The government has failed to properly guard against fraud in its £ 47 billion Covid emergency loan program for small businesses, opening up to billions of pounds in losses, a dog said. keep.
The rebound loan program was launched in May 2020 and did not include a full credit check or identity check for small businesses applying for loans, said the National Audit Office, which monitors public sector spending. .
“The government has prioritized getting small business rebound loans quickly, but has failed to put in place adequate fraud prevention measures,” said Gareth Davies, Comptroller and Auditor General of the NAO. “One of the impacts of these decisions is evident in the high levels of estimated fraud. “
The government launched the program at the start of the pandemic to stop the small business collapse.
Businesses could borrow up to £ 50,000 or a maximum of 25% of their annual turnover from licensed banks. About a quarter of UK businesses have applied for the program, and 1.5 million rebound loans – which were 100% government guaranteed – worth £ 47 billion were made.
In March, the UK Department of Business, which ran the program through British Business Bank, a state lender, estimated that 37% of loans would go unpaid and 11% came from fraudulent claims.
A subsequent investigation by accounting firm PwC in October reduced the fraud rate to 7.5%, although the NAO said it had not had time to verify that estimate itself.
Other countries are also investigating the misuse of emergency loans issued during the pandemic.
Meg Hillier, Labor chair of the all-party public accounts committee, said the government had done too little to reduce “the colossal risks of fraud and error”.
“He is now focusing on collecting money from organized crime, but many small-scale fraudsters will have eluded him,” she added.
The business ministry said the loans and other aid had helped millions of businesses avoid laying off staff. “We are working closely with lenders and law enforcement authorities to minimize fraud and ensure that those who commit fraud suffer the consequences,” said a spokesperson.