At least £16bn lost to Covid loan fraud and error
UK taxpayers face a bill of at least £15.7bn as a result of fraud and error within the Covid-19 support schemes, with the final cost likely to top £20bn, according to new government estimates.
The public accounts committee’s Covid-19 cost tracker update found that by the end of March 2021, total losses ranged between £12.4bn and £20.1bn.
The committee found that the Treasury does not yet know exactly how much money has been lost to fraud and error across via Covid loan schemes, and called for more clarity from the government.
The report said the Treasury has increased its investment in the detection and recovery of fraud and expects this to have a significant return.
The Office for Budget Responsibility estimated in October that £21.17bn was expected to be written off from the government’s Covid support schemes, including the bounce back loan scheme (BBLS), coronavirus business interruption loan scheme, coronavirus large business interruption loan scheme, future fund and recovery loan scheme.
The MPs’ report said the Treasury should write to the committee by the end of the financial year with an estimate of how much taxpayers’ money has been lost to fraud and error within schemes and how much it expects will be recovered for each pound it spends doing so.
Read more: Johnson and Starmer clash over Covid loan fraud
“Given that the increased risk of fraud and error could cost the taxpayer billions of pounds, it is crucial that HM Treasury can identify, estimate the volume of, and attempt to recover, funding that was distributed in error or through fraudulent claims,” the report said.
“HM Treasury does not yet know how much money has been lost to fraud and error across government’s response to Covid-19.
“Our previous work on government’s response to Covid-19 has revealed that the risk of fraud and error to public finances has risen substantially during the pandemic. As a result, government is likely to be exposed to significant financial risk.”
The committee said it was “concerned that Treasury does not intend to adequately monitor and update” the ongoing cost of the pandemic to the taxpayer.
It said the Treasury has committed to conduct a routine review of estimated costs, including those associated with the loan schemes.
Read more: Covid loans fraudulently used to buy houses, cars, and pornography
However, the Treasury has not specified which elements of government’s response to the pandemic will be included in these updates, or how departments will be held to account for spending taxpayers’ money.
The committee said that the National Audit Office (NAO) Covid-19 cost tracker has increased transparency regarding the cost of the government’s response to the pandemic.
The report said the Treasury should explain how, when, and what data captured by the NAO in the Covid-19 cost tracker it will continue to update and this should also address how loanbook commitments and the estimated write-off costs under the BBLS will be monitored.
“Monitoring the forecast costs and actual spend related to Covid-19 is crucial for parliamentary scrutiny and for holding departments to account for their use of taxpayers’ money,” the report said.
Earlier this month, MPs called for HMRC to take action, after discovering the “avalanche of errors and fraud” it faces from the Covid-19 support schemes.