Friday, December 03, 2021
Government incompetence lost billions of pounds in public money again
As if it were not bad enough that the government wasted billions of pounds of public money on buying useless PPE and giving contracts to a dodgy VIP list, the Guardian reveals that this may just be the tip of a large iceberg in which administrative incompetence saw fraudsters cream off even more cash.
The paper quotes a National Audit Office report which has identified that the government failed to guard properly against fraud in its £47bn Covid emergency lending programme for small businesses, opening itself up to billions of pounds of losses. The NAO says that the bounce-back loan scheme launched in May 2020 did not include credit checks or fully verify the identity of small businesses applying for loans:
“Government prioritised getting bounce-back loans to small businesses quickly but failed to put adequate fraud prevention measures in place,” said Gareth Davies, the NAO’s comptroller and auditor general. “One impact of these decisions is apparent in the high levels of estimated fraud.”
The government launched the scheme at the start of the pandemic to stop the collapse of small businesses.
Firms could borrow up to £50,000 or or a maximum of 25% of annual turnover from accredited banks. About a quarter of UK businesses applied to the scheme, and 1.5m bounce-back loans – which were 100% guaranteed by the government – worth £47bn were made.
In March, Britain’s business ministry, which ran the programme via the British Business Bank, a state lender, estimated that 37% of the loans would not be repaid and that 11% came from fraudulent applications.
A subsequent investigation by the accountancy firm PwC in October revised the fraud rate down to 7.5%, although the NAO said it had not had time to check this estimate itself.
Other countries are also investigating the misuse of emergency loans issued during the pandemic.
The government is now focusing on recovering money from organised crime, yet many of the smaller-scale fraudsters will have slipped through its fingers.
The paper quotes a National Audit Office report which has identified that the government failed to guard properly against fraud in its £47bn Covid emergency lending programme for small businesses, opening itself up to billions of pounds of losses. The NAO says that the bounce-back loan scheme launched in May 2020 did not include credit checks or fully verify the identity of small businesses applying for loans:
“Government prioritised getting bounce-back loans to small businesses quickly but failed to put adequate fraud prevention measures in place,” said Gareth Davies, the NAO’s comptroller and auditor general. “One impact of these decisions is apparent in the high levels of estimated fraud.”
The government launched the scheme at the start of the pandemic to stop the collapse of small businesses.
Firms could borrow up to £50,000 or or a maximum of 25% of annual turnover from accredited banks. About a quarter of UK businesses applied to the scheme, and 1.5m bounce-back loans – which were 100% guaranteed by the government – worth £47bn were made.
In March, Britain’s business ministry, which ran the programme via the British Business Bank, a state lender, estimated that 37% of the loans would not be repaid and that 11% came from fraudulent applications.
A subsequent investigation by the accountancy firm PwC in October revised the fraud rate down to 7.5%, although the NAO said it had not had time to check this estimate itself.
Other countries are also investigating the misuse of emergency loans issued during the pandemic.
The government is now focusing on recovering money from organised crime, yet many of the smaller-scale fraudsters will have slipped through its fingers.
