Source · Select Committees · Public Accounts Committee
Recommendation 17
17
We asked the Department if it was confident that enough was being done to tackle...
Conclusion
We asked the Department if it was confident that enough was being done to tackle medium and bottom-tier fraud, to ensure there is a sufficient deterrent for smaller-scale fraud. It recognised that deterrence is “important” and was “on their minds”. In such cases, the Department said that although criminal prosecution was unlikely, there were “personal consequences” for businesses who wish to take out credit in the future, or for company directors who may face disqualification by the Insolvency Service.42 We noted, however, that this might not be a sufficient deterrent effect for some individuals, such as fraudsters who have no interest in running a business or being a company director in the future.43 41 C&AG’s Report, paras 2.13, 2.15 42 Qq 65, 70, 83 43 Qq 87–89 Bounce Back Loans Scheme: Follow-up 15 2 Lessons learned Long-term impact of the Scheme
Government Response
Not Addressed
HM Government
Not Addressed
3: PAC conclusion: The Department has been complacent in preventing Scheme fraud and its prioritisation of ‘top tier’ fraudsters puts other government Schemes at risk. 3a: PAC recommendation: Next time the Department launches an emergency business support scheme, it should be explicit on the trade-offs and level of fraud it is prepared to tolerate from the outset. 3.1 The government agrees with the Committee’s recommendation. Recommendation implemented 3.2 The economic crisis brought about by the COVID-19 pandemic required an extraordinary response from government. The BBLS was devised to address the urgent cashflow needs of the UK’s smallest businesses. The department was clear at the outset that the scheme’s design would create a heightened vulnerability to fraud and there would be a significant risk of credit losses. The scheme was implemented under Ministerial Direction, and the exchange of letters that were published in June 2020 shows that these risks were acknowledged at the outset. 3.3 In the event of another crisis similar in scale to the COVID-19 pandemic, the government would again need to consider the trade-offs between the generosity and speed of a loan guarantee scheme, and the consequent risks for value for money. There is now increased Fraud and Financial Crime resource in the Bank. Additionally, the launch of the Public Sector Fraud Authority this year (announced in the Spring Statement) will further strengthen the ability of the government to manage and mitigate fraud risks, deal with vulnerabilities, and overall increase its counter fraud capacity and capability.