Recommendations & Conclusions
24 items
2
Recommendation
Forty-Fifth Report - Department for Bus…
Accepted
The Department’s lack of curiosity surrounding lenders’ performance in the Bounce Back Loan Scheme increases the risk of losses for the taxpayer. The Bounce Back Loan Scheme was set up quickly, with limited requirements for what data lenders should collect and how it should be shared with government. In line …
Government response. The government agrees with the recommendation and is undertaking specific workstreams to improve data collection, reporting, robustness, and transparency for lender performance. This includes developing the lender portal, standardising data, improving analysis, and establishing better policies for future lending schemes.
HM Treasury
3
Recommendation
Forty-Fifth Report - Department for Bus…
Accepted
The Department continues to make slow progress on its counter fraud activities related to the Bounce Back Loan Scheme. The Department’s counter-fraud response on BBLS started too late. The Department did not liaise with the Cabinet Office counter fraud function until well after the scheme launched, and had a virtually …
Government response. The government agrees and states it has developed an overarching BBLS Counter Fraud strategy, is considering publishing it, and the British Business Bank already publishes relevant data quarterly. It has also commissioned specific pilots (involuntary liquidation, enforcement, debt management specialist) …
HM Treasury
4
Recommendation
Forty-Fifth Report - Department for Bus…
Accepted
The Department’s performance reporting in its annual report and accounts does not allow Parliament and the public to monitor progress towards its strategic priorities. The Department’s activities are wide-ranging, and it told us it has an ever-growing set of delivery obligations. It believes its complexity, and broad and diverse remit …
Government response. The government agrees and will report against SR21 metrics in the 2022-23 Annual Report and Accounts, providing more contextual information around metrics. It will also review best practice to include more graphical presentation for user-friendliness.
HM Treasury
5
Recommendation
Forty-Fifth Report - Department for Bus…
Accepted
It is not clear how the Department holds to account third parties that deliver multi-billion-pound programmes on its behalf. The Department stated that responsibility lies with the commercial bank lenders and local authorities and that it is the Department’s role to enable, support and challenge them. HM Treasury’s Managing Public …
Government response. The government agrees and states it uses designated Accounting Officers for public bodies, an Arm’s Length Body Review Programme, and Senior Responsible Officers for each scheme to ensure oversight and accountability. DBT is currently considering how to best manage future …
HM Treasury
6
Recommendation
Forty-Fifth Report - Department for Bus…
Rejected
Confidence in the Companies Register is undermined by errors and inaccuracies. Companies House, an executive agency of the Department, maintains the Register of Companies for England and Wales. The size of the register is growing, which the Department considers reflects international trends and entrepreneurial activity. However, false statements, fake entries, …
Government response. The government disagrees with the recommendation, stating that most errors are accidental and corrected before prosecution, and courts are reluctant to sanction compliant parties. It highlights the forthcoming Economic Crime and Corporate Transparency Bill which will reform Companies House's powers, …
HM Treasury
7
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
Victims of the Post Office Horizon scandal continue to suffer as they await compensation due. The Horizon accounting system erroneously recorded shortfalls of cash in local Post Office branches over its more than 20-year lifetime. The Post Office blamed many of these shortfalls on sub postmasters and sub postmistresses, despite …
Government response. The government agrees and provides detailed payment figures for both the Historical Shortfall Scheme (HSS) and overturned convictions as of 30 May 2023. It states 2,401 HSS offers have been issued totalling £98.7m (net) with 1,965 payments made totalling £67.7m, …
HM Treasury
1
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
On the basis of the Department’s 2021–22 Annual Report and Accounts, and the Comptroller and Auditor General’s report therein, we took evidence from the Department of Business, Energy and Industrial Strategy about its performance in 2021–22.1
Government response. The government states that Business, Energy and Industrial Strategy can conclude recovery is unrealistic for certain debts due to business cessation, poor value for money, or reputational risk. DBT has also commissioned a Non-Executive Director to review assurance, reconciliation, and …
HM Treasury
8
Conclusion
Forty-Fifth Report - Department for Bus…
Deferred
The Department estimated fraud and error levels of £985 million were contained in the £11.7 billion grant funding provided for the first wave of business support grant schemes (Small Business Grant Fund; Retail Hospitality and Leisure Grant Fund; and Local Authority Discretionary Grant Fund). The estimated fraud and error in …
Government response. The government agrees with the committee's observations but states that recovery of irregular payments for early grant schemes is largely unrealistic. It has initiated a review by a Non-Executive Director into ongoing assurance, reconciliation, and recovery activity, with a target …
HM Treasury
9
Conclusion
Forty-Fifth Report - Department for Bus…
Deferred
Of the £985 million estimate of fraud and error for the first wave of business support grant schemes, the Department has recovered £5.3 million through NATIS and local authorities.16 This represents 0.7% of the fraud and error estimate. The Department explained that it will further refine the fraud and error …
Government response. The government agrees with the committee's concern but states that recovery for many irregular payments is unrealistic due to various factors. It has initiated a review by a Non-Executive Director into assurance, reconciliation, and recovery activity, expected to conclude by …
HM Treasury
10
Conclusion
Forty-Fifth Report - Department for Bus…
Acknowledged
The Bounce Back Loan Scheme (BBLS) is the largest of the Covid-19 business support loan schemes, with 1.6 million loans approved, totalling £47.4 billion.19 BBLS gave the lender a full (100%) government-backed guarantee against the outstanding balance of the facility (both capital and interest).20 The British Business Bank, one of …
Government response. The government acknowledges the Department provided more than £38 billion for the Bounce Back Loans Scheme.
HM Treasury
11
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
Lenders self-report on performance within the British Business Bank’s portal, and the Department has published data on this performance as at 31 July 2022.22 The portal was designed for administering the guarantee rather than managing the loans.23 Due to lenders following their ‘business as usual’ procedures there is inconsistency in …
Government response. The government agrees with the committee and, despite rejecting the assertion of 'lack of curiosity,' is undertaking extensive work to improve outcomes. This includes developing the lender portal, standardising data, improving analysis, enhancing policies and procedures, piloting additional actions, and …
HM Treasury
12
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
The Department gathers information from the lenders in addition to the (notably limited) requirements in original agreements.25 We had also taken evidence from Natwest, HSBC, Starling Bank and Paragon Bank. The lenders told us that all information requested by the Department has been provided.26 However, the Department has not established …
Government response. The government agrees with the committee and is actively working to improve lender performance and information gathering. This includes developing the lender portal, standardising data definitions, improving analysis, and reviewing the range of data published to ensure a comprehensive understanding …
HM Treasury
13
Conclusion
Forty-Fifth Report - Department for Bus…
Acknowledged
The inadequacy of the Department’s initial fraud response on the Bounce Back Loan Scheme has been well documented, through our previous report28, and the most recent NAO report on this topic.29 This included the lack of initial liaison with the Cabinet Office, and the lack of an appropriate in-house counter …
Government response. The government agrees with the Committee's recommendation and highlights the development of a Bounce Back Loan Scheme (BBLS) Counter Fraud strategy, quarterly data publications on COVID-19 debt schemes, and a series of pilots to test the case for additional recovery …
HM Treasury
14
Conclusion
Forty-Fifth Report - Department for Bus…
Acknowledged
The Department has made progress in its fraud response. The Fraud Risk Assessment has been updated, although this identified additional fraud risks which were not considered at the point the scheme was launched.30 Notably, the Department told us about the improvements which have been made to the ongoing Recovery Loan …
Government response. The government agrees with the Committee's recommendation and highlights the development of a Bounce Back Loan Scheme (BBLS) Counter Fraud strategy, quarterly data publications on COVID-19 debt schemes, and a series of pilots to test the case for additional recovery …
HM Treasury
15
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
However, funding for counter fraud activities remains low, with limited recoveries being made. The Department’s National Investigation Service (NATIS), a law enforcement agency partnered with the Department since September 2020, has received £13.2m in funding. The Department told us that NATIS have 558 open investigations, recovered £5.8 million of irregular …
Government response. The government agrees with the committee's conclusion and states the recommendation is implemented. It has developed an overarching BBLS Counter Fraud strategy and is commissioning a series of pilots to test additional recovery activities for suspected wrongdoing, with plans for …
HM Treasury
16
Recommendation
Forty-Fifth Report - Department for Bus…
Accepted in Part
The National Audit Office recommended in December 2021 that the Department should produce a formal strategy, setting out the longer-term ambitions, objectives and metrics for the impact of successful counter-fraud actions; fraud risk appetite; and prioritisation of counter-fraud activities and resources based on cost-effectiveness.34 A formal strategy such as this …
Government response. The government states the recommendation is implemented, as the Department for Business and Trade has developed an overarching Bounce Back Loan Scheme Counter Fraud strategy and is considering making a version public. They also highlight ongoing data publication, PSFA support, …
HM Treasury
17
Conclusion
Forty-Fifth Report - Department for Bus…
Acknowledged
The Department is responsible for government’s business support grant schemes which have has provided local authorities with £25 billion of COVID-19 grant funding to allocate to eligible businesses since March 2020. Furthermore, the Department provided more than £38 billion for the Bounce Back Loans Scheme, operated by the British Business …
Government response. The government acknowledges the Department's responsibility for business support grant schemes and the Bounce Back Loans Scheme.
HM Treasury
18
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
The statement of AO’s responsibilities in the Department’s ARA outlines the Accounting Officer’s responsibility for the propriety and regularity of the finances allocated to them.36 This is reinforced through HM Treasury’s Managing Public Money 28 BEIS Annual Report & Accounts 2020–21 (parliament.uk) p6 29 The Bounce Back Loan Scheme: an …
Government response. The government agrees with the committee's conclusion and states the recommendation is implemented. It outlines how public bodies' Chief Executives are designated as Accounting Officers responsible for robust governance and financial management, and how DBT is considering future relationships and …
HM Treasury
19
Conclusion
Forty-Fifth Report - Department for Bus…
Not Addressed
In its written evidence, the Institute of Chartered Accountants in England and Wales (ICAEW) drew attention to the Department’s response to our previous report on the BEIS Annual Report and Accounts.38 The ICAEW told us that the Department’s response did not acknowledge its overall responsibility, and that of the Accounting …
Government response. The government agrees with the committee's point but does not explicitly acknowledge overall responsibility for fraud recovery linked to Covid schemes, instead detailing existing accountability structures via designated Accounting Officers and Senior Responsible Officers. It is considering how best to …
HM Treasury
20
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
The Companies House annual report and accounts continues to show an increase in the number of the companies registered. The Department considers this to be a reflection of wider international trends and increased entrepreneurial activity.41 However, the rise in registrations also increases the likelihood that the Companies House register contains …
Government response. The government disagrees with the committee's framing of the issue, particularly regarding 'fake entries,' but confirms and elaborates on its ongoing reforms through the Economic Crime and Corporate Transparency Bill. These reforms will strengthen Companies House's powers to improve transparency, …
HM Treasury
21
Conclusion
Forty-Fifth Report - Department for Bus…
Rejected
It has been an offence since 2009 to make a false return to Companies House, yet to date there is a record of just one conviction for this offence, in 2018. The Department was unable to confirm the number of prosecutions or convictions made under these existing powers.44 The Department …
Government response. The government disagrees with the Committee's implied criticism regarding the lack of convictions under existing powers, explaining that most errors are accidental and courts are reluctant to sanction subsequently-compliant offenders. However, it details new powers and reforms under the Economic …
HM Treasury
22
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
The Horizon IT system used by sub postmasters and subpostmistresses erroneously recorded shortfalls of cash in local Post Office branches over a 20-year period. The Post Office blamed many of the shortfalls on sub postmasters and sub postmistresses, despite it being the Horizon IT system was at fault. Post Office …
Government response. The government agrees with the Committee’s recommendation and has provided details of the total value of payments made to date and the proportion of the total payments that this represents, for both the Historical Shortfall and Historical Convictions schemes and …
HM Treasury
23
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
We drew the Department’s attention to media reports relating to individual cases where payments had not yet been made or where claimants had been forced to accept half of what they were entitled to; and asked the Department what they were doing about these cases.47 The Department stated that in …
Government response. The government agrees with the committee's conclusion and states the recommendation is implemented. It provides a detailed update on the significant progress in delivering compensation, including the number of offers and payments made under the Historical Shortfall Scheme and the …
HM Treasury
24
Conclusion
Forty-Fifth Report - Department for Bus…
Accepted
We asked whether the Department will in effect be funding the full bail out of the estimated compensation. The Department stated that of the estimated £150 million provided for the Historical Shortfall Scheme, £63.3 million will be funded by the Department and for the Overturned Historical Convictions Scheme, the Department …
Government response. The government agrees with the committee's conclusion and states the recommendation is implemented. It provides an update on the progress of compensation payments under both the Historical Shortfall Scheme and the Overturned Historical Convictions Scheme, detailing the number of offers …
HM Treasury