Government “could have been prepared” for Covid loan fraud

A report from the Public Accounts Committee (PAC) said the business department left an “open goal” to perpetrators of fraud.

The government guaranteed £79.3bn worth of loans during the first year of the pandemic, and analysts estimate the taxpayer will lose about £4.9bn to fraud and error.

An additional £5.7bn is estimated to have been lost within furlough and self-employment support programmes.

PAC’s review of the annual report of the Department for Business, Energy and Industrial Strategy said efforts to identify fraud and error had come too late.

It noted that, by the time they are confirmed the money will have been spent and “trails will have long ago gone cold”.

“BEIS says it saw this risk coming but it’s really not clear where government was looking when it set up its initial Covid response,” said the PAC’s chair, Dame Meg Hillier.

“It offered an open goal to fraudsters and embezzlers and they have cashed in, adding billions and billions to taxpayer woes. These lessons should have been learned from the banking crisis a decade ago, and could have been prepared in the government’s pandemic exercises.”

Although the report recognised the government provided crucial for businesses during the height of the pandemic, it accused the BEIS of oversight in safeguarding against organised economic crime.