The leader of an influential group of MPs has said the government left the lens open to fraudsters when it designed the multi-billion pound support for businesses during the pandemic.
Dame Meg Hillier, who chairs the Public Accounts Committee, said billions had been added to “taxpayer woes” due to government-sponsored loan schemes.
The British Business Bank, which falls under the Department for Business, Energy & Industrial Strategy (Beis), has been tasked with overseeing the lending, which funneled tens of billions to businesses during the lockdown.
“Beis says he saw this risk coming, but it’s really unclear where the government was looking when it put together its initial response to Covid,” Dame Meg said.
“He offered an open target for fraudsters and embezzlers and they cashed in, adding billions and billions to taxpayer woes.
“These lessons should have been learned from the banking crisis ten years ago and could have been prepared in the government’s pandemic exercises.
“These mistakes must be weeded out of future crisis responses, now, and the government would do well to apply the lessons to the growing and interrelated crises it currently faces over climate change, energy supply and the cost of living. .”
Over the life of three loan schemes, Beis has guaranteed £79.3bn of Covid-19 business loans. According to current estimates, around £4.9 billion is expected to be lost due to fraud and error.
The committee called on Beis to explain how he is doing “everything in his power” to reduce the fraud and error the taxpayer is likely to suffer from these schemes.
It should also ensure that local authorities cooperate in calculating the level of fraud and error in the business support grants they administer.
MPs also suggested that officials ensure ministers are made aware of the risks of fraud in clear communications.
This should include what can be done to mitigate risk, such as working with Companies House, the UK business register.
They added, “The department should…clearly explain how it plans to recover funds it identifies as claimed fraudulently or paid in error.”
A government spokesperson said: “We continue to crack down on Covid support scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers.
“These programs have been implemented with unprecedented speed to protect millions of jobs and businesses.
“If the government didn’t act quickly, more businesses would have failed and many more jobs lost.”