‘Unacceptable’ billions lost and risked due to fraud and error in Covid schemes, MPs say

Government has risked and lost “unacceptable” billions due to fraud and error in key Covid support schemes, a new report warns.

In a blistering assessment, the chair of the Public Accounts Committee said the mistakes, waste, and openings for fraudsters “will all end up robbing current and future taxpayers of billions of pounds”.

MPs on the committee said there was a lack of preparedness and “weakness” in systems — concluding the total cost of government losses remained “uncertain”.

But they said: “It has clearly exposed the taxpayer to substantial, long-term financial risks and ‘large amounts’ — now running into many billions of pounds — of taxpayers’ money will be lost to fraud and error”.

The committee highlighted that the Covid job retention scheme — which paid the wages of those furloughed during the crisis — alone is estimated to lose £5.3 billion to fraud and error.

They added: “The estimated loss to fraud and error across all Covid-19 response measures is not known but is expected to be at least £15 billion across the scheme and loans implemented by HM Revenue & Customs, the Department for Work and Pensions and the Department for Business, Energy & Industrial Strategy”.

According to a National Audit Office from September, the full cost for the lifetime of the government’s Covid-19 measures will reach around £370 billion.

The PAC added the Treasury should state what it has learned from the Covid response and what it is doing to collect lessons across government departments. It should also find out how much money has been lost in error and to fraudsters, how much of this will be recovered and how much it will cost to recover it.

Chair of the committee, Meg Hillier, added: “As the PAC has made clear across a series of reports on the costs of Covid, lack of preparedness and planning, combined with weaknesses in existing systems across government, have led to an unacceptable level of mistakes, waste, loss and openings for fraudsters which will all end up robbing current and future taxpayers of billions of pounds.”

The Labour MP added: “It is essential that for as long as we will be paying the costs of Covid-19, which is at least the next 20 years just in some of the loan repayment terms, the Treasury and all of Government continue to account specifically for what it has spent in response to the pandemic.

“Government must be held accountable in this way to all the future taxpayers who will be paying for this response.

“Crucially this must ensure lessons are learned for when the next big crisis hits — be it climate, health or financial.”

A Treasury spokesperson said: “We reject the claims made in this report. No fraudulent payments have been written off and the Taxpayer Protection Taskforce is expected to recover up to £1bn from fraudulent or incorrect payments.

“Our COVID support schemes were rolled out at a time of national crisis, protecting millions of jobs and businesses when they needed it most.

“Thanks to the speed and scale of our intervention, the economy is back to pre-pandemic levels and growing at the fastest rate in the G7. The cost of inaction could have had a catastrophic impact on jobs and livelihoods.”