Billions of pounds of taxpayers’ money will be “lost to fraud and error” in the government’s scramble to dish out cash via covid business support schemes, the public accounts committee has warned today.
In a new report, the influential committee said that the true extent of losses through schemes such as the coronavirus business interruption loan scheme will only be “gradually revealed”, after the department for business, energy and industrial strategy estimated that £4.9bn of taxpayers money will be lost in loans issued to ineligible businesses.
Chair of the committee Dame Meg Hillier said despite BEIS claiming it saw the risk coming, “it was not clear where BEIS was looking when it set up its initial covid response”.
“It offered an open goal to fraudsters and embezzlers and they have cashed in, adding billions and billions to taxpayer woes,” she said.
“These lessons should have been learned from the banking crisis a decade ago, and could have been prepared in the Government’s pandemic exercises.”
She added the mistakes must now be written out of future crisis responses, and lessons must be learned as the government grapples with soaring inflation and threats to energy security.
The report comes after new company registrations of new companies jumped by more than 20 per cent in 2020-2021 compared to any of the previous five years, which the the Committee says “would certainly appear to be a warning sign warranting closer scrutiny”.
Lord Agnew, who quit in January over the government’s decision to write off £4.3bn in fraudulent Covid loans, suggested that more than 1,000 companies received emergency business support despite not trading at the start of the pandemic, referring to this as a “schoolboy error”.