Fraud and error in Covid job schemes ‘cost an estimated £4.5 billion’

Fraud and error in the government’s Covid job support schemes cost the taxpayer a staggering £4.5 billion, a new report by the public spending watchdog shows.

The National Audit Office said that while the pandemic measures protected jobs and businesses, the speed of design led to “significant levels of fraud and error”.

During nationwide lockdowns, the government’s furlough scheme made payments totalling almost £69 billion covering 11.7 million individual jobs.

The self-employment income support scheme also made grants worth over £28 billion to 2.9 million individuals.

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But the NAO criticised the government for not doing more to prevent mistakes and fraudulent claims, with large amounts “unlikely to be ever recovered”.

It said HMRC’s latest estimate for the total fraud and error in both schemes is estimated to be £4.5 billion – 4.6% of the total cost.

But even that estimate is subject to “considerable uncertainty”, auditors say, with the figures ranging from between £3.2 billion to £6.3 billion.

NAO chief Gareth Davies said the furlough and self-employed schemes prevented millions of job losses “but billions went to people whose incomes increased during the pandemic, and billions more was lost in fraud and error”.

He added: “The government must improve the way it estimates levels of fraud and error and allocate sufficient resources to tackle this issue.”

Labour’s deputy leader Angela Rayner said: “This Tory Government’s incompetence has led to an unacceptable waste of taxpayers’ money, leaving the door open for scammers with £4.5 billion lost to error and fraud.”

“The much-vaunted ‘Taxpayer Protection Taskforce’ missed its own targets, and there is now clear evidence of a shocking failure to claw back taxpayers’ money in even the most blatant of cases due to their poorly designed processes.

Meg Hillier, the Chair of the Public Accounts Committee, said that while the support schemes protected millions of people and businesses “billions of pounds were wasted through fraudulent claims and loose controls”.

A government spokesperson said: “We are not writing off any fraud from these schemes – our work to root out those who abused the system is ongoing.

“Meanwhile, we effectively minimised fraud from the start with compliance checks that did not unnecessarily delay payments when they were needed and further compliance activity undertaken by HMRC has secured and protected more than £1 billion.

“The NAO found that the employment support schemes achieved their primary aim of protecting jobs and businesses, with unemployment peaking at just 5.2%.”