Source · Select Committees · Public Accounts Committee
Sixty-Eighth Report - Local authority administered COVID support schemes in England
Public Accounts Committee
HC 1234
Published 6 September 2023
Recommendations
5
Acknowledged
Set out evaluation conclusions and capture pandemic business support lessons for future policy.
Recommendation
We do not yet know the impact achieved by the £22.6 billion provided to businesses, or how much money was spent that might not have been needed. Government set up grant schemes knowing that they would provide too much to …
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Government Response Summary
The government agrees with the recommendation but provides no specific details on what DBT has concluded from the Ipsos evaluation or HM Treasury's plans to capture lessons from pandemic business support.
HM Treasury
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9
Accepted
Estimated £1.1 billion losses from grant scheme fraud and error, primarily in first cohort.
Recommendation
DBT currently estimates losses due to fraud and error from the grant schemes to be £1.1 billion. £985 million of this (or around 90%) is attributed to the first cohort. The much smaller estimates for the later schemes are still …
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Government Response Summary
The government agrees with the committee's recommendation and has implemented a review to improve recovery of irregular payments and improve value for money, including contacting local authorities, streamlining recovery processes, introducing a pilot digital tool, and fast-tracking referrals for litigation.
HM Treasury
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Conclusions (25)
2
Conclusion
Accepted
The Departments have been slow to take effective action to recover losses – three years since the Department for Business, Energy & Industrial Strategy introduced the schemes, less than 2% of the estimated £1.1 billion lost to error and fraud has been recovered. In May 2023, DBT told us it …
Government Response Summary
The government agrees. A review has been undertaken by the DBT's Audit and Risk Assurance Committee Chair, with findings presented. Work is underway to implement recommendations, including re-contacting local authorities, streamlining recovery processes, piloting a digital tool for viability assessment, and fast-tracking fraud referrals for litigation.
3
Conclusion
Acknowledged
Central government’s distance from the practical realities on the ground meant confusion, delays and uncertainty for small businesses and local authorities. Business, local authorities and MPs all experienced at times a lack of clarity about precisely which businesses were covered by which schemes, and experienced delays when seeking clarification from …
Government Response Summary
The government agrees with the recommendation to improve understanding of small businesses and strengthen feedback mechanisms, but provides no specific actions or plans on how this will be achieved.
4
Conclusion
Accepted
The Department for Business and Trade needs to build on the progress made during the pandemic in developing the approach to the oversight of grants. BEIS responded to the initial and multiplying pressures on the administration of the schemes as the pandemic unfolded by commissioning a review of its management …
Government Response Summary
The government agrees and has created a new Grant Delivery Directorate (GDD) in DBT to ensure a consistent, best-in-class approach to grant management, including fraud prevention. Lessons learned will be shared through the Cabinet Office Grant Champions Forum and the upcoming Ipsos C19 evaluation report, with guidance implemented for future schemes.
6
Conclusion
Acknowledged
The government did not have in place a plan for how it would provide support to businesses during a national emergency like the pandemic. At the time the pandemic started there were no contingency plans in place between central and local government on how to provide support to businesses. HM …
Government Response Summary
The government agrees and states it is currently drafting guidance and will consider recommendations from pending reports when planning future schemes. It will also seek to enhance its understanding of local government system capabilities through ongoing collaboration.
1
Conclusion
Rejected
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Business and Trade (the Department) and HM Treasury about local authority-administered COVID-19 grants for businesses in England.2
Government Response Summary
The government explicitly disagrees with the committee's recommendation, stating that a single precise definition for basic control in national emergencies is not appropriate given the varied nature of such events.
7
Conclusion
Rejected
We pressed witnesses about the absence of basic controls in the early schemes, and the level of consideration that had been given to how quickly these controls could have been put in place.9 DBT told us that the level of speed involved was “almost inconceivable”, but accepted that early in …
Government Response Summary
The government rejects the committee's implied recommendation for a single definition of basic controls in emergencies, arguing that HMT adapts controls proportionately and that existing spending frameworks provide sufficient flexibility while retaining accounting officers' responsibilities.
8
Conclusion
Not Addressed
Three schemes announced in March and May 2020 made up the first cohort of grants, linked to the first national lockdown. The three schemes of the second cohort were announced in the second half of 2020, in response to the local and national lockdowns responding to the second wave of …
Government Response Summary
The government response restates the introduction from the Committee report and provides general information about the COVID-19 grant schemes but does not engage with any specific recommendation.
10
Conclusion
Accepted
DBT explained that the government did not issue local authorities with guidelines for undertaking debt recovery until December 2020.14 In March 2021 work started on checking a sample of payments from the first set of schemes. This work took until May 2022.15 DBT told us the recovery of losses to …
Government Response Summary
The government agrees and details actions underway by December 2023 to improve recovery of irregular payments, including re-contacting local authorities, streamlining processes, introducing a pilot digital tool to assess recovery viability, and fast-tracking fraud referrals for litigation.
11
Conclusion
Accepted
DBT does not have definitive figures on the split between fraud and error within the schemes. DBT told us the number of payments classified as fraud by local authorities were 8% of the total number of recovered payments it is aware of from local authority reporting, and 15% by number …
Government Response Summary
The government has accepted the finding, outlining actions taken to improve recovery of irregular payments, such as re-contacting local authorities, streamlining processes, implementing a pilot digital tool, and fast-tracking fraud referrals. The department is also working with local authorities to quantify recoverable payments and costs.
12
Conclusion
Accepted
DBT told us that by May 2023 £20.9 million of losses had been recovered to date; this is around 2% of the £1.1 billion. We heard that £15 million had been recovered by local authorities and £6 million had been repaid to government voluntarily by large businesses. DBT also said …
Government Response Summary
The government agrees and details actions underway by December 2023 to improve recovery of irregular payments, including re-contacting local authorities, streamlining processes, introducing a pilot digital tool to assess recovery viability, and fast-tracking fraud referrals for litigation.
13
Conclusion
Accepted
DBT told us that it is considering contacting the 40% of authorities that did not respond to its fraud and error survey, to understand what was happening locally.20 However, when we questioned witnesses on what more could be done to increase the level of losses recovered, they cited a number …
Government Response Summary
The government has accepted the finding, stating it has re-contacted all local authorities, streamlined recovery processes, introduced a pilot digital tool for viability assessment, and is fast-tracking fraud referrals for litigation. The department is also quantifying expected recoverable payments and costs with local authorities.
14
Conclusion
Accepted
Despite these arguments, DBT and HM Treasury also sought to reassure us that the government was serious about pursuing fraud.23 When pressed by us, DBT said it would reconsider the possibility of allowing local authorities to keep a proportion of 14 Qq 32, 36 15 C&AG’s Report, para 2.21 16 …
Government Response Summary
The government has accepted the finding, stating it has re-contacted all local authorities, streamlined recovery processes, introduced a pilot digital tool for viability assessment, and is fast-tracking fraud referrals for litigation. The department is also quantifying expected recoverable payments and costs with local authorities.
15
Conclusion
Accepted
The LGA informed us that local government had little or no input into the government’s work on the design of the grant schemes up to the point of the initial announcements.26 DBT told us many of the early grants were paid automatically using business rates data held by local authorities.27 …
Government Response Summary
The government will write to the Committee by Spring 2024, detailing proposals to improve understanding of small businesses across sectors and strengthen mechanisms for receiving and acting on their feedback.
16
Conclusion
Accepted in Part
Another source of error acknowledged by HM Treasury was that not every authority had automated systems in place from the start that could prevent duplicate payments. Many local authorities were relying on data and systems which could not be used to easily identify which businesses were eligible for grants. Local …
Government Response Summary
The government accepts the recommendation with a target implementation date of Spring 2024, committing to account for evaluation findings and anticipated guidance when planning future schemes and contingencies. It will also enhance understanding of local government system capabilities through collaborative working when considering future scheme delivery options.
17
Conclusion
Accepted
There were also consequences arising from insufficiently granular knowledge about small businesses within the departments. We asked officials about the way that scheme designs and initial versions of guidance were unable to provide clarity about whether or how a range of business types were covered.31 This lack of clarity prompted …
Government Response Summary
The government will write to the Committee by Spring 2024, detailing proposals to improve understanding of small businesses across sectors and strengthen mechanisms for receiving and acting on their feedback.
18
Conclusion
Accepted
We were pleased to hear from DBT that the connection between policy and delivery within the department has been strengthened, and feedback from local authorities is 24 Qq 67, 72 25 Qq 22, 107–112; Letter to the Chair of the Public Accounts Committee from Gareth Davies, Permanent Secretary, Department for …
Government Response Summary
The government confirms the recommendation is implemented, highlighting the creation of the new Grant Delivery Directorate (GDD) to centralise and oversee grant schemes, aiming for a consistent approach, protection of public money, and value for money. The GDD will also facilitate sharing best practices and lessons learned across government.
19
Conclusion
Rejected
The first wave of grant schemes in spring 2020 were largely untargeted. They account for around half of the £22.6 billion eventually provided to businesses under these schemes over the pandemic.38 HM Treasury told us the amount paid out in the first wave was very large; it was fiscally very …
Government Response Summary
The government rejects the committee's implied recommendation, stating that a single precise definition for the basic level of control in national emergencies is inappropriate due to varying circumstances. It affirms that established spending frameworks apply, with Accounting Officers responsible for expenditure, but flexibility is necessary to tailor responses to specific emergencies.
20
Conclusion
Accepted
BEIS conducted a review of COVID-19 business grant delivery in early 2021 and then acted to increase capacity and capability within the department.43 There were improvements within the life of the COVID-19 business grants. Later stage grants were more targeted than the first grants while also being deliverable; DBT told …
Government Response Summary
The government states the recommendation is implemented, having created a new Grant Delivery Directorate (GDD) within DBT to centralise and improve the design, development, and delivery of all new grant schemes, ensuring consistent protection of public money and fraud combat.
21
Conclusion
Accepted
When we asked about the current situation, DBT told us it now has a specialist business grants and investment directorate of 120 people with 30 working on grants, which it describes as a centre of excellence. It highlighted that members of the grants team have extensive experience in delivering grant …
Government Response Summary
The government confirms the recommendation is implemented, stating DBT has established a new Grant Delivery Directorate to centralise and oversee the design, development, and delivery of all new DBT Grant Schemes. This directorate aims to protect public money, combat fraud, and ensure value for money, while sharing best practices.
22
Conclusion
Accepted
HM Treasury told us Ministers’ goals for the business grant schemes were to ensure sure that businesses could survive the pandemic and people stayed in employment for longer.49 We heard how civil servants in HM Treasury and BEIS (now DBT) made significant efforts to support these goals in difficult circumstances, …
Government Response Summary
The government agrees with the finding and commits to publishing the delayed Ipsos evaluation report in late November 2023, after Office of National Statistics clearance. DBT will write to the Committee following publication to set out its conclusions from the evaluation.
23
Conclusion
Accepted
HM Treasury acknowledged that it still does not know how well the government’s goals were met and what was achieved for the money spent. It told us it wanted to answer the question of “whether this was the right thing to do”: whether the schemes met their objectives and the …
Government Response Summary
The government agrees with the finding and commits to publishing the delayed Ipsos evaluation report in late November 2023, after Office of National Statistics clearance. DBT will write to the Committee following publication to set out its conclusions from the evaluation.
24
Conclusion
Deferred
The requests made by BEIS officials for Ministerial Directions to proceed with the early grants schemes made reference to the Department’s inability to predict their impact in advance or construct a business case to normal standards. In particular, they referred to the possibility that some funding might be provided to …
Government Response Summary
The government will publish the Ipsos evaluation report in late November 2023 and will subsequently write to the Committee to set out its conclusions from the evaluation, deferring the detailing of lessons learned until after the report's release.
25
Conclusion
Accepted
When the pandemic started, the government did not have contingency plans for the country-wide emergency business support schemes of the kind that it quickly decided were needed.59 HM Treasury told us that there had not been advance planning for a national lockdown. DBT said frankly that the scale and speed …
Government Response Summary
The government agrees with the finding and commits to considering IPSOS evaluation findings, anticipated guidance from Cabinet Office and HM Treasury, and recommendations from NAO and GGMF reports when planning future schemes and contingencies by Spring 2024. DBT will also enhance understanding of local government capabilities.
26
Conclusion
Accepted
The absence of contingency plans contributed to the scramble at the start of the pandemic, with knock-on effects much further down the line. HM Treasury told us that it had to create a function to pay business grants from scratch within around 10 working days and linked this to the …
Government Response Summary
The government agrees with the finding and commits to considering IPSOS evaluation findings, anticipated guidance from Cabinet Office and HM Treasury, and recommendations from NAO and GGMF reports when planning future schemes and contingencies by Spring 2024. DBT will also enhance understanding of local government capabilities.
27
Conclusion
Accepted
Focusing on the future, we were keen to understand whether the lessons learned from the pandemic were being turned into plans that could be safely stored and, if necessary, taken off the shelf to help in a future emergency.66 This committee has commented before on the impact that staff turnover …
Government Response Summary
The government will incorporate IPSOS evaluation findings and anticipated guidance into future scheme planning and contingencies. It will also consider recommendations from pending NAO and GGMF reports and enhance understanding of local government capabilities for future delivery models.