Planning & Budgeting

“Billions of pounds” of taxpayers’ money lost to Covid-19 fraud

· 3 min read

MPs in the UK have warned that the hasty rollout of government support schemes to curb the harsh economic impact of the COVID-19 crisis may have led to the loss of billions of pounds of taxpayers' money. 

MPs in the UK have warned that the hasty rollout of government support schemes to curb the harsh economic impact of the COVID-19 crisis may have led to the loss of billions of pounds of taxpayers' money. 

The swift spread of the virus at its peak did not give the government adequate time to plan for effective resource allocation. Instead, it forced them to take quick action in the least amount of time possible to sustain millions of employers who were struggling to make ends meet, thanks to strict nationwide lockdown regulations. 

Many of these schemes have supported millions of people over the past few months. For example, the furlough scheme, which was introduced in March, was designed to ensure that employers affected by the pandemic could continue to pay their workers 80% of their wages. Over 1.2 million employers availed themselves of this scheme, to protect the livelihoods of 9.6 million workers.   

Another scheme, the Bounce Back Scheme, which provided emergency loans to small businesses to help them keep afloat during the coronavirus crisis, allowed eligible businesses to claim up to £50,000 in government support, which would be interest-free for one year. 

Though well-intentioned, the speed at which applications for these schemes needed to be approved meant compromising on the quality of fraud checks and identity verification, which has led to an alarming increase in fraud.

A recent report by Her Majesty’s Revenue and Customs (HRMC) estimated that 10% of the money delivered in mid-August was issued fraudulently or erroneously, which the Commons Public Accounts Committee raised concerns about. HMRC have also said revenue collected through compliance work for the upcoming tax year has reduced by 51% and that this amount will never be recovered.

Committee Chair Meg Hillier said that the government should have been better prepared because pandemics had been present on the national risk register long before the coronavirus hit the UK. She added that the surprising lack of economic planning was evidence that there was room for fraudsters to take advantage of messy schemes drawn up in a short amount of time. Finally, she also demanded the government publish a list of companies who received furlough money so the Committee could get a clearer picture of where the money was being used. 

While the speedy rollout of these schemes was partially successful in protecting the UK economy from a deep recession, The Commons Public Accounts Committee said that "hastily drawn support schemes meant unacceptable room for fraud against taxpayers." 

What to read next...

The government remains unapologetic as it maintains that the schemes were delivered promptly to lessen the economic impact of the pandemic on millions of people. They also said that multiple fake claims were rejected and without these furlough schemes, people would have been in even more trouble in the long run.

Rhea Tibrewala
Rhea Tibrewala
Rhea has had over 5 years of experience in the finance sector, having worked as a digital marketing manager for leading financial institutions across multiple geographies. She is a tech fanatic, an avid reader, and enjoys travelling and music in her free time.
The content on is for informational and educational purposes only and should not be construed as professional financial advice. Should you need such advice, consult a licensed financial advisor. Any references to products, offers, rates and services from third parties advertised are served by those third parties and are subject to change. We may have financial relationships with some of the companies mentioned on this website. We strive to write accurate and genuine reviews and articles, and all views and opinions expressed are solely those of the authors