Source · Select Committees · Public Accounts Committee
Recommendation 13
13
Accepted
DBT faces substantial challenges and high costs in recovering irregular COVID payments.
Conclusion
DBT told us that it is considering contacting the 40% of authorities that did not respond to its fraud and error survey, to understand what was happening locally.20 However, when we questioned witnesses on what more could be done to increase the level of losses recovered, they cited a number of challenges. DBT and HM Treasury emphasised that establishing whether payments were irregular is both “hard and expensive” due to limited data on the early payments, ambiguities in scheme design, ministerial promises to overlook some borderline local authority decisions taken at speed and the sheer number of payments involved.21 DBT pointed out there can be “legal questions about the ability to recoup money.” DBT gave us figures of £450 million to £500 million to carry out checks on every one of the 4.5 million payments. In relation to recovery once irregular payments have been identified, DBT said recovery as a percentage of identified fraud has been much lower than recovery as a percentage of identified error. Fraudulently-obtained payments were sometimes very quickly split into small amounts and moved to multiple other accounts. DBT observed that recovery of error would involve putting pressure on small businesses that might still be struggling.22
Government Response Summary
The government has accepted the finding, stating it has re-contacted all local authorities, streamlined recovery processes, introduced a pilot digital tool for viability assessment, and is fast-tracking fraud referrals for litigation. The department is also quantifying expected recoverable payments and costs with local authorities.
Government Response
Accepted
HM Government
Accepted
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.