Billions of pounds disbursed under Covid-19 employment support schemes have been lost to fraud and error, a watchdog has warned.
The government has been criticized by the National Audit Office for failing to do more to prevent errors and fraudulent claims when it introduced the furlough scheme and the self-employed income support scheme.
In total, £4.5bn – or almost 4.6% of the total cost of the Government’s £96.9bn Covid-19 emergency aid – was claimed in error or fraudulently, according to the latest report from the National Audit Office.
But even that estimate is subject to “significant uncertainties”, say auditors, with figures ranging from £3.2bn to £6.3bn.
The government insisted compliance checks minimized fraud from the start and said no fraud would be written off while work was being done to identify those who abused the system.
Gareth Davies, the head of the National Audit Office, said the government must ensure “adequate resources” are available to address the problem.
The latest report not only looks at the role of the Treasury, but also that of HM Revenue & Customs.
“The Covid Employment Support Schemes were rolled out quickly and provided essential support to individuals, businesses and the economy during the pandemic,” Davies said.
“The furlough and self-employment schemes have prevented millions in job losses, but billions have gone to people whose incomes have risen during the pandemic, and billions more have been lost to fraud and error.
“The government needs to improve the way it estimates fraud and error rates and allocate sufficient resources to address this issue.”
Officials have had harsh words for the Treasury and the government over the design of the program, effectively implying that it could have done more to save money.
In particular, the government is accused of not having used clear financial impact assessments a priori.
According to the report, “billions of pounds are likely to have been paid out to claimants whose incomes have increased over the period”.
“While the numbers are highly uncertain, large amounts of bugs and fraud are unlikely to ever be recovered. Departments must ensure they continue to act against fraud where cost-effective to do so and pursue the most serious cases to the full force of the law where it is in the public interest to do so.”
As of March, the NAO notes 24 criminal investigations were underway into fraudulent claims, while HMRC predicts it will recover around £1.1billion over the next two years.
In response to the report, a government spokesman said: “We are not writing fraud out of these systems – our work to root out those who have abused the system continues.
“Meanwhile we have effectively minimized fraud from the outset, having carried out compliance checks which did not unnecessarily delay payments where required and further compliance activities undertaken by HMRC have secured and protected over £1billion.
“The NAO found that the job-boosting programs met their key objective of protecting jobs and businesses, with unemployment peaking at just 5.2%.”
https://www.theargus.co.uk/news/23044567.covid-furlough-scheme-lost-billions-fraud-error-report-claims/?ref=rss Covid furlough scheme lost billions to fraud and mistakes, report claims