Covid Credit Fraud and Error Will Cost UK Taxpayers Tens of Billions, MPs Say | Business

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The parliamentary report says taxpayers will lose tens of billions of pounds to Covid-19 support schemes because the government has abandoned basic fraud checks and has rushed to roll out programs.

A report released by the Public Accounts Committee (PAC) acknowledges that the government has responded quickly to providing vital support to vulnerable businesses at the onset of the pandemic. However, the decision to prioritize speed and bailout meant that taxpayers’ exposure to fraud and error “increased significantly.”

The PKK accuses the government of a double decision to loosen routine fraud controls in programs such as the popular Repayable Credit Scheme (BBLS), which allowed companies to self-announce information such as profits as part of their filings, and to support businesses and people with with whom he had not previously had a relationship.

According to data released by the business department, the cumulative impact of fraud and defaults would mean that nearly half of the £ 46.5 billion repayable loans issued during the pandemic will never be repaid.

The PAC said that government agencies have not used their anti-fraud expertise enough to develop new programs to minimize waste.

The Cabinet of Ministers estimates that fraud and error is already costing the public purse £ 51.8 billion a year. This is before any Covid-19 lending schemes are taken into account, including BBLS and layoffs.

But that number could rise, according to figures released by the Department of Business, Energy and Industrial Strategy (BEIS), which previously estimated this fraud and loan losses due to defaults. could cost the taxpayer about £ 26 billion

Repayable loans were the most popular of the Covid-19 lending schemes, with more than £ 46.5 billion issued to more than 1.5 million businesses that said their operations were at risk due to Covid-19 isolation measures.

The scheme, which ran from May 2020 to March 2021, offered loans to businesses of up to £ 50,000, capped at 25% of turnover. at an interest rate of 2.5%. The first 12 months were interest-free and paid for borrowers.

These loans were disbursed by dozens of commercial banks, including large lending institutions such as HSBC, Lloyds and Barclays. While these banks must pursue clients for repayment, any losses will be covered by the taxpayers as the loans are provided with a 100% government guarantee.

The report said the arrangement left BEIS “dependent on banks, which admit lack of incentive because their money is not at stake.”

PAC Chairwoman, Labor MP Meg Hillier, said government departments, including BEIS, are not paying attention to the financial risks associated with Covid support programs. “The Covid emergency masks a more worrisome approach to risk and taxpayer money management,” she said.

The GAC is currently issuing a number of recommendations, including calls for the Treasury and the Cabinet of Ministers to publish a report annually highlighting the risks that fraud and error pose to public money, to tighten fraud reporting requirements in Covid-19 support schemes, and to disclose any plans. collect taxpayer money.

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He also urges government departments to introduce tougher anti-fraud measures and address inconsistencies in how fines and sanctions are applied.

A government spokesman said their priority was to act quickly to protect workers and businesses. They said the loan, vacation and grant schemes have become “a lifeline for millions of people across the UK, helping them survive the pandemic and protecting jobs.”

“These schemes were designed to minimize fraud from the start, and we have rejected or blocked thousands of fraudulent claims. We will not tolerate those who are trying to deceive taxpayers, and we will take action against criminals, including in the form of criminal prosecution, ”the spokesman added.

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