The most spectacular heist on the public purse

• Checks on the use of public money, when billions of pounds have probably been lost to fraud, is being compared to the hapless platoon on Dad's Army, and by the minister who quit because he thought it indefensibly weak.

• Hundreds of millions of pounds are also being spent on another form of business support, and 14 years after the Scottish government flagship programme began, a review could find no evidence to say if it was money well spent.

• Even among those who benefit from the Small Business Bonus Scheme, there's not much support for the propositions that it's good value for public money, or that it adds either jobs or investment.

Helping business through Covid with loans and grants was a vital and very expensive task. But we now know that checking up on fraudulent applications for these loans might as well have been handed over to Captain Mainwaring and his hapless platoon.

We know it because a minister at the heart of the business department has said so. Lord Agnew quit his job because he could no longer defend the UK government's efforts to catch up on billions of pounds of loans that were claimed fraudulently.

It was necessary to move quickly, he told MPs on Wednesday: "But on the fraud side, it was just a Dad's Army operation."

The Treasury reckons that more than £5.8 billion has been fraudulently claimed. And it goes on to assume that its anti-fraud efforts can only go so far, so it's already written off £4.3 billion of it.

In these extraordinary times, when there have also been a mind-bending waste of money on buying personal protective equipment when Covid first broke out, such numbers may wash over us. But what we've seen in the past two years is the most spectacular heist on the public purse.

Government is taking much of the flak for failing to look after that money better, but doesn't it also say something about public morality that so many people took the opportunity to rip us all off?

SNP flagship

Helping businesses through Covid with loans and grants was an expensive task

The UK government's defence starts by pointing to the need to act swiftly to prop up firms that had been forced to close. Exceptional measures and exceptional spending for exceptional times.

That cannot be the excuse for up to £280m per year of Scottish government being spent on smaller Scottish businesses without being able to say if it's having any impact, or the desired impact. It's been going on for 14 years.

This is the finding of a study of the Small Business Bonus Scheme (SBBS), a flagship of SNP policy when it first came to office, and that's the way it has stayed. This is not just any study, but one commissioned by the Scottish government itself.

The SBBS means that any business premises with a rateable value of less than £18,000 gets a waiver on its rates bill. For those above that threshold and up to £35,000, there's a rebate. Firms with multiple premises are disqualified.

Understandably, and predictably, it's valued by those who benefit from it. Others who fall just outside the threshold say that business rates are often their second biggest cost, after labour.

And as it helps out everyone's favourite independent shopkeepers, you won't find opposition politicians eager to criticise it.

Not reassuring

The Fraser of Allander Institute was commissioned to evaluate the Small Business Bonus Scheme

So it has fallen to those in academia who study public spending to keep asking the questions: what does that money achieve? Do you know if it works as intended? Could there be a better way of spending that money?

To that, we've had no answers - only an assurance that it is very helpful to small firms and, by implication, must be helpful in their employment of staff and investment for growth.

An independent review of business rates concluded, among other things, that these questions deserved serious answers, so the Fraser of Allander Institute at Strathclyde University was commissioned to evaluate the SBBS. Its report has just been published by the Scottish government. It's not reassuring.

It finds that there is no evidence to show whether the scheme works as intended. That's not to say there's evidence that it does not. But this is a scheme that began in 2008 paying out £68m to 64,000 business premises.

By 2020, it had risen steadily to paying out £279m to the owners or operators of 126,000 business properties. And there's a manifesto promise to keep it going at least until the next election. It would be a brave business minister, of any party of government, who then axed it.

However, the evidence from this evaluation is that it deserves reform if that money is to be effectively targeted.

Transformed wages

Only 40% of respondents said the small business support scheme was a good use of public funds

The researchers report that the money goes indiscriminately to companies that can use that subsidy to employ more people, and to invest more in their business. It also goes to those who don't use it for either purpose.

This is not just for small firms. It pays out to big earners operating out of small premises. And obviously, it doesn't pay out to those who don't have business premises - some of whom work from home, others whose business is on the move.

It is not tied to employment conditions, such as payment of the real minimum wage, which the Scottish government now wants to see applied to other business policies, as part of its new 'economic transformation' strategy.

The Strathclyde researchers questioned a sample group of those who benefit from SBBS, asking: "Is this a good use of public money?". No more than 40% said it is.

They went on: "Is it a factor influencing decisions to invest to improve or expand your business?". Less than 30% said it is.

One justification for the scheme is that it supports the businesses that make town centres attractive places for communities to go. So they asked: "Does SBBS support town centres?" There was only moderate support for that statement (with a statistical health warning that the sample may not have sufficient numbers in town centres).

Insiders out

There was only moderate approval for the scheme's support of town centres

The underlying problem identified by Fraser of Allander is that there simply isn't the data with which to make a proper evaluation of the policy. They point out that it's directed at buildings and not businesses, and make the case for a full register of Scottish businesses with which to target the policy more effectively.

That brings costs, they concede, but it might be an investment worth making if the annual outflow of SBBS funds is to be better targeted in future.

The Scottish government's response to the evaluation it commissioned? "Over the last 14 years, Scotland's business community has had to weather a global financial crisis, a decade of UK Government austerity, Brexit, a global pandemic and spiralling energy costs.

The spokesman went on: "During that time, we are proud to have supported more than 100,000 small businesses across Scotland with rates relief of up to 100%, saving them thousands of pounds a year. Scotland has had the most generous rates relief regime anywhere in the UK, despite regular comments suggesting otherwise.

"It is essential that we continue ensuring we support businesses as best we can - that is why we commissioned this report in the first place. We will consider this report and its recommendations carefully."

A final point: Who are these people to be telling the Scottish government about the shortcomings of its data collection? Well, several of them were recently working at the heart of the Scottish government on precisely those data questions. They know where the gaps and weaknesses can be found.

There's been quite an exodus from St Andrew's House into the academic and think tank communities, most recently adding Philip Whyte, to become director of IPPR Scotland, "the progressive think tank". They take some valuable insights into analysing what happens inside Scottish government.

You might also wish to note that they have a vested interest in additional data they want collected. It would make the life of a business policy researcher very much easier and more interesting.