11 hours ago
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it would cover losses incurred by lenders on payments which couldn't be repaid when the scheme began, though it has now withdrawn its backing on £357 million worth of loans where it felt lenders had not done everything possible to recover the funds.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.'
