Recommendation 23

Between March 2020 and March 2022, local authorities distributed COVID-19 grants costing £22.6 billion via 4.5 million payments to businesses. By October 2022, the Department for Business, Energy & Industrial Strategy (BEIS) estimated that error and fraud across all the COVID-19 grant schemes was in the region of £1.1 billion (just under 5% of the value of grants paid to businesses). BEIS required local authorities to 65 Q 37; C&AG‘s Report, para 1.18 66 C&AG’s Report, Figure 5 67 Qq 20, 33 68 Qq 37–38; C&AG’s Report, Figures 1 and 5 69 C&AG’s Report, para 1.18, 3.11 and Figure 5 70 Qq 83, 86 71 C&AG’s Report, Departmental Overview 2019–20: Ministry of Housing, Communities & Local Government, January 2021 72 C&AG’s Report, Tackling fraud and corruption against government, Session 2022–23, HC 1199, 30 March 2023 Tackling fraud and corruption against government 17 pursue any losses from error and fraud they identify arising from payments. However as all recovered monies must be paid back to central government, local authorities have had no financial incentive to identify losses beyond those contained within the BEIS-directed samples used to derive the estimates of error and fraud losses73 Only about 2% of the fraud and error losses, £21 million, had been recovered when we took evidence in May.74 Local authorities are also under considerable pressure to complete their audits. Only 9% of local government bodies received audited accounts for 2020–21 by the extended statutory publication deadline of 30 September 2021 and 12% received audited accounts for 2021–22 by the statutory deadline of 30 November 2022. Against such a background, we asked HM Treasury whether PSFA should be given a wider remit to also cover the management of fraud across local government.75