UK lost up to £16bn due to fraud and errors in Covid loan schemes | Coronavirus

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Fraud and mistakes have likely cost the UK government up to £16billion under Covid-19 emergency loan schemes, according to Parliament’s spending watchdog, which called the losses a ” “unacceptable”.

A public accounts committee report released on Wednesday said the Treasury is expected by the end of the year to come up with estimates of fraud and error losses in individual schemes and how much it intends to recover.

The government has guaranteed or provided loans worth £129billion to people and businesses during the coronavirus pandemic to support them financially through lockdown restrictions. However, ministers were warned from the outset that the speed of the schemes would expose them to fraud.

Since then, government agencies have uncovered large-scale fraud in several parts of the system, ranging from the Coronavirus Job Retention Scheme (CJRS) for furloughed workers, the Bounce Back Loan Scheme (BBLS) for small businesses and the coronavirus business interruption loan program. (CBILS) for medium-sized companies. Reports from crime and bankruptcy agencies showed some loans were being used to fund gambling, luxury goods and home renovations.

Theodore Agnew dramatically quit as Treasury minister in a speech to the House of Lords last month after criticizing the lack of action to recover stolen money.

Data from departments’ annual reports suggests fraud and error losses of between £12.4bn and £20.1bn, with a central estimate of £15.7bn, according to the report .

The furlough scheme is estimated to have suffered the largest fraud and error losses of £5.3billion, followed by the BBLS where £4.9billion is believed to have been lost. The government has funded a ‘taxpayer protection task force’ to root out fraud in schemes, including furloughs run by HM Revenue and Customs, but anti-corruption experts fear there will be insufficient funding to tackle it fraud in rebound loans.

The government will also have to cancel £21billion in loans to people or businesses that will not be able to repay them.

Dame Meg Hillier, the Labor MP who chairs the Public Accounts Committee, said the loan fraud was part of a series of repeated government failures.

“The lack of preparation and planning, combined with weaknesses in existing systems within government, has led to an unacceptable level of error, waste, loss and openings for fraudsters that will all end up depriving current taxpayers and futures of billions of pounds,” she said. .

Hillier added that the Treasury should continue to specifically account for Covid-19 related spending measures over their lifetime, rather than allowing spending to be absorbed into individual budgets.

All UK responses to Covid-19 are expected to cost £370bn over 20 years in the case of the Cultural Recovery Fund, according to data from the National Audit Office. Some £260bn had been spent by September 2021.

“The government must be held accountable in this way to all future taxpayers who will pay for this response,” Hillier said. “Essentially, this should ensure that lessons are learned for when the next big crisis hits – be it climate, health or financial.”

A Treasury spokesperson said: “We reject the assertions made in this report. No fraudulent payments have been reversed and the Taxpayer Protection Task Force is expected to recover up to £1billion in fraudulent or incorrect payments.

“Thanks to the speed and scale of our response, the economy has returned to pre-pandemic levels and is growing at the fastest pace in the G7. The cost of inaction could have had a catastrophic impact on jobs and livelihoods.

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