Recommendation 3

HM Treasury does not yet know how much money has been lost to fraud and error across government’s response to COVID-19. Our previous work on government’s response to COVID-19 has revealed that the risk of fraud and error to public finances has risen substantially during the pandemic. As a result, government is likely to be exposed to significant financial risk. Some of the larger COVID-19 measures are likely to lose large sums of taxpayers’ money to fraud and error. For example, the Coronavirus Job Retention Scheme is estimated to lose £5.3 billion to fraud and error – equating to 8.7% of the funding distributed through the scheme. HM Treasury asserts that it has increased its investment in the detection and recovery of fraud and expects this to have a significant return. However, HM Treasury is not able to put a figure to the expected return on investment or the amount of fraud and error across the breadth of government’s response to COVID-19. Given that the increased risk of fraud and error could cost the taxpayer billions of pounds, it is crucial that HM Treasury can identify, estimate the volume of, and attempt to recover, funding that was distributed in error or through fraudulent claims. Recommendation: HM Treasury should write to the committee by the end of the financial year with its estimate of: • how much taxpayers’ money has been lost to fraud and error within schemes introduced in response to the pandemic; and • how much it expects will be recovered for each pound it spends doing so.