Covid scheme fraud hit almost £11bn but much ‘beyond recovery’, report says
Much of the £10.9bn of taxpayers’ money lost to fraud and error in Covid support schemes is now “irrecoverable”, a report has said.
Covid Anti-Fraud Commissioner Tom Hayhoe said the response to the pandemic had led to “huge expenditures of public money exposing them to the risk of fraud and errors” and that many organizations were unprepared.
Employment support programs set up by the previous Conservative government, including furlough and help for the self-employed, were subject to £5bn of fraud, the report found.
Many of the support measures were credited with supporting the economy throughout Covid lockdowns. But Mr Hayhoe said the “outrage” over fraud, abuse and error had “not abated”.
Mr Hayhoe had been asked by Chancellor Rachel Reeves to investigate the amount of public money lost to fraud, given his experience in procurement as the former chairman of an NHS trust.
The nearly £11bn lost to fraud and error is close to the amount the government spends on the UK’s justice system. The report states that £1.8 billion has been recovered, but states: “A large part of the deficit can no longer be recovered.”
But he added that there were still areas where “investment is worthwhile and work needs to continue to recover money that was incorrectly paid.”
Poor accountability, poor quality data and weak contracts were among the main reasons for the losses, the report said.
Most public institutions were unprepared for “a crisis of this magnitude and requiring such immediate expenditure.”
“As a result, some measures to protect against potential fraud were inadequate.”
This was the case for the supply of Personal Protective Equipment (PPE) where order volume “exceeded the newly created supply chain and involved measures that invited distrust, opportunism and profiteering”.
It found £13.6bn was spent on PPE procurement, with 38bn items purchased but 11bn left unused by 2024. Losses from overordering and fraud of £324 million were estimated at £10 billion.
Support for small businesses, where “lending is based on self-certification with inadequate controls to prevent abuse”, has also been criticized.
It said the design of the Bounce Back Loan Scheme “creates certain vulnerabilities to fraud and error” and that the scheme is estimated to have led to fraud and error losses of up to £2.8bn.
The report acknowledges that plans were designed and implemented quickly, but Mr Hayhoe says fraud prevention needs to be incorporated more into future disaster responses.
Rachel Reeves welcomed the report and said the government would respond fully in the new year.
Speaking in the House of Commons, he criticized the previous Conservative government, saying they had “played fast and loose with public money and left the front doors wide open to fraud”.
“This government will leave no stone unturned because this money belongs to taxpayers, not cronies or crooks.”
The Conservatives have been approached for comment.
In September the government launched a voluntary repayment scheme for people and businesses to return their pandemic scheme money by the end of December, no questions asked.
An earlier report by Mr Hayhoe revealed that pandemic-era PPE contracts had cost British taxpayers £1.4bn through undelivered contracts and unusable gowns, masks and gloves. Only a small part of this (£400 million) was recovered.
