Nearly £5 billion might be lost to fraud and error in the Covid support schemes for businesses.
Dame Meg Hillier, who chairs the Public Accounts Committee, said that several billion had been added to “taxpayer woes” due to the Government-sponsored loan schemes.
The British Business Bank, which reports to the Department for Business, Energy & Industrial Strategy (Beis), was tasked with overseeing the loans, which funnelled tens of billions to companies during lockdown.
“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,” Dame Meg said.
“It offered an open goal to fraudsters and embezzlers and they have cashed in, adding billions and billions to taxpayer woes.
“These lessons should have been learned from the banking crisis a decade ago, and could have been prepared in the Government’s pandemic exercises.
“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.”
Over the lifetime of three loan schemes, Beis guaranteed £79.3 billion in Covid-19 loans to businesses. At current estimates, around £4.9 billion of this is expected to be lost due to fraud and error.
The committee called on Beis to set out how it is doing “everything in its power” to reduce the fraud and error hit that the taxpayer is likely to take from these schemes.
It should also make sure that local authorities are cooperating on calculating the level of fraud and error in business support grants that they administered.
The MPs also suggested that officials make sure that ministers are made aware of fraud risks in clear communications.
This should include what can be done to mitigate the risks, such as working together with Companies House, the register of businesses in the UK.
They added: “The department should … clearly explain how it is planning to recover funds it identifies as claimed fraudulently or paid out in error.”
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.”