Recommendation 11

We examined fraud and error across government in 2021. We found that government had introduced many vital support schemes in response to the pandemic, but that these had substantially increased the risk of fraud and error to public finances and the taxpayer was expected to lose billions of pounds as a result. Between April 2020 and March 2021, fraud within Universal Credit rose to an all-time high of 14.5%. At the time of our previous evidence session, BEIS estimated that between 35% and 60% of loans issued through the Bounce Back Loan Scheme may not be repaid.25 HM Revenue & Customs (HMRC), the Department for Work & Pensions (DWP), and the Department for Business, Energy & Industrial Strategy (BEIS) are responsible for some of the schemes we identified as having the highest risk of fraud and error. Since our report in June 2021, all three departments have published their annual report and accounts for 2020–21, which provide an updated position on the estimated fraud against some of the largest COVID-19 measures. These show that at the end of March 2021, these three departments expected to lose £15.7 billion as a result of fraud and error within COVID-19 support schemes, with their estimated total losses ranging between £12.4 billion and £20.1 billion.26 Department and scheme Estimated loss from COVID-19 support schemes Lower estimate Central estimate Upper estimate (£ millions) (£ millions) (£ millions) Department for Work & 3,850 Pensions & Universal Credit HM Revenue & Customs & 4,065 5,279 7,281 Coronavirus Job Retention Scheme HM Revenue & Customs & 355 493 631 Self-Employment Income Support Scheme HM Revenue & Customs & 43 71 99 Eat Out to Help Out Business, Energy & Industrial 3,615 4,944 6,725 Strategy & Bounce Back Loan Scheme Business, Energy & Industrial 514 1,038 1,562 Strategy & Local Authority Grant Scheme (figures do not include all local authority grant schemes) Total 12,442 15,675 20,148