Covid schemes created ‘perfect storm’ for fraudsters

The huge scale of how much pandemic aid has been siphoned off by fraudsters has been revealed in a damning report.

They have bilked the Covid-19 business support schemes of at least £27bn, according to the UK’s public spending watchdog, the Public Accounts Committee (PAC).

The PAC reveals how relaxed controls combined with the speed of the coronavirus financial support packages created “a perfect storm for thieves”.

The true scale of how much aid has been swindled away, however, may never be known as HM Revenue & Customs (HMRC) does not have a handle on the statistics relating to false claims.

The PAC said the Government “significantly increased” taxpayer exposure to fraud and error by its twin decisions to drop basic fraud and error checks in paying out Covid loans, and to support people and businesses that it had no prior relationship with.

The coronavirus-linked sum is on top of around £50bn lost annually to criminals and through mistakes, according to Government estimates, which accounts for more than 40 per cent of all reported crime in the UK.

Banks were also slammed for their careless approach to dishing out the money as they “don’t have enough skin in the game” to be concerned about losses, the committee found.

The Department for Business (BEIS) estimates the Bounce Back Loan Scheme could cost the taxpayer £27bn in fraud or credit losses, with the 100 per cent taxpayer guarantee leaving the department “reliant on banks that it admits lack incentives given it is not their money on the line”.

“The Government knows it is losing over £26bn a year to fraud and error in the tax and benefits systems, but admits to another £25bn it can’t even detect,” said committee chairwoman Dame Meg Hillier MP.

Three Government departments responsible for dealing with the majority of the pandemic support, the BEIS, Department for Work and Pensions (DWP) and HMRC, failed to take necessary steps to detect, pursue and recover billions of pounds in fraud and overpayments, the report found.

Although BEIS is working with the police on criminal sanctions for loan scheme fraud, it maintains it is up to the bank to follow usual recovery procedures in the first instance.

A rush to provide support to vulnerable businesses and individuals played straight into the fraudsters’ hands, the report found. Government officials were also slow to act despite being confronted with numerous early red flags, according to the report.

Rishi Sunak’s Treasury department took more than a year to green light the HMRC’s Taxpayer Protection Taskforce despite knowing since March 2020 that billions had already been misappropriated.

The accounts committee listed numerous recommendations, and called on the Treasury to issue new transparency guidance for Government support in the next six months that would name any business that obtained furlough cash.

A Government spokesman said the priority during the pandemic had been to act rapidly and help businesses, and that the Bounce Back Loan Scheme had been designed to minimise fraud and thousands of false claims.

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Posted in Business, Covid-19 - Fraud, News.