Billions of pounds lost to Covid fraud and error under the Tories is unlikely to ever be recovered, a damning report has revealed.
Covid Counter Fraud Commissioner Tom Hayhoe found an eye-watering £10.9billion was lost to the taxpayer during the pandemic as fraudsters exploited Government schemes like ‘bounce-back’ loans, the Eat Out to Help Out and one-off grants.
Some £1.8billion had been clawed back but “much of the shortfall is now beyond recovery,” the report said. The £10.9billion bill is close to the cost of running the UK’s justice system. It could also fund free school meals for the UK’s 2.7 million eligible children for eight years.
Mr Hayhoe said the Government “paid too little attention to the risk of fraud” as it battled to contain the spread of the deadly virus. Schemes were rolled out with huge fraud risks and no early safeguards – costing the taxpayer millions.
Ministers also failed to recognise the risk that crooks would seek to line their own pockets. He said: “When the spirit of Dunkirk and the Blitz were evoked during COVID-19, the opportunism of the black marketeers like Dad’s Army’s Private Walker appeared to be forgotten.”
In a 110-page report, the Covid fraud tsar blamed weak accountability, bad quality data and poor contracting as he laid bare the scale of waste. The report said: “Of the estimated £10.9 billion lost to fraud and error from COVID-19 spending, £1.8 billion has been recovered. Much of the shortfall is now beyond recovery, but areas remain where investing in recovering money paid out incorrectly is worthwhile and work should continue.”
Recovering public cash is harder now that it would have been immediately afterwards, as evidence has degraded, stolen funds have been moved and the justice system is grappling with a backlog, making it hard to prioritise fraud cases. Ministers and decision-makers have also been replaced in many cases.
But Mr Hayhoe urged Government departments to press on with recovering cash, like the Department of Health which could claw back a potential £325million from the final eight of the 55 contested PPE contracts. It comes after the Government won a legal battle against PPE Medpro – a company linked to Baroness Michelle Mone.
The consortium, led by her husband Doug Barrowman, was ordered to repay over £121million for breaching a PPE contract to supply 25 million surgical gowns. The couple have denied wrongdoing.
But in other areas the money has been lost. An estimated £4.6million was detected in fraud and error at the Department for Environment, Farming and Rural Affairs (Defra) – with just £0.2million recovered. But the review said “there are no further opportunities for detection and recovery action that would offer good value for money, therefore its work is concluded”.
The Government must build in anti-fraud controls to crack down on those who seek to exploit a crisis, as the pandemic exposed gaps in the system, the report said. Ministers must not assume that everyone is acting in the public good and fraudsters must be reminded it is not a victimless crime, it added.
Chancellor Rachel Reeves said: “Leaving the front door wide open to fraud has cost the British taxpayer £10.9 billion — money that should have been funding our public services, supporting families, and strengthening our economy.
“We have started returning this money to the British people and we will leave no stone unturned in rooting out the fraudsters who profited from pandemic negligence.”
In September, the Chancellor tasked a hit squad with hunting down Covid fraudsters, with the power to fine offenders 100% of the value of the money they owe. Fraudulent claimants can also be blocked from becoming company directors and put them forward for criminal investigation.
Firms and individuals that wrongly claimed Covid cash were told to return the funds by December under a voluntary repayment scheme.
