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Public Accounts Committee publishes report criticising the Business Government's handling of Covid Schemes

Posted on 4 May 2023

The Public Accounts Committee has recently published a report into the activities of the Department for Business, Energy & Industrial Strategy (the Department) within which they criticise the Department's handling of the business support schemes that were launched by the Government during the COVID-19 Pandemic.

The Committee's main criticism concerns the Department's failed attempts to recover funds that were issued through fraud or error during the Pandemic. The Department has estimated that around £985 million was wrongly awarded in the first wave of business support grants of which it has so far only managed to recover £5.3 million. As reported by the Committee: "This represents 0.7% of the fraud and error estimate" evidently a small fraction of the total.

The Committee also directed criticism at the Department's assertion that the majority of the wrongly allotted grants were issued as the result of error as opposed to fraud. The Committee concluded that it had not seen any evidence to support this position and went further, commenting that the Department still does not know the true extent of the problem.

The Department's recovery efforts are further blighted by the decision to essentially write off nearly £1 billion that was erroneously paid out by Local Authorities to businesses because it does not expect to be able to recoup the funds. The Committee also criticised the Department for adopting a generally 'laissez faire' approach to protecting taxpayers' money.

The Committee reiterated findings of its earlier report which found that the Department had been slow in its initial response to tackle fraud within the COVID-19 support schemes. The Committee concluded that the lack of funding for counter fraud activities had led to limited recoveries being made.

Businesses received unprecedented and much needed Government assistance during the Pandemic. However, as the dust continues to settle in the aftermath, it is becoming increasingly clear that some Government departments did not exercise proper oversight of the business support schemes. Although early on in the Pandemic, the Government might have been excused for taking time to get their systems in place, it is worrying that those issues now appear to have bled into the attempts to recoup the funds paid in error or by way of fraud – attempts which have so far only led to the recovery of 0.7% of fraudulent payments or those paid in error.  With the Committee noting that the "Department continues to make slow progress on its counter fraud activities related to the Bounce Back Loan Scheme." The Committee also concluded that efforts to counter fraud in relation to the Bounce Back Loans "started too late".

The Government has recently affirmed its commitment to tackling fraud by creating new legislation and bodies tasked with addressing the problem, including the Taxpayer Protection Taskforce and more recently the Public Sector Fraud Authority. However, these efforts continue to yield poor results largely because of insufficient funding and enforcement. Despite its stated commitment to tackling the issue, the Government still has a long way to go to do what is ultimately needed to address the issue of COVID fraud in the UK.

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