Taxpayer left to pay billions due to Covid fraud, say MPs

Mistakes, waste and fraud that led to billions of pounds of Covid loan support being lost were "unacceptable", the head of a group of MPs has said.

Meg Hillier, chair of the Public Accounts Committee (PAC), said taxpayers will be exposed to financial risks for decades.

Previous official figures estimated the government is unlikely to recoup up to £21bn of Covid loans to business.

The Treasury said it rejects the claims made in the PAC report.

Ms Hillier said repeated PAC reports had made clear that a "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".

She said this would end up robbing current and future taxpayers of billions of pounds, and that the "government must be held accountable".

"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.

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

But the Treasury rejected the claims in the report, saying that no fraudulent payments have been written off and the Taxpayer Protection Taskforce it has set up is expected to recover up to £1bn from fraudulent or incorrect payments.

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The Coronavirus Job Retention Scheme - commonly known as furlough - alone is estimated to have lost £5.3bn to fraud and error. That's almost 9% of the total funding distributed through the programme.

The estimated loss to fraud and error across all Covid-19 response measures is not known but is expected to be at least £15bn across the schemes and loans implemented by various government departments.

In September, spending watchdog the National Audit Office said the government had spent £261bn on 374 measures in response to the pandemic. These measures are expected to cost a total of about £370bn over their lifetime.

That same month, the Office for National Statistics (ONS) reported that a provision of nearly £21bn had been made for defaults under loan schemes for companies, such as the Covid bounce-back loan policy.

The PAC said 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, the committee added.

A Treasury spokesperson said: "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."

They argued that the "cost of inaction" could have had a big impact on jobs and livelihoods.