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 …
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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 has so far only attempted to assess the extent of fraud and error in the initial three grant schemes administered in Spring 2020: the Small Business Grant Fund; Retail, Hospitality and Leisure Grant Fund; and the Local Authority Discretionary Grant Fund. The Department’s sample examined only 476 grants, representing 0.05% of grants paid out by number. The Department asserts that it is refining its estimate of fraud and error in this group by expanding its sample to nearly 5,000 grants, and that the second group of local authority administered grants would be an even larger sample of 12,000 grants. However, the Department has not yet started work on the second group and success with these larger samples relies on the capacity and willingness of local authorities to cooperate. We are concerned that local authorities have few incentives to do so given that all recovered funds are to be passed to the Department, and the limitations to the estimates of fraud and error make it challenging for the Department and local authorities to assess the time and resources required to recover these funds. Recommendation: The Department should write to the Committee by September 2022 setting out how it will obtain full cooperation from local authorities to allow it to calculate robust fraud and error estimates for all COVID-19 business support grants, milestones for achieving these calculations, and how this information is being used to focus recovery efforts. 6 Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020–21
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Government response AI summary
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.
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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 …
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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 billion21 of this funding, the 11 Qq 10, 13, 67, 72–77, 99–101; C&AG’s Report, page 134 12 Q 67; C&AG’s Report, page 130 13 Q 24 14 Qq 9, 17 15 C&AG’s Report, Introduction, page 130 16 C&AG’s Report, pages 130–133 17 Department for Business, Energy & Industrial Strategy, Annual report and accounts 2020–21, 25 November 2021, Accountability report, page 121 and Note 19, page 215; C&AG’s Report, page 133 18 Q 10; C&AG’s Report, page 132 19 If 11.15% implies a fraud loss of £4.9 billion, 7.5% would equate to approximately £3.3 billion 20 Q 67; C&AG’s Report, pages 130, 133–134 21 Department for Business, Energy & Industrial Strategy, Annual report and accounts 2020–21, 25 November 2021, Note 4.4, page 167: £10,824 million in 2019–20 plus £683 million in 2020–21 = £11,507 million or £11.5 billion 10 Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020–21 Department estimates 8.9%, or just over £1 billion, is lost to fraud and error.22 Again, this figure represents a central estimate in a range between £514 million (4.4%) and nearly £1.6 billion (13.4%).23 The Department told us that this was an estimate that it has low confidence in.24 In written evidence, the Institute of Chartered Accountants in England and Wales (ICAEW), a regulator of the accountancy and audit profession, believes there is a significant chance that this underestimates the level of fraud and error; however, it also considers that the Department has had sufficient time to collect the information it needs from local authorities and perform adequate checks to calculate a more accurate estimate.25 As a result of these material levels of fraud and erro
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Government response AI summary
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.
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HM Treasury