Source · Select Committees · Public Accounts Committee
Recommendation 3
3
The Department does not know whether grants distributed by local authorities on its behalf have...
Conclusion
The Department does not know whether grants distributed by local authorities on its behalf have benefited businesses, including those most in need of that funding. Although the Department set the eligibility criteria for grant schemes administered by local authorities, it delegated most grant decisions to them. The Department told us that pre-payment checks did not apply to all these schemes, and that ministers prioritised delivery of grants over faster post-payment assurance sampling work. However, with only 476 grants tested, the Department does not know where the vast majority of this £21.8 billion grant funding has gone, nor the eligibility of those in receipt of it. In the absence of more granular information, the assessment it has done is already indicative of ineligible businesses receiving grant funding, eligible businesses receiving a value of grant funding they were ineligible for, or most likely a combination of both. Fraud and error in these grant payments reduces the effectiveness of these schemes to achieve their objective of providing funds to support those businesses most in need. Recommendation: The Department should, alongside its Treasury Minute response, explain to the Committee how it is going to obtain greater assurance over the regularity and value for money of grant payments made on its behalf.
Government Response
Not Addressed
HM Government
Not Addressed
3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 Each scheme was developed in an emergency context in response to emerging variants, local and national restrictions/lockdowns. There has been an iterative approach to the grants schemes with each one getting stronger and more robust. 3.3 The lessons learnt form delivering the initial COVID-19 support grants is that greater assurance can be obtained through mandating pre-payment eligibility checks by local authorities, improved assurance sampling design, innovative data collection and management, as well as independent evaluation. Further information is included in the letter accompanying this recommendation. 3.4 Responsibility for checking that all grant awards were issued in a compliant manner and to eligible businesses rests with the local authority. It is a condition of BEIS grants to local authorities that they must take all reasonable and practicable steps to recover any payment made in fraud or error before BEIS becomes liable. See paragraph 2.4 above. 3.5 Grant award letters issued to local authorities on all COVID-19 business support schemes confirmed that the local authority was required to undertake appropriate and proportional assurance check on all grants issued to determine whether the funds were awarded to eligible businesses in a compliant manner. Each scheme has unique eligibility criteria to be checked.