has been lost from loans issued to ineligible businesses during the pandemic.

But the Public Accounts Committee said the total sum squandered “could go even higher” because of unknown amounts lost to fraud and error from grant funding given to businesses via local authorities.

Labour MP Meg Hillier, chair of the committee, said the government had offered “an open goal to fraudsters and embezzlers and they have cashed in – adding billions and billions to taxpayer woes”.

In a damning report, the committee said it was worried that attempts to recover lost money will be in vain “as the money will have been spent and the trails will have long ago gone cold”.

Chancellor Rishi Sunak has denied “ignoring” Covid support scheme fraud, and has promised that the government would “do everything we can” to recover money stolen by fraudsters.

MPs condemned BEIS officials over the billions lost to error and fraudsters from Covid loans – saying they “did not sufficiently identify or reflect the potential risks from organised economic crime”.

Suitcases filled with cash from the Covid loans were seized at the border as suspected embezzlers attempted to smuggle them out of the country, The Times reported last month.

The committee also found that the department distributed £21.8bn of Covid grant funding to businesses through local authorities, but still “lacks information on recipients” of this money.

BEIS officials have only estimated the level of fraud and error in under half of these grants – but already expects over £1bn of that to be lost.

MPs called on the government to set out exactly how it will work with councils across the UK to calculate “robust” fraud and error estimates – and do more to recover the squandered money.

The cross-party committee said it was “unconvinced” that the department’s current plans for recovering swindled money will act as a “sufficient deterrent” to those considering committing fraud.

Ms Hillier said: “BEIS says it saw this risk coming, but it’s really not clear where government was looking when it set up its initial Covid response.”

The senior Labour MP added: “These mistakes must be written out of future crisis responses, now, and government would do well to apply the learnings to the mounting, interrelated crises it now faces in climate change, energy supply and the cost-of-living.”

Lord Agnew quit as the government’s efficiency tsar over the handling of fraudulent Covid loans in January. He accused officials of making “schoolboy errors” by handing out money to over 1,000 companies not trading at the start of the pandemic.

A government spokesperson said: “We’re continuing to crack down on Covid support scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers.

“These schemes were implemented at unprecedented speed to protect millions of jobs and businesses. If the government didn’t move quickly, more businesses would have failed and many more jobs lost.”