Coronavirus furlough scheme: Over £3 billion lost to fraudsters

Coronavirus furlough scheme: Over £3 billion lost to fraudsters

 · 3 min read
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The National Audit Office has said that over £3 billion allocated to the COVID-19 furlough scheme may have been lost to fraudsters.

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The National Audit Office has said that over £3 billion allocated to the COVID-19 furlough scheme may have been lost to fraudsters. 

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The spending regular estimates as much as £2 billion may have gone to criminals posing with fake companies. They also believe several employers may have inflated the amount of money they claimed under the scheme while continuing to make employees work full time.

The furlough scheme was designed to support employers who could not afford to continue to pay their employees at the peak of the lockdown. Under the system, workers continued to receive up to 80% of their wages while they were furloughed. Over 9.6 million workers availed themselves of this scheme, figures from HRMC estimate. 

However, a recent survey conducted by Ipsos Mori reported that around 9% of furloughed workers continued to work at the request of their boss. A fraud hotline set up by the NAO also received over 10,000 reports of violations of the terms of furlough, revealing some employers who claimed furlough payments did not pass them on in full to their employees.

The NAO said that the scheme, while beneficial to millions, was rolled out too hastily, allowing criminals to bypass the usual systems of checks and balances that would have helped to identify any potential fraud. By May around a third of the UK workforce was already placed on furlough. However, of these workers, around 2.9 million of them reportedly did not gain any access to the benefits promised by the scheme, due to government indecision or fraud.

Another scheme that recently came under fire for being too quick to grant funds to claimants was the Bounce Back scheme, which gave eligible businesses up to £50,000 of government-backed finance which would remain interest-free for a year. A recent report by the NAO suggests that as much as 60% of these emergency loans may have been fraudulently claimed and will never be repaid.

While the government has been praised for responding so quickly to the crisis, the NAO has recommended that any future support schemes should have tighter regulations to ensure that fraudsters cannot take advantage of them. They also recommended the tax office do more to educate and inform employees, especially those whose employers claimed benefits under these schemes, to ensure that they are not taken advantage of.

"In future, the departments should do more while employment support schemes are running to protect employees and counter acts of fraud," said Gareth Davies, head of the NAO.

Rhea Tibrewala
Rhea Tibrewala
Rhea joined Age Group in 2020, bringing over 5 years of experience of working in and writing about the finance sector. She is a tech fanatic, an avid reader, and enjoys travelling and listening to music in her free time.
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