By Ben Kerrigan-
Independent Commissioner has concluded that the last government’s support schemes left the front door open to covid fraud with £10.9 billion lost to pandemic fraudsters.
The government has already actioned recommendations in Covid Counter Fraud Commissioner’s report – including new fraud powers and voluntary repayment scheme
Further action planned to retrieve lost funds and prevent repeat of mistakes in future crises
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The Covid Counter Fraud Commissioner, Tom Hayhoe’s, final report to Parliament finds many schemes – including Bounce Back Loans and Eat Out to Help Out – were rolled out with huge fraud risks and no early safeguards – costing the taxpayer millions.
Weak accountability, bad quality data and poor contracting were identified as the primary causes of the £10.9 billion pound losses – which were enough to fund daily free school meals for the UK’s 2.7 million eligible children for eight years.
A report published in 2023 by the Public Accounts Committee finds that, three years on from the provision of £22.6 billion in business support schemes in the pandemic, the Government had, by May 2023, recovered only £20.9 million of an estimated £1.1 billion in fraud and error losses.
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Research undertaken by the House of Commons Library in March showed a central estimate of £11.8 billion of taxpayers’ money lost to fraud and error through the government’s business support schemes.
As families continue to feel the impact of the cost-of-living crisis, the total amount of taxpayer funds wasted through fraud and error equates to £419.93 for every household in Britain, the Labour party said.
COVID-19 pandemic restrictions were diverse and subject to variations over time and between different parts of the country. All had an impact on businesses, many of which were forced to temporarily close or curtail their operations.
The government announced in early March 2020 that it would provide grants, administered by local authorities, to support smaller businesses in England.
The National Audit Office has said in its report that government achieved its primary objective to deliver financial support to businesses quickly during the COVID-19 pandemic. BEIS prioritised speed over conducting pre-payment checks for the schemes launched at the start of the pandemic, but did not then act quickly to conduct follow-up checks.
Chancellor Rachel Reeves appointed Tom Hayhoe in December 2024 to ensure mistakes of the past are never repeated, with this government already recouping almost £400 million of covid support cash.
Chancellor, Rachel Reeves said:
”Leaving the front door wide open to fraud has cost the British taxpayer £10.9 billion — money that should have been funding our public services, supporting families, and strengthening our economy.
We have started returning this money to the British people and we will leave no stone unturned in rooting out the fraudsters who profited from pandemic negligence.
The government has already actioned many of the Commissioner’s early proposals. These include:
A voluntary repayment scheme, launched in September, giving claimants until 31 December to pay up. Tougher sanctions powers through the Public Authorities (Fraud, Error and Recovery) Bill, which became law on 2 December. Specialist fraud recovery teams to track down suspected fraudsters and recover taxpayer cash, from 2026.
Josh Simons, Cabinet Office Minister, said:
”We’re taking more action to bring fraudsters to justice and make the state the hardest possible target: giving investigators new powers to take on cases, using artificial intelligence to speed-up counter-fraud work, and setting up a repayment scheme to claw back money into the public purse.
The report highlights that counter fraud controls were ‘inadequate’ and only improved later in the pandemic. Hayhoe makes further recommendations to ensure the country is prepared for further crises that need an economic response from government – emphasising that future preparation and robust controls will provide the best value for money for taxpayers.
The government will consider the report in full and respond early in the new year”.
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