Source · Select Committees · Public Accounts Committee
Recommendation 9
9
Accepted
Estimated £1.1 billion losses from grant scheme fraud and error, primarily in first cohort.
Recommendation
DBT currently estimates losses due to fraud and error from the grant schemes to be £1.1 billion. £985 million of this (or around 90%) is attributed to the first cohort. The much smaller estimates for the later schemes are still being refined; DBT told us that although the numbers may creep up slightly, the £1.1 billion total is expected to be pretty stable.13 6 C&AG’s Report, Figures 4, 5 and 6 7 Q 117; C&AG’s Report, para 1.6 and Figure 3 8 Qq 12, 19, 24–28, 32, 56 9 Qq 48, 98–99 10 Qq 79, 99 11 Q 79 12 C&AG’s Report, paras 1.5–1.6 13 Qq 13, 19 and 31; C&AG’s Report, para 2.16 10 Local authority administered COVID support schemes in England
Government Response Summary
The government agrees with the committee's recommendation and has implemented a review to improve recovery of irregular payments and improve value for money, including contacting local authorities, streamlining recovery processes, introducing a pilot digital tool, and fast-tracking referrals for litigation.
Government Response
Accepted
HM Government
Accepted
2. PAC conclusion: The Departments have been slow to take effective action to recover losses – three years since the Department for Business, Energy & Industrial Strategy introduced the schemes, less than 2% of the estimated £1.1 billion lost to error and fraud has been recovered. 2. PAC recommendation: The Department for Business and Trade and its non- executive directors (NED) should ensure that the current review of the approach to recovery is rigorous and takes a sufficiently broad view of the public interest, including in its terms of reference: • An assessment of the public value that can be achieved from pursuing these monies, including the deterrent effect of pursuing fraudsters and the impact on public confidence; • testing the Department’s previous assumptions and revisiting past conclusions; and • setting a figure for what it believes is recoverable and at what cost. 2.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2023 2.2 The planned non-executive directors (NED) review reported to the Committee has now been undertaken by the Chair of Department for Business and Trade (the department’s) Audit and Risk Assurance Committee. The review was undertaken during the period June through early September 2023 with findings now presented to the Permanent Secretary. 2.3 The review identified opportunities to improve recovery of irregular payments overall, including fraud payments, and improve value for money, with the following work underway to implement recommendations: • all local authorities have been re-contacted to request engagement, increasing the volume and accelerating the flow of irregular payments cases; • recovery processes have been streamlined with appropriately deployed skills and new resource allocated; • a pilot digital tool has been introduced to help assess viability of recovery from grant recipient businesses, ensuring recovery effort is focused on recoverable debt; and • fast-tracking referrals of actual and suspected fraud payments for litigation is ongoing. 2.4 The department is also working with local authorities to quantify the value of irregular payments that might reasonably be expected to be recovered and the associated cost of recovery.