Recommendation 1

HM Government Not Addressed

1.1 The government agrees with the Committee’s recommendation. Recommendation implemented 1.2 The Department for Business, Energy & Industrial Strategy’s 2020-21 accounts were qualified due to estimated material levels of fraud and error in the initial COVID-19 grant schemes and the COVID-19 loan guarantee schemes. The estimates of fraud and error in the schemes remain highly uncertain and are being revised as more information becomes available. The Department for Business, Energy & Industrial Strategy (the department/BEIS) will publish revised estimates in its 2021-22 accounts. Financial Guarantees 1.3 Since the launch of the scheme, the department has been working alongside the British Business Bank to mitigate fraud risks in the Bounce Back Loan Scheme, working with lenders, law enforcement and other partners across government. At Spring Statement 2022 the Chancellor announced new funding which will lead to the doubling of the department’s enforcement capacity through the National Investigation Service (NATIS) and richer data to support work with lenders, who remain the first line of defence in catching potential fraudsters. Grants 1.4 From an allocation of £26.9 billion, £22.6 billion has been paid to businesses through over 4.5 million awards. Of the £4.3 billion difference, over £2 billion underspent has been returned by local authorities, with the balance expected in the coming months now that all schemes have closed. In addition, irregular payments have occurred. The initial estimate of which was included in the 2020-21 accounts, with a central point of 8.9%. Further details on the limitations of the estimate are included within the accounts. Over £4 million has been voluntarily repaid from large companies and debt recovery of irregular payments due to error, fraud, or non-compliance is underway. Full assurance work is underway and expected to be completed by the end of the calendar year with first estimates reflected in 22-23 accounts. Further information is included in the accompanying letter to recommendation 3.