Taxpayers to pay billions in COVID fraud and errors
Fraud and error in public spending are estimated to cost the taxpayer up to £51.8 billion every year. Around £25 billion is outside the tax and benefits system, according to a report published by the Public Accounts Committee.
How could this happen?
For many areas of spending outside the tax and benefits system, there is still no formal measurement and limited capability to tackle fraud and error, risking large amounts of fraud and error being unidentified or untackled, said the PAC Fraud and Error report. Cabinet Office estimates this annual level of undetected fraud and error could cost the taxpayer up to £25 billion a year before COVID-19 schemes are considered.
The report said some early government support schemes failed to implement basic principles of effective fraud control, with the report expressing concern that departments are not required to consult with the Government’s Counter Fraud Function when designing new spending initiatives.
The Committee asked BEIS about plans to recover loans made as part of the Bounce Back Loan Scheme.
Dame Meg Hillier MP, Chair of the Committee, said a more robust approach to tackling fraud by the government was needed: “If BEIS is worried that 100% taxpayer loan guarantees mean the lending banks don’t have enough skin in the game, departments across government show a worrying, similar lack of urgency.”
“BEIS told us that in the first instance, it is the banks’ responsibility to manage recovery in line with their usual processes. BEIS explained that it is planning to work with the police to carry out criminal investigations, and pursue a civil recoveries programme.”