Only 1% of £1.1bn lost in Covid business scheme recovered, report finds

theguardian.com:

Just 1% of the estimated £1.1bn lost from the government’s Covid business support programme in England as a result of fraud and error has been recovered so far, the public spending watchdog has said in a report urging ministers to learn lessons from the scheme.

The “overwhelming majority” of fraud and error occurred during the initial incarnation of the grant scheme launched in March 2020, which did not require prepayment checks, the National Audit Office (NAO) said in its report on the rushed-through efforts.

The total of £1.1bn lost in grants amounted to just under 5% of the total for the scheme, according to business department statistics. The latest figures of retrieved money, collated by the newly renamed Department for Business and Trade (DBT) and cited by the NAO, showed that only £11.4m of that has been recovered – 1% of the amount lost.

The report sets out the sheer speed at which the eight separate grant schemes for businesses, administered by local authorities, were developed and launched, noting that the business department was only asked by the Treasury in late February to examine how such a system might work.

The first version began from 11 March, with a second on 17 March. As early as 19 April, the report says, local authorities had made 484,000 payments totalling £6bn, more than 50% of the total handed out in what was the biggest such support programme beyond the furlough scheme.

Matters were not helped by a lack of any shared contingency plan between local and national government on how to support businesses in the event of an emergency, the NAO said, with councils generally only hearing about new schemes when they were announced publicly, at which point they were already dealing with queries from local