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Only 2% of Fraudulently Claimed COVID Cash from Rishi Sunak’s £22 Billion Pandemic Scheme Recovered by Government

A new parliamentary report details a complete lack of planning in handing out the money to small businesses, pubs, restaurants and some retail premises and clubs

Then Chancellor Rishi Sunak places an ‘Eat Out to Help Out’ sticker in the window of a business in August 2020. Photo: Jeff J Mitchell/PA/Alamy

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Whitehall officials have told MPs it is “incredibly hard and expensive” to recover COVID-19 money fraudulently claimed during the pandemic – after admitting only 2% of the cash from a £22 billion programme funding businesses has been returned to the Treasury in the last three years.

The admission comes after the Department for Business and Trade was criticised by MPs for the slow progress made to recover an estimated £1.1 billion in fraud lost to fake claims and mistakes under the ministry’s business COVID support programme administered by local councils.

This scheme was part of much bigger fraud loss – thought to be more than £20 billion – from lax controls and hasty decisions across the entire pandemic support programme run by then Chancellor Rishi Sunak during the Coronavirus crisis.

The admission by civil servants led to stern words from Labour’s Dame Meg Hillier, chair of the Commons’ Public Accounts Committee, in a report published today.

“A door was left wide open in these schemes to fraudsters who took shameful financial advantage of schemes that were designed with national solidarity in mind,” she said. “It is simply not good enough to give up on recovering this money simply because it is difficult to do so. Public trust is harmed if the Government shrugs its shoulders at criminals lining their pockets with state support.”

The committee’s report paints a picture of a complete lack of planning in handing out the cash from the ministry down to the local authorities who had to give the money to small businesses, pubs, restaurants and some retail premises and clubs. Guidelines as to who was eligible changed up to 30 times at the beginning of the scheme. Ministers put pressure on civil servants and local government to hand out the money rather than making sure people were eligible.

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The biggest element of fraud came in the first £11.1 billion tranche of cash paid out in the first two months of the scheme in April and May 2020. Some £985 million was thought to have been fraudulently claimed and local councils were unprepared to handle the situation. Guidance from the ministry was limited as only 20 civil servants were put in charge of handing out the £11.1 billion.

What has emerged in some councils – at a time when many had no outside auditors and had not invested in the latest IT – were struggling to verify that they were sending the money to the right people. They relied on business rate records and, in some cases, sent the money to the wrong addresses because records were not up to date. Altogether, they dealt with 4.5 million claims during the pandemic.

“Government set up grant schemes knowing that they would provide too much to some businesses and not enough to others, particularly for the earliest grants,” the report states.

Recovery of the cash was been slow and limited. The report says that the department “told us that by May 2023 £20.9 million of losses had been recovered to date; this is around 2% of the £1.1 billion. We heard that £15 million had been recovered by local authorities and £6 million had been repaid to government voluntarily by large businesses”.

The ministry’s knowledge of what went wrong has been hampered by 40% of local councils not returning a questionnaire sent out to them.

A UK Government spokesperson told Byline Times that “it was only right that we stepped up to support the country in unprecedented times – saving businesses and jobs.”

“We are working with local authorities to recover payments made to businesses who weren’t eligible for the grant scheme and have recovered nearly £33 million and a further £4 billion of taxpayer’s money in funds held by local authorities,” the spokesperson said. “We have also taken decisive action to recoup more than £12 million of taxpayers’ money linked to fraudulent COVID-19 bounce back loan scheme applications, and a recent raid in West Yorkshire led to four people being arrested.”

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