Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Publish BBLS counter-fraud strategy and report on recovery results and expenditure
Recommendation
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 non-existent counter fraud function of its own at the time the scheme was designed, of two full-time staff. Subsequent Fraud Risk Assessments identified additional fraud risk indicators that weren’t considered at the point the scheme was launched. The Department told us key learning from Bounce Back Loan Scheme has been applied to the Recovery Loan Scheme, although this has fundamentally different features such as industry standard checks in place, and the lack of a 100% guarantee. The Department provided an update on the progress of the National Investigation Service (NATIS), which having been provided with £13.2 million funding, had recovered £5.8 million (which is 0.2% of the total estimated fraud and error for the COVID-19 business support schemes), made 58 arrests and had 558 open investigations at the time we took evidence. Recommendation 3: • The Department should publish its counter-fraud strategy straightaway and make maximum use of available resources, including lender data and lender audits, to target its activity where it can be most cost effective. • The Department should report back to the Committee with the updated results of the spend on counter fraud and the recovery results obtained compared to the level of estimated fraud.
Government Response Summary
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) to test additional recovery activities.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. Recommendation implemented The Department for Business and Trade has developed an overarching Bounce Back Loan Scheme (BBLS) Counter Fraud strategy which is driving an extensive programme of activity in DBT, BBB and wider delivery partners. DBT is considering whether a version of this should be made public in due course. The British Business Bank (BBB) publishes data on the COVID-19 debt schemes on a quarterly basis. This is a simultaneous publication inclusive of a full lender list and across the debt scheme portfolios. The most recent publication was made on 19 May 2023. The data points reported include the following information for each lender: • Life event values: This data provides an overview of the overall performance of each lender’s BBLS loan book, for each of the loan states (arrears, defaults, claimed or settled). • Suspected fraud analysis, including: i) drawn loan amount; ii) total values of suspected fraud; iii) value of claims where the lender has stated that the reason for the claim is due to fraud; and life event values for suspected fraud facilities (for example, suspected fraud for loans in arrears, in defaulted loans, in claimed loans or settled loans) Publication of this data is an important part of the government’s ongoing commitment to transparency in relation to the COVID-19 debt schemes. This work is supported by the Public Sector Fraud Authority, who have led the development of a sophisticated analytics programme to better understand the level and types of fraud committed against the scheme. The department has commissioned a series of pilots to test the case for additional recovery activities where wrongdoing is suspected, starting with an involuntary liquidation pilot, an enforcement pilot and a pilot involving a private debt management specialist. The department has already seen success from this programme of work and is planning the next steps which will be taken through our established governance mechanisms. In doing so, the department will consider the ongoing case for additional recovery action, including the value for money and any implications for available capacity in (for example) enforcement agencies.