The National Audit Office has released a report stating that the government’s Covid business support programme in England has only recovered 1% of the estimated £1.1bn lost due to fraud and error.
The report emphasizes the need for ministers to learn from the scheme’s shortcomings. The majority of the fraud and error took place during the initial launch of the grant scheme in March 2020, as prepayment checks were not required at that time. According to the Department for Business and Trade’s statistics, the £1.1bn lost in grants represented just under 5% of the scheme’s total.
The NAO’s report cites newly collated figures from the DBT, indicating that only £11.4m, or 1% of the lost amount, has been recovered so far.
In a report by the National Audit Office, the rapid development and launch of eight separate grant schemes for businesses, which were administered by local authorities, was highlighted. The report noted that the business department was only asked to examine how such a system might work in late February by the Treasury. The report further revealed that just 0.4% of all estimated irregular payments paid out in grants by local councils had been recovered.
By 19 April, local authorities had made 484,000 payments totalling £6bn, which was more than 50% of the total handed out in what was the largest such support program beyond the furlough scheme. The report also emphasized that there was a lack of any shared contingency plan between local and national governments on how to support businesses during an emergency.
The initial wave of fraud and error was a result of the accelerated timetable, which was later corrected by incorporating prepayment checks and access to much more accurate local information about businesses. The report called for the Department for Business and Trade (DBT) and Treasury to work with councils to create formal contingency plans by the end of the year, using the lessons learned from the Covid scheme.
The NAO commended the business department and local government for working quickly to set up and distribute grants to businesses but emphasized that the full impact of fraud and error was still unclear.
According to the report, the government does not have any idea about the impact of the grants in terms of job maintenance or how much support was given to businesses that did not need it. Therefore, an overall assessment of the value for money of the schemes remains uncertain.
The head of the National Audit Office stated that the government’s experience of working with local authorities to provide financial support during the pandemic offers valuable lessons that can be used to improve contingency planning and build government resilience for responding to future national emergencies. The newly formed Department for Business and Trade can utilize these lessons to enhance the planning process.
