Billions lost to fraud and error during Covid likely to be lost 'forever'

08 March 2023 , 00:01

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Vital Covid support schemes cost £96billion - but billions were lost in fraud and error (Image: PA)

Billions of pounds in taxpayers' money lost to fraud and error during the Covid pandemic is likely to be gone "forever", a new report says.

Cross-party MPs claim HMRC's attempts to claw back some £2.3 billion incorrectly paid to employers claiming furlough has been "woeful".

They warn a decision to wind down the Taxpayer Protection Taskforce in 2024 "puts at risk" the recovery of money paid out as a result of fraud and error.

It claims HMRC has "taken little action to punish culprits".

Both the furlough scheme and the self-employed support programme introduced in 2020 cost the public purse over £96billion.

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The vital schemes covered millions of employers and almost 3million self-employed workers during the crisis.

The MPs' report states: "HMRC estimates indicate that between £2billion and £5.1 billion of error and fraud within the schemes is likely to remain unrecovered by 2023-24.

Chair of the Public Accounts Committee Meg Hillier (Handout)

"It would be unacceptable for HMRC to write-off such a large amount of taxpayer’s money. It must continue to tackle non-compliance on the schemes while it evidently remains cost-effective to do so."

The committee called on HMRC to "send a clear message on recovering fraud through its tax compliance activities and must urgently increase the rate of repayments from those who overclaimed".

Chair of the Committee Dame Meg Hillier said: “Bad actors in British business are running rings around the Revenue.

"Perhaps some of the same companies that were complaining about even the minimal levels of transparency over billions and billions that were paid out in order to save jobs in this country but are now just lost to the public purse, likely forever."

She added: "While money that genuinely saved jobs and households got out admirably quickly, the weak recovery effort will fail to deter potential future criminals.

"Too many companies claimed that shouldn't have and now won't give it back."

A government spokesperson said: “Without furlough, millions of people would have lost their jobs. We had to act quickly to prevent catastrophic increases in unemployment.

“These schemes limited fraud and error, without delaying payments for those in desperate need of them.

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"Over £1 billion has already been protected or recouped and we continue to root out those who abused the system.”

Ashley Cowburn