Covid loan fraudsters take over “one in every five pounds”

The figures were released last Friday 10 June in response to a parliamentary question.

By the end of March, the government had settled £351m worth of claims on the state guarantee to lenders who disbursed credit under the bounce back loan scheme, according to The Times. Banks had marked £72m of this as potentially fraudulent.

The £47bn bounce back programme saw the government provide 1.6 million loans up to £50,000 underwritten by the taxpayers. Borrowers had to self-attest their 2019 turnover, and banks were told to exert light due diligence on borrowers.

A mass of fraudulent activity has since been uncovered. A Times investigation revealed how recipients had used the loans to finance gambling sprees, home improvements, luxury cars and watches.

Shadow Chancellor Rachel Reeves said the fraud was “a waste of hard-earned taxpayer money on a historic scale.”

Banks are permitted to claim back losses on defaulted credit, as long as they followed the programme’s rules – even if loans were made under fraudulent conditions.

The British Business Bank, which was responsible for administering pandemic finance schemes, estimated £3.6bn will be lost to fraud.

Meg Hillier, chairwoman of the public accounts committee, said: “The government is only beginning to tally up the cost of its Covid response and every new figure paints an uglier picture for the taxpayer and the public purse.”

“The government did not do anything like its best to protect the taxpayers who are paying for it.”

Starling Bank recently called for Lord Agnew to retract his criticism of its oversight, who he claimed was “one of the worst when it came to validating the turnover of businesses or submitting suspicious activity reports”.