MPs urge Government not to 'give up' on recovering lost Covid cash

Only £22m out of £1.1BILLION lost to fraud and error on Covid grants has been recovered as MPs urge Government not to ‘give up’ on recovering taxpayers’ cash

Ministers have been warned not to ‘give up’ on recovering taxpayers’ cash as the vast majority of £1.1billion lost to fraud and error through Covid grants is still yet to be recouped. 

In a new report, the House of Commons’ Public Accounts Committee (PAC) noted how only £20.9million of an estimated £1.1billion in fraud and error losses from coronavirus business support grants had been recovered.

Across eight separate schemes, £22.6billion of Government funding was distributed by local authorities in England in grants to businesses between March 2020 and March 2022.

The PAC report, published today, said it was still not clear how far the money succeeded in protecting firms and workers’ jobs during the Covid crisis.

The cross-party group of MPs also put pressure on the Government not to relent in efforts to recover the money lost to fraud and error through the various schemes.

Across eight separate schemes, £22.6billion of Government funding was distributed by local authorities in England in Covid grants to businesses between March 2020 and March 2022

Labour MP Dame Meg Hillier, the chair of the PAC, said: ‘The Government must not wait for the conclusions of the COVID inquiry to learn the lessons laid out in this report.’

It found, by May this year, only £20.9million had been recouped. But, in response to the PAC report, the Government said it has now recovered £32.6million with a further £13.6million pending.

The PAC said Whitehall departments had been ‘slow to take effective action to recover losses’ more than three years since the schemes were first introduced.

‘When we challenged officials about improving their approach to recovering losses, we were told that checking payments is very expensive, there are legal questions about the ability to recover some payments, and it will be ‘incredibly hard’ to recover much of the losses,’ the report said.

The PAC said the Government’s focus on distributing grants quickly led to ‘compromises on how targeted the support was and on the checks required to be made before money was paid out’. 

It also found that a ‘distance’ between the Government and ‘practical realities on the ground’ caused ‘confusion, delays and uncertainty’ for businessses and councils.

The MPs also criticised a lack of Government planning for how businesses would be provided support during a national emergency such as the pandemic.

Labour MP Dame Meg Hillier, the chair of the PAC, said:’The Government must not wait for the conclusions of the COVID inquiry to learn the lessons laid out in this report.

‘Never again should a national emergency find policy being written as we go along, without firm planning and good local data, with local authorities not properly funded to work in partnership on the support required.

‘The next emergency must find the Government rigorously prepared with an understanding of the optimal means to support businesses through difficult times.

‘The lack of planning from Government also meant that a door was left wide open in these schemes to fraudsters who took shameful financial advantage of schemes that were designed with national solidarity in mind.

‘It is simply not good enough to give up on recovering this money simply because it is difficult to do so.

‘Public trust is harmed if the Government shrugs its shoulders at criminals lining their pockets with state support.’

Responding to the PAC report, a Government spokesperson said: ‘It was only right that we stepped up to support the country in unprecedented times – saving businesses and jobs.

‘We are working with local authorities to recover payments made to businesses who weren’t eligible for the grant scheme and have recovered nearly £33million and a further £4billion of taxpayers’ money in funds held by local authorities.

‘We have also taken decisive action to recoup more than £12 million of taxpayers’ money linked to fraudulent Covid-19 bounce back loan scheme applications, and a recent raid in West Yorkshire led to four people being arrested.’

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