Government 'slow to take action' to recover £1.1bn lost to Covid fraud

A report published today by the committee, which oversees government spending, examines the £22.6bn of support given to businesses and individuals by the government over the course of the pandemic.

The committee has urged the government to set out the steps it will take to tackle these errors and fraud, as well as how it intends to recover funds and restore the public’s trust.

Dame Meg Hillier MP, Chair of the Committee, said: “The government must not wait for the conclusions of the COVID inquiry to learn the lessons laid out in this report.

“Never again should a national emergency find policy being written as we go along, without firm planning and good local data, with local authorities not properly funded to work in partnership on the support required.

“The next emergency must find the Government rigorously prepared with an understanding of the optimal means to support businesses through difficult times.”

In July, official figures showed more than half of the company directors who had been struck off in the UK over the previous fifteen months had been involved in alleged fraud or abuse of Government Covid relief schemes.

Between 1 April 2022 and 30 June this year, 1,200 company directors were disqualified from running companies, with 611 of those involving alleged abuse of pandemic grants and loans.

It is still unclear, according to the report, how successful the £22.6bn provided to businesses was in protecting companies and employment.

When challenged by the committee on its slow response to recovering losses, officials at the Department for Business and Trade (DBT) argued that checking payments is expensive, and there was legal uncertainty about their ability to recover some payments, making it “incredibly hard” to recover much of the money lost.

A UK Government spokesperson said: “It was only right that we stepped up to support the country in unprecedented times – saving businesses and jobs.

“We are working with local authorities to recover payments made to businesses who weren’t eligible for the grant scheme and have recovered nearly £33 million and a further £4 billion of taxpayer’s money in funds held by local authorities.”

Mike Cartwright of the West and North Yorkshire Chamber of Commerce shares some sympathy with the Government’s position. Talking to The Yorkshire Post, he said: “We were all working in unprecedented times, and it was a most challenging situation for everyone – central government, local authorities, businesses and everyone else.

“We know, because we worked so closely with them at that time, that local authorities worked damned hard to check and stop fraudulent claims, yet also to get that money out to the most needy as quickly as they could.

“There was a balance to be struck, and I don’t think any hand-wringing or claims of ‘should woulda coulda’ are particularly helpful. Of course, it would be great if more of the lost money can be recovered.”