Taxpayer exposed to long-term risk from COVID fraud

The Public Accounts Committee has published 'COVID-19 cost tracker update'. It expects that all Coronavirus state-backed schemes will cost at least £15bn in fraud and has exposed the taxpayer to "substantial, long-term financial risks".

The PAC explained that it used the National Audit Office's (NAO) COVID-19 cost tracker which it praised for producing a more transparent methodology for monitoring government expenditure. The report outlines concerns that HM Treasury and other government departments have neither learned how to monitor departmental expenditure nor how to prevent fraud in the future.

The Committee pointed out that the NAO estimates:

• Coronavirus Job Retention Scheme (CJRS), or furlough, alone is estimated to lose £5.3 billion to fraud and error.
• The measures are expected to cost a total of £370 billion over their lifetime, although as some measures will be spread over time, these are estimates.
• Elements of COVID-19 subvention would continue for many years, up to 10 years in the repayment term of the Bounce Back Loan Scheme (BBLS) and 20 years in the Cultural Recovery Fund.

The PAC conclusions and recommendations include:

• The COVID-19 cost tracker has increased transparency and helped hold the government to account for its funding commitments and spending to date.
  • Recommendation: As part of its Treasury Minute response, HM Treasury should explain how the strengths it identified from the cost tracker approach, including transparency and accessibility, can be applied to the presentation of other thematic areas of public spending. So far it has not done so.
• We are concerned that HM Treasury does not intend to adequately monitor and update the ongoing cost of COVID-19 to the taxpayer.
  • Recommendation: As part of its Treasury Minute response, HM Treasury should explain how, when, and which subsets of the data captured by the NAO in the COVID-19 cost tracker it will continue to update. This should also address how loan book commitments, including those made under the Culture Recovery Fund, and any associated liabilities, such as estimated write-off costs under the Bounce Back Loans Scheme, will be monitored.
• HM Treasury does not yet know how much money has been lost to fraud and error across the government’s response to COVID-19.
  • Recommendation: HM Treasury should write to the committee by the end of the financial year with its estimate of:
    • How much taxpayers’ money has been lost to fraud and error within schemes introduced in response to the pandemic.
    • How much it expects will be recovered for each pound it spends doing so.
• HM Treasury has not set out what lessons it has learnt from the government’s response to COVID-19 and how it will apply these in future.
  • Recommendation: HM Treasury should write to the committee by the end of the financial year setting out:
    • What it has learned from the government’s response to the COVID-19 pandemic.
    • What action it is taking to identify and collate learning from across government departments.

Dame Meg Hillier MP, chair of the Public Accounts Committee added that, "As the PAC has made clear across a series of reports on the costs of Covid, lack of preparedness and planning, combined with weaknesses in existing systems across Government, have 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 also felt that the NAO methodology has a serious role in future ongoing governmental projects, for example, achieving net-zero. 

Useful guides on this topic 

COVID-19: Coronavirus Job Retention Scheme (CJRS) from 1 November 2020 to 30 September 2021
What is CJRS? When does the CJRS apply? How to claim CJRS. How to calculate CJRS claim amounts.

COVID-19: Loan funding
COVID-19: different types of loan funding. All loan funding is repayable. 

COVID-related tax fraud costs us billions says PAC
The Parliamentary Accounts Committee (PAC) has published a report 'Fraud and Error', warning that government actions 'significantly increased' UK taxpayers' exposure to a loss of billions of pounds through fraud and error in administering Coronavirus support packages.

External links

Public Accounts Committee: COVID-19 cost tracker update

National Audit Office COVID-19 cost tracker