Recommendations & Conclusions
20 items
2
Recommendation
First Report - Department for Business,…
Not Addressed
The Department does not have a good enough assessment of the levels of fraud and error in local authority administered business support grants. During 2020– 21 and 2021–22 the Department has provided funds to local authorities to distribute to local businesses in their areas through nine grant schemes. The Department …
Government response. The government response discusses Électricité de France’s (EDF) strategies, plans, and the estimated costs of decommissioning, and doesn't address the recommendation to calculate fraud estimates.
HM Treasury
3
Conclusion
First Report - Department for Business,…
The Department does not know whether grants distributed by local authorities on its behalf have benefited businesses, including those most in need of that funding. Although the Department set the eligibility criteria for grant schemes administered by local authorities, it delegated most grant decisions to them. The Department told us …
Government response. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 Each scheme was developed in an emergency context in response to emerging variants, local and national restrictions/lockdowns. There has been an iterative approach to the grants schemes with each …
HM Treasury
4
Conclusion
First Report - Department for Business,…
The Department was aware of heightened fraud risks within its COVID-19 business support schemes from the outset but did not make full use of all the tools at its disposal to prevent and detect fraud. The Department expected that some potential recipients of funding for its COVID-19 business support schemes …
Government response. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The economic crisis brought about by the COVID-19 pandemic required an extraordinary response from government. The department was clear at the outset that the design of certain COVID-19 business …
HM Treasury
5
Conclusion
First Report - Department for Business,…
The Department has yet to set out how it is learning lessons from managing its COVID-19 business support schemes to better protect taxpayers’ money Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020–21 7 in future. The Department now has two years’ worth of experience designing, implementing, …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2022 5.2 The department continues to refine its estimates of the levels of fraud and error across its COVID-19 business support schemes, including the COVID-19 loan schemes and …
HM Treasury
6
Conclusion
First Report - Department for Business,…
The Post Office’s mismanagement of its Horizon programme has had devastating consequences for individuals wrongly accused of fraud. The financial cost of compensating these individuals will largely fall to the public purse. The Horizon accounting system erroneously recorded shortfalls of cash in local Post Office branches over its more than …
Government response. 6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 Over the past decade, the government has provided over £2.5 billion in funding to support the Post Office network. The government is providing a further £335 million for the …
HM Treasury
1
Conclusion
First Report - Department for Business,…
On the basis of a report by the Comptroller and Auditor General we took evidence from the Department for Business, Energy & Industrial Strategy (the Department) on its performance in 2020–21.1
Government response. 1.1 The government agrees with the Committee’s recommendation. Recommendation implemented 1.2 The Department for Business, Energy & Industrial Strategy’s 2020-21 accounts were qualified due to estimated material levels of fraud and error in the initial COVID-19 grant schemes and the …
HM Treasury
7
Conclusion
First Report - Department for Business,…
Not Addressed
In addition to its guaranteed loan schemes, the Department provided £21.8 billion in grant funding to local authorities to distribute to businesses in their areas. The Department set the eligibility criteria and provided guidance on grant making to local authorities.20 In the first three grant schemes, which account for £11.5 …
Government response. The government response discusses the Programme, committing to meet the indicative timeframe and recruit/retain skills, and manages short-term risks to value for money; it doesn't address the conclusion about grant funding.
HM Treasury
8
Conclusion
First Report - Department for Business,…
Of the £21.8 billion grant funding the Department provided to local authorities to distribute in their areas in 2020–21, the Department has so far attempted to assess the extent of fraud and error in only £11.5 billion of this funding, and through a sample of only 476 grants. This very …
Government response. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 2.2 The general principle applies that local authorities are responsible and accountable for the lawful use of funds under Section 151 of the Local Government Act 1972. …
HM Treasury
9
Conclusion
First Report - Department for Business,…
The success of these larger samples relies on the capacity and cooperation of local authorities to respond to the Department’s requests for information.34 The Department considers that it has not yet given local authorities the opportunity to do the necessary reconciliations, as it has been asking so much of them …
Government response. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 2.2 The general principle applies that local authorities are responsible and accountable for the lawful use of funds under Section 151 of the Local Government Act 1972. …
HM Treasury
10
Conclusion
First Report - Department for Business,…
Despite recognising these limitations and uncertainty in its current estimates, the Department does not believe that its grant funding has been subject to significant fraud.40 It suggests that fraud will ultimately range between 1% and 2%, which it would consider as ‘normal’ and consistent with its expectations.41 Conversely, it suggests …
Government response. 1.4 From an allocation of £26.9 billion, £22.6 billion has been paid to businesses through over 4.5 million awards. Of the £4.3 billion difference, over £2 billion underspent has been returned by local authorities, with the balance expected in the …
HM Treasury
11
Conclusion
First Report - Department for Business,…
Although the Department set eligibility criteria for grant schemes administered by local authorities, it delegated most grant decisions to them. The Department told us that it provided clear guidance to local authorities on recordkeeping requirements and the need to be able to reconcile payments for the purposes of audit.43 However, …
Government response. 3.4 Responsibility for checking that all grant awards were issued in a compliant manner and to eligible businesses rests with the local authority. It is a condition of BEIS grants to local authorities that they must take all reasonable and …
HM Treasury
12
Conclusion
First Report - Department for Business,…
Having sampled only 476 grants distributed by local authorities out of circa one million grants made, the Department therefore has very little visibility of which businesses have benefited from these schemes.45 It cannot say whether many businesses in receipt of grants were eligible, and whether those that were both eligible …
Government response. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 Each scheme was developed in an emergency context in response to emerging variants, local and national restrictions/lockdowns. There has been an iterative approach to the grants schemes with each …
HM Treasury
13
Conclusion
First Report - Department for Business,…
The Department was responsible for a substantial component of government’s overall financial response to the pandemic, resulting in the third-largest estimated lifetime costs of any department, as reported by the National Audit Office’s COVID-19 cost tracker.46 We have previously reported that government prioritised speed when designing and implementing measures to …
Government response. 4.2 The economic crisis brought about by the COVID-19 pandemic required an extraordinary response from government. The department was clear at the outset that the design of certain COVID-19 business support schemes, combined with the pace at which they were …
HM Treasury
14
Conclusion
First Report - Department for Business,…
Registrations of new companies on Companies House increased sharply during 2020–21. During the period 2015–16 to 2019–20, annual new company registrations averaged 640,000. By comparison, in 2020–21 there were more than 810,000, making new company registrations in that year more than 20% higher than in any of the preceding five.51 …
Government response. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The economic crisis brought about by the COVID-19 pandemic required an extraordinary response from government. The department was clear at the outset that the design of certain COVID-19 business …
HM Treasury
15
Conclusion
First Report - Department for Business,…
The Department launched its first COVID-19 business support scheme shortly after the first lockdown was announced on 23 March 2020. Since then, the Department has launched many more, and now has around two years’ worth of experience of designing, implementing, and managing its COVID-19 business support schemes.56 It has taken …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2022 5.2 The department continues to refine its estimates of the levels of fraud and error across its COVID-19 business support schemes, including the COVID-19 loan schemes and …
HM Treasury
16
Conclusion
First Report - Department for Business,…
As some COVID-19 business support schemes have increasingly become part of business as usual, the Department told us that, for example in relation to grants distributed by local authorities, its systems and methods are now approaching maturity. It considers it has improved its guidance to local authorities and refined its …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2022 5.2 The department continues to refine its estimates of the levels of fraud and error across its COVID-19 business support schemes, including the COVID-19 loan schemes and …
HM Treasury
17
Conclusion
First Report - Department for Business,…
The Department has commissioned evaluation of its business support schemes; however, it cautioned that it is proving challenging to separate the impact of various aspects of government’s overall support package which also included, for example the furlough scheme.61 Several of the Department’s major areas of expenditure in the coming years, …
Government response. 5.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2022 5.2 The department continues to refine its estimates of the levels of fraud and error across its COVID-19 business support schemes, including the COVID-19 loan schemes and …
HM Treasury
18
Conclusion
First Report - Department for Business,…
Between 1997 and 2000 the Post Office implemented a new IT system called Horizon. This system is now known to be responsible for accounting discrepancies that suggested, for example, shortfalls of cash in Post Office branches.62 At the time, the Post Office considered some of these shortfalls to be caused …
Government response. 6.4 The Horizon scandal has had a devastating impact on postmasters and their families. It is right that affected postmasters are properly compensated and, without government funding, the compensation would have been unaffordable to Post Office. To form part of …
HM Treasury
19
Conclusion
First Report - Department for Business,…
In December 2020 the Department wrote to the Post Office, noting that the number of applications to the Scheme was ‘…materially higher than expected resulting in a corresponding increase in possible scheme claims and costs…’ and that the Post Office considered ‘…any amount in excess of the original budget will …
Government response. 6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 Over the past decade, the government has provided over £2.5 billion in funding to support the Post Office network. The government is providing a further £335 million for the …
HM Treasury
20
Conclusion
First Report - Department for Business,…
The Department currently estimates that the scheme is likely to cost £153 million, of which £89 million is from the Post Office and £65 million is from the Department.65 The Department noted that its contribution was its current best estimate, and did not represent a hard and fast limit: should …
Government response. 6.1 The government agrees with the Committee’s recommendation. Recommendation implemented 6.2 Over the past decade, the government has provided over £2.5 billion in funding to support the Post Office network. The government is providing a further £335 million for the …
HM Treasury