Recommendation 39

The NAO report found that previous attempts by MHCLG to accelerate remediation resulted in it relaxing some of its safeguards and the taxpayer being exposed to an increased risk of fraud. This included moving from making payments in arrears to making up–front payments of between 30% and 80%.65 We asked MHCLG whether it should have been obvious that relaxing funding criteria as dramatically as it did in 2020 would lead to increased fraud, noting that one potential loss of over £500,000 had already been identified. MHCLG told us that the priority for the early schemes had been to get funding out as quickly. It stressed that the system was never without checks at all, and that there were, for example, checks by experts around the scope of the work. It explained that it had made a series of changes over the last few years in response to a fraud risk assessment by the Government Internal Audit Agency, including benchmarking costs and a reduction in single–tender actions.66