LONDON - Fraud and error from a loan scheme to help businesses cope with the COVID-19 pandemic could cost the British taxpayer up to 27 billion pounds ($37 billion), on top of some 50 billion pounds a year lost to criminals and mistakes, a report said on Wednesday.
The Bounce Back Loan Scheme was launched in May last year to allow banks to quickly lend businesses up to 50,000 pounds with 100% state guarantee to help them cope with losses during national lockdowns.
But, the government’s business department (BEIS) estimates that between 35-60% of loans may not be repaid because of fraud or credit issues, amounting to up to 27 billion pounds, parliament's Public Accounts Committee (PAC) said in a report.
Meanwhile, fraud and error in the Universal Credit welfare payment system rose by 3.8 billion pounds to a record high of 5.5 billion pounds between April last year and March 2021.
The PAC said the COVID-19 losses came on top of government estimates of an annual cost of fraud and error of up to 51.8 billion pounds a year.
"The government knows it is losing over 26 billion pounds a year to fraud and error in the tax and benefits systems, but admits to another 25 billion pounds it can’t even detect," Meg Hillier, the committee chair said.
"That’s over 50 billion pounds worth of public services a year given away to fraudsters and by mistakes in payments - before the frightening losses racking up in our COVID-19 spending so far, and against the backdrop of a massive surge in need."
The government said their priority during the pandemic had been to act fast to help businesses and workers, and that the Bounce Back Loan Scheme had been designed to minimise fraud and thousands of false claims had been rejected.
"We won’t tolerate those who seek to defraud taxpayers and will take action against perpetrators, including through criminal prosecution," a spokesperson said.
($1 = 0.7234 pounds)
