Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps he is taking to recover funds that have been lost to fraud related to covid-19 support schemes.

The Government has consistently stated that fraud is totally unacceptable, and we are taking action on multiple fronts to recover money lost to error and fraud and, where necessary, take legal action on those who have sought to exploit the COVID-19 support schemes.

It was right to establish the schemes quickly and in a way that they could be accessed easily by the millions who needed support. Given the unprecedented efforts that the Government has made to protect jobs and livelihoods during this pandemic, it would have been impossible to prevent all related fraud.

In designing the COVID-19 support schemes the Government followed the leading practice of the International Public Sector Fraud Forum on dealing with fraud in an emergency context. The dedicated Government Counter Fraud Function and Centre of Expertise re-prioritised its work to focus on COVID financial support schemes. It provided fraud risk assessment support, offered expert counter fraud advice and created data driven tools to Government Departments to help prevent, detect and recover fraud. The Fraud Function continues to offer post-event assurance support to Government Departments to find and fight fraud.

Robust measures were put in place to control error and fraud in COVID-19 support schemes from their inception. For instance, to minimise the risk of fraud and error and unverified claims, the Coronavirus Job Retention Scheme and Self-Employment Income Support Scheme were designed around existing data held on HMRC’s systems.

To further bolster anti-fraud measures on HMRC-delivered COVID-19 support schemes, at the Spring Budget last year, the Government invested more than £100 million in a Taxpayer Protection Taskforce of more than 1,200 HMRC staff to combat COVID-19-related fraud. This Taskforce is expected to recover between £800 million and £1 billion from fraudulent or incorrect payments during 2021-22 and 2022-23. In addition, HMRC has so far stopped or recovered £743 million of overclaimed grants in 2020/21.

In respect of the Bounce Back Loan Scheme, the Government continues to work closely with the British Business Bank, lenders and enforcement agencies to tackle fraud and to recover as many fraudulent loans as possible. This is on top of the £2.2 billion worth of fraudulent applications that were prevented by upfront checks.

As part of the Spring Budget last year, we announced plans to significantly strengthen enforcement activity against fraudulent Bounce Back Loans, including new powers for the Insolvency Service to tackle rogue directors and investing in the National Investigation Service to investigate serious fraud.

For local authority-administered business grants, local authorities are responsible for ensuring the safe administration of grants and that appropriate measures are put in place to mitigate against the increased risks of both fraud and payment error. Guidance for the grant schemes requires that local authorities have assurance plans in place which set out the steps they would take to minimise fraud. Government has mandated pre-payment checks (company and bank account searches) as well as post-event assurance, and a Fraud Risk Assessment.

Where grants have been paid in error, non-compliantly or to a fraudster, local authorities must seek to recover these funds and return them to BEIS. If local authorities have been unable to reclaim the grant, the case may be referred to BEIS under the Debt Recovery Policy to establish the next steps.