Source · Select Committees · Public Accounts Committee
Recommendation 2
2
The potential Scheme losses are eye-watering, and we are not convinced the Department has the...
Conclusion
The potential Scheme losses are eye-watering, and we are not convinced the Department has the data it needs to manage the risks to the taxpayer. The Department estimated in its 2020–21 Annual Report and Accounts that it would lose £17 billion as a result of the Scheme, of which £4.9 billion was because of fraud. We have seen similarly high levels of expected losses due to fraud in other Covid-19 business support schemes, with losses from fraud and error within the furlough and self-employment schemes estimated at £5.7 billion. This staggering amount of taxpayer money could have been spent on improving existing public services. The Department admits that fraud within the Scheme falls well outside what it would consider a tolerable level, although it cannot tell us what that level should be. Its fraud estimate does not include all potential types of fraud, such as suspected turnover inflation fraud to claim larger loans than a borrower is entitled to. To date, it has allocated just £32 million to countering fraud and does not know whether lenders or other stakeholders, including law enforcement agencies, have the resources they need to counter fraud. The Department reports its estimates of losses once each year and these have a high level of uncertainty. The Bank’s loan data from the 24 commercial lenders under the Scheme has data limitations as each lender categorises and reports data in a slightly different way. The Department is trying to improve its approach to quantifying losses in the Scheme, but it is almost two years since its launch. 6 Bounce Back Loans Scheme: Follow-up Recommendation: The Department should, within the next 3 months, develop a strategy setting out the increase needed in Scheme counter-fraud resources for all relevant government stakeholders to both reduce fraud levels to a tolerable level and to maximise recoveries. As part of its Treasury Minute response, the Department should explain how it intends to improve the accuracy and timeliness of
Government Response
Acknowledged
HM Government
Acknowledged
2023. This will reflect the revised costs for defueling/deconstruction and uncontracted liabilities. 2.3 As noted to the Committee, Électricité de France’s (EDF) strategies, plans and the estimated costs are scrutinised, challenged, and approved by the Non-NDA liabilities assurance team (NLA) under the terms of the revised funding agreement. EDF’s estimated costs of decommissioning is now to be presented as a range of costed scenarios reflecting risk and uncertainty and this is contractually updated on an annual basis. 2.4 EDF’s liabilities from 2020 onwards have utilised a new methodology based upon “top down” scenario evaluation specifically designed to improve understanding, make external scrutiny easier, and counter optimism bias. This has created a much wider range of costs (recognised in the liabilities numbers). HM Government’s Government Actuary Department (GAD) was involved in assessing this methodology.