MPs slam failure to recover £1.9bn Covid loan fraud
The Public Accounts Committee (PAC) criticised the lack of incentive for lenders to claim back the funds, with an estimated £1.9 billion in suspected fraudulent loans highlighting a significant gap in the programme's oversight.
Introduced in the early days of the pandemic, the scheme was created to provide financial assistance for businesses facing the impact of forced closures during lockdown.
READ MORE: Scottish Labour 'playing politics' ahead of final vote on education reforms, say SNP
Standard credit and affordability checks were waived so companies could have instant access to loans of up to £50,000.
While the Department for Business and Trade (DBT) has acknowledged the estimated £1.9bn in fraudulent losses, it's thought that the figure could increase due to the number of counterfeit claims yet to be identified.
Approximately £130 million has been recovered so far, though the DBT has admitted it cannot determine how much is linked to fraud.
The PAC's comments highlight concerns about the large amounts of public money lost through false claims and a lack of action from the Government in holding people to account.
The Government had guaranteed it would cover losses incurred by lenders on payments which couldn't be repaid when the scheme began, though it has now withdrawn its backing on £357 million worth of loans where it felt lenders had not done everything possible to recover the funds.
Banks will now foot the bill, rather than taxpayers, and earlier this month Starling Bank announced it had agreed to remove the Government guarantee on groups of loans which had potential issues – leading the bank to put aside roughly £28 million.
The PAC, however, has said this broader guarantee has led to reduced incentive to recover taxpayer's money lost through fraudulent claims.
READ MORE: EU, taxes, and Labour 'out of step': What we learned in John Curtice's polling report
Sir Geoffrey Clifton-Brown, chairman of the committee, said: 'DBT were unable to tell us if even the tiny fraction of that sum recovered was in fact even related to fraud.
'Indeed, relying on government-backed lenders to recover losses, who thus lack any incentive to pursue lost funds, has been a dangerously flat-footed approach.
'Now that the Insolvency Service has taken over responsibility for viable cases, we look forward to hearing how it fares where others have failed.'
A DBT spokesperson told The National: 'We will always protect taxpayers' interests, which is why we appointed a Covid Counter-Fraud Commissioner to scrutinise Covid spending and why we will be transferring all ongoing viable cases to the Insolvency Service over the coming months following our review of NATIS's performance.
'We will consider the Committee's recommendations and continue to work across Government, law enforcement and commercial leaders to identify and tackle fraud in relation to the Covid debt schemes.'
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Wales Online
an hour ago
- Wales Online
Flood measures in Valleys street won't be carried out because they are not economically viable
Flood measures in Valleys street won't be carried out because they are not economically viable NRW said that the construction of a raised flood defence wall and the purchase of the most at-risk properties in Clydach Terrace had been considered (Image: Google ) Two options to reduce the flood risk in a Valleys street will not go ahead having been judged not to be economically viable. Natural Resources Wales (NRW) were looking at a range of possible flood risk management solutions for Clydach Terrace in Ynysybwl including the construction of a raised flood defence wall and the purchase of the most at-risk properties after Ynysybwl had been badly affected during Storm Dennis in 2020 with flood waters from the Nant Clydach coming over the highway wall and flooding several properties on Clydach Terrace. But the assessment by NRW found neither option is close to being economically viable under the UK and Welsh Government funding rules for flood risk management purposes that it must follow. In a statement NRW said that it has reaffirmed its commitment to residents of Ynysybwl following completing an outline business case that looked at options to reduce the risk of flooding to homes along Clydach Terrace. NRW said that the topography of the area in relation to the river presents a challenging risk and that during extreme rainfall events flooding can happen rapidly and to significant depths. The outline business case looked at a range of possible flood risk management solutions including the construction of a raised flood defence wall and the purchase of the most at-risk properties. Article continues below But the assessment found that neither option is close to being economically viable under the UK and Welsh Government funding rules for flood risk management purposes that NRW must follow. NRW said the proposed flood defence wall would need to vary along its length between 3.5m and 4.5m above road level to provide a good level of protection at a cost far outweighing the estimated economic benefits even when uncertainties are considered. The alternative option of purchasing the most at-risk properties was also found not to be cost-effective to be eligible to receive flood defence grant in aid funding from the Welsh Government. NRW said that although this conclusion is disappointing it recognises the flood risk remains and will not walk away from the community and will continue working with Rhondda Cynon Taf Council and the Welsh Government in deciding the most realistic and sustainable way forward. To get all the latest news on Welsh politics, health, education and other key issues, sign up to our Wales Matters newsletter. David Letellier, head of operations South Wales Central for NRW, said: 'We know how deeply flood risk affects people's lives and wellbeing and we understand this will be disappointing news for residents. 'This was a thorough assessment of what's possible in Ynysybwl and although we cannot take forward a major scheme at this time we are not walking away from Ynysybwl. 'We remain committed to working with the community, the local authority, and other partners to explore what else can be done to manage the risk and support residents.' Responding to the publications of the Natural Resources Wales (NRW) outline business case which concluded not to proceed with options to reduce the risk of flooding to homes along Clydach Terrace, Rhondda Cynon Taf Council said: 'We note the completion of NRW's options development and understand its conclusions will be disappointing to the residents of Clydach Terrace. 'While the NRW process has been ongoing the council has continued working to prepare for all outcomes at the conclusion of the process. As always the safety of residents at Clydach Terrace is at the forefront of all our decisions. 'Despite NRW being the responsible flood risk management authority for this location Rhondda Cynon Taf Council continues to explore all options for Clydach Terrace at pace. 'Nothing is off the table, including acquisition of properties where necessary, and we will consult with impacted residents on all future options, ensuring their wishes and needs are listened to. This includes convening a meeting for residents of Clydach Terrace in the next seven to 10 days to consider potential options and next steps. 'The council will continue working with Welsh Government and Natural Resources Wales to improve the flood resilience of this location which continues to be significantly exposed to river flooding.' Article continues below
The Guardian
an hour ago
- The Guardian
NSW Coalition proposes cuts to ‘crippling' fees on housing construction in budget reply
The New South Wales opposition will call for cuts to levies that add to the cost of building homes in the state and likely propose changing government fees to try to improve the viability of major residential projects. A $12,000 Housing and Productivity Contribution was introduced in May 2023 soon after the Minns Labor government was elected, replacing the previous Special Infrastructure Contribution, which applied to specific development zones. The $12,000 fee per unit or housing lot is very unpopular with developers, as it is payable at the start of a project when a construction certificate is issued, making it a significant early expense. The opposition leader, Mark Speakman, said he would outline a plan to lower housing costs when he gives his budget reply on Thursday. Sign up for Guardian Australia's breaking news email 'It's a yet another impost that forms part of the record state government taxes and charges that are crippling housing development in New South Wales,' he said. Speakman said easing taxes and charges will be a theme in his budget reply. The 2025-26 NSW budget, delivered on Tuesday by the Minns government, included new measures to assist developers, including a new scheme whereby the government would use its balance sheet to guarantee to buy at the presale stage up to 5000 homes. 'I think they would be better to just focus on the level of taxes and charges, and also the timing,' Speakman said. 'The Housing and Productivity Contribution is imposed when [developers] get a construction certificate. It would help developers' cashflows … if there were to be such a tax that it's done at the occupation certificate stage.' The industry had identified financing mid-rise projects as a challenge, he said. Sign up to Breaking News Australia Get the most important news as it breaks after newsletter promotion Labor argues that a guarantee by the state government to purchase about 30% of the units in a development should help convince banks to lend. If the units do not sell, the government would acquire them for affordable housing on completion under the scheme. The forecasts revealed that the Minns government is on track to construct about 240,000 dwellings over the five years to 2028-29 – well short of the 377,000 NSW was tasked to build as part of the National Housing Accord, announced by Anthony Albanese in 2023. Tuesday's budget noted that the lead times between approvals and completions in NSW is now two years for houses and three years for apartments. Asked about the low figure, the premier, Chris Minns, said further changes to the planning laws and zoning changes planned by the government would boost the number of homes and it was too early to say that NSW would miss its target. 'I am hoping for bipartisan support, Minns said. 'But I suspect the nimby wing of the Liberal party will intervene,' he said, singling out the shadow attorney general and MP for Wahroonga, Alistair Heskens. Wahroonga, on Sydney's upper north shore, is slated for several low to mid-rise development areas under the government's Transport Oriented Development zones. Heskens has warned the TODs 'will dramatically increase local congestion'. Speakman said they had held meetings with the government over the reforms and that these had been constructive.
The National
an hour ago
- The National
SNP Government 'to cut spending by £2.6 billion per year by 2030'
Speaking in Holyrood, Shona Robison said that the Scottish Government's plans would save the equivalent of '4.4% of the forecast resource budget' by 2029/30. Her speech came as the Scottish Government published both its Medium-Term Financial Strategy and its first Fiscal Sustainability Delivery Plan. Opening, Robison said that the Scottish Government had been left facing a '£400 million shortfall' after Chancellor Rachel Reeves declined to provide full funding for the additional costs of Labour's increases to employers' National Insurance contributions. She went on: 'Further, in the UK Spending Review, had the resource funding being provided to the Scottish Government for day to day priorities matched the average increase for UK departments, we would have £1.1 billion more to spend over the next three years. 'And, last week, they set out proposals that will deliver deep cuts to disabled people's support – pushing more people into poverty. With a real life negative funding impact in Scotland of £440m by 2029-30, based on the Office for Budget Responsibility's estimates.' Robison said that the allocations "simply do not reflect the unavoidable realities of the demands that will be placed on public services by the demographic changes we face – not least through an ageing population". More to follow …
