Taxpayers are set to lose tens of billions of pounds because basic checks and controls were scrapped to rapidly introduce Covid-19 support schemes, the Commons’ public accounts committee said.
The government must try harder to recover the money with a “zero tolerance” approach and regular fraud risk assessments, MPs on the select committee said, criticising a “lack of urgency”.
The committee found that as much as £27 billion would be lost on the £46 billion bounce back loans scheme, which has a blanket state guarantee. Another £5.5 billion has already been lost to fraud and error under universal credit.
Local authorities have been responsible for several billions of pounds of Covid support, but with their budgets under pressure, they have “variable capacity to handle fraud”, the committee, which is chaired by Labour’s Dame Meg Hillier, said.
TaxWatch estimates that up to £7 billion of furlough has been illegally drawn. HM Revenue & Customs has launched 13,000 investigations into suspected Covid fraud.
The committee said that the government had “significantly increased” taxpayer exposure to fraud and error by dropping basic checks in the pandemic.
According to the Cabinet Office, in normal years fraud and error regularly cost the taxpayer more than £50 billion a year.