Government writes off £4.3bn in stolen Covid paymentsby
Almost £6bn in public money has been erroneously paid out in coronavirus support, and the government expects to recover just £1 in every £4 after admitting more than £4bn may have been lost to fraud.
The Treasury expects to recover just a quarter of the £5.8bn lost to fraud and error across multiple Covid support schemes.
It has revised down the amount it hopes to claw back by 2023, predicting only £1 of every £4 in support payments claimed by those who were not entitled will return to the public purse.
However, industry experts told AccountingWEB their warnings ahead of time fell on deaf ears as the government pressed ahead with inferior technology and outdated processes that played straight into the hands of fraudsters.
How much has been written off?
HMRC admitted it expects a maximum of £1.5bn will be returned by the end of the next financial year in a document intended to dispel “myths, misconceptions and inaccurate stories or claims” about its work.
It said an estimated £5.8bn in support grants was paid out to fraudsters via schemes including the Coronavirus Job Support Scheme (CJRS) and the self-employed income support scheme in 2020 and 2021.
The Treasury has written off approximately £4.3bn, despite creating an anti-fraud taskforce of around 1,200 employees dedicated to chasing down suspect claims paid out during the pandemic.
“Difficult to recover”
The £1.3bn to £1.5bn it anticipates recouping is significantly less than the £2.3bn HMRC permanent secretary Jim Harra said in November that his department predicted to hit. Harra was grilled by the Public Accounts Committee on Monday as MPs reacted to the scale of the projected losses.
“Nothing has been written off,” Harra told the PAC. He later added, “The [£4.3bn] figure is inaccurate,” as it is the product of an estimate, “but nevertheless, it is the case that a significant proportion of the amount lost to error and loss we suspect will be very difficult to recover.”
Harra explained that HMRC had fraudulent claims worth about £380m, prevented payment of a further £304m before it was made, and there was one payment that escaped the tax department worth £26m, which HMRC managed to stop in the bank account.
Last year, HMRC said the taskforce was expected to recover £1bn in fraudulent or incorrect claims over the next two years. At that point it had more than 23,000 investigations open. The CJRS, which ran from March 2020 to September 2021, enabled employers to claim some of the wages owed to employees who could not work their full contracted hours due to pandemic restrictions.
Stories of errors and clear fraud soon emerged, with unscrupulous businesses claiming furlough cash despite also having their employees working.
Shadow chief secretary to the Treasury Pat McFadden told MPs that the government’s target of recovering a fragment of the stolen funds was tantamount to “giving up easily”.
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