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Covid fraud and error losses could reach £15bn


The government is estimated to have lost at least £15bn to fraud and error across all Covid-19 schemes, the public accounts committee has warned in a damning report published today. 


23rd Feb 2022
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An influential group of MPs has called on the government to account for the “unacceptable” billions of taxpayers’ money risked and lost to Covid fraud and error.

The total cost lost across all government departments is still uncertain, but the House of Commons public accounts committee (PAC) has concluded that it’s running into the billions. 

£15bn estimated loss to fraud and error

The PAC estimates that at least £15bn has been lost across the Covid schemes.

The furlough scheme alone is responsible for £5.3bn of that loss, which equates to 8.7% of the funding distributed through the scheme.

The Bounce Back Loan Scheme (BBL) was the next biggest target of fraud and error which is estimated to lose £4.9bn.

The other state-backed Covid support schemes have also succumbed to fraud and error, with estimated losses for the Local Authority grant scheme estimated at £1.03bn, the self employed scheme at £493m, the eat out to help out scheme at £71m and universal credit at £3.8bn. 

The estimated total losses could be £12.4bn but as the PAC pointed out, they could be much higher and even reach £20bn. The MPs said that a lot of the uncertainty comes from the long loan repayments, with Bounce Back Loans lasting 10 years and the cultural recovery fund could stretch to 20 years. 

The national audit office’s Covid-19 cost tracker in September 2021 shows the government has spent £261bn on 374 pandemic measures, but these measures are expected to cost £370bn over their lifetime.

Government must learn lessons from the crisis

Chair of the PAC, Meg Hillier MP said the “lack of preparedness and planning, combined with weaknesses in existing systems across government, has led to an unacceptable level of mistakes, waste, loss and openings for fraudsters which will all end up robbing current and future taxpayers of billions of pounds.”

The PAC is urging the Treasury to learn the lessons from the pandemic so the same mistakes future generations will be paying for will not happen again. 

Hillier said it’s essential the Treasury and all of government account specifically for what it has spent in response to the pandemic. “Government must be held accountable in this way to all the future taxpayers who will be paying for this response,” she said. 

The sooner the Treasury undertakes this exercise, the quicker it can embed the lessons, concluded the PAC. It added that a public inquiry may take some years to complete and learn the lessons from the government’s handling of the pandemic.


The MPs are concerned though that the Treasury will not adequately monitor and update the ongoing costs that Covid will inflict on the taxpayers. As a recommendation, the PAC highlights monitoring the forecast costs and actual spend related to Covid as “crucial for Parliamentary scrutiny and for holding departments to account for their use of taxpayers’ money”.

The PAC is concerned that funding to tackle issues arising from Covid will not be ring-fenced from 2022-23, which means some of the Covid costs will just merge into the department’s ongoing activities. 

Another concern for the PAC is the fact the Treasury does not know precisely how much money has been lost to fraud and error. The Treasury said its increased investment in the detection and recovery of fraud, but the PAC argues that the government department hasn’t put a figure to “the expected return on investment”. 

The PAC is calling on the Treasury to write to the committee by the end of the financial year and confirm how much has been lost to fraud and how it expects to recover. 

The PAC has closely tracked the scale of projected Covid losses and recently grilled HMRC chief executive Jim Harra on the headlines that the Treasury has ‘written off’ billions lost to fraud and error. Harra retorted that “nothing has been written off”.

Replies (6)

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By Hugo Fair
24th Feb 2022 01:22

"Harra retorted that “nothing has been written off”."

Guess that depends on whether he's including reputations, careers and parliamentary seats?

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Replying to Hugo Fair:
By Tornado
24th Feb 2022 09:13

I think Harra takes us for idiots and we would not spot the word play. The full reply should have been -

"Harra retorted that “nothing has been written off ...... but it is expected that 20,000 million pounds will be"

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Replying to Tornado:
By RickyRoark
24th Feb 2022 11:51

With respect, anyone who takes anything that Jim Harra (or any politician) says at face value is an idiot for doing so.

Thanks (1)
By SteveHa
24th Feb 2022 09:12

Per the BBC:

But the Treasury rejected the claims in the report, saying that no fraudulent payments have been written off and the Taxpayer Protection Taskforce it has set up is expected to recover up to £1bn from fraudulent or incorrect payments.

So that's OK, then. Only £14 - £19 billion lost then.

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By Catherine Newman
24th Feb 2022 17:32

A client contacted me this week to say that he has realised that from what other people have said (my mate down the pub) he should have claimed the grants as it is free money and people he knows have bought equipment with the grants. I asked whether his contacts have agents. He doesn't know but he doesn't think they do.

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By tedbuck
28th Feb 2022 12:41

Perhaps there ought to be a levy on the salaries of the head honchos at the Treasury and HMRC to recover some of the money. See how amusing they thought it would be then.

The taxpayers have to pay for the errors which they make. Perhaps someone should do a FOI request to see how much they all cost and how much per taxpayer. You know that silly chart they put in people's letters. Perhaps there should be a section for HMRC's waste costs

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