A Conservative Lord has defended the government’s handling of fraudulent state-backed loans, saying it introduced the support quickly to aid businesses.
Speaking in the House of Lords, Lord Viscount Younger of Leckie answered questions over Covid loan fraud, following the resignation of Lord Agnew of Oulton yesterday. He said the government deployed the state-backed loan schemes quickly to support businesses and the economy.
He added that estimated losses to error and fraud in 2021 was £5.8bn, £500m of which has now been recovered. He said that the expected losses in 2021 to 2022 will be published in due course and the expected recovery by HMRC is estimated to be between £1.3bn and £1.5bn.
Lord Younger said as of 17 December 2021, £67m worth of claims had been settled from the loan schemes and of these £13m or 337 facilities had been flagged from lenders as suspected fraud.
“Throughout this dreadful crisis we’ve had to endure for the past two years, the government’s main objective has been to protect jobs and livelihoods whilst also supporting businesses and public services across the UK,” he said.
“We’ve worked, and had to work, quickly to produce some generous packages to produce the necessary support we had to back in lockdown one…
“The government continues to work with the British Business Bank, lenders and fraud authorities to identify and address fraud risks and uncover loans addressed fraudulently…There’s a lot of work going on in terms of recovery.
“The schemes that were brought forward in those very difficult times were designed in response to a pronounced market failure, particularly with the UK’s smaller businesses struggling to access the finance they needed to survive at the start of the pandemic. Voices from across the spectrum were shouting at us to ensure we acted quickly. We did so.”
Lord Younger said that HMRC and the department for business, energy and industrial strategy are working very hard in conjunction with the lenders to recover as much as they can.
“The figures are big, we paid out altogether over £400bn to support the economy and I’d say to that extent it’s been a great success and the economy is in very good shape,” he said.
“Lenders continue to work closely with government on counter fraud including making £1.2bn worth of receipts on facilities identified as fraudulent so far.
“It’s important lenders are made accountable for taxpayers money and all lenders continue to be subject to robust audit checks from the British business Bank…
“Preventing fraud is incredibly important. We designed the schemes to prevent as much fraud as possible before any payments were made before quickly supporting those needing it in unprecedented circumstances. We had to move quickly but clearly lessons will be learned.”