Skip to main content

Business Department does not expect to recoup billions of taxpayers’ money lost to fraud and mistakes in pandemic support

26 April 2023

  • Department “effectively writing off” nearly £1 billion paid out erroneously by local authorities on its behalf
  • Of estimated £2.2 Billion lost to fraud and error in Covid schemes only about £10 Million so far recovered
  • Errors and inaccuracies in Companies House system undermine confidence and open door to fraud

In a report today the Public Accounts Committee says the Department for Business, Energy & Industrial Strategy (BEIS) continues to make slow progress on its counter fraud activities related to the Bounce Back Loan Scheme, and its lack of curiosity about lenders’ performance increases the risk of losses for the taxpayer. The Department accepts that grant payments made through councils to their local businesses were ‘not in line with how the scheme was meant to work’ but it does not expect to recoup these funds.

The size of the Companies Register is growing, which BEIS says reflects international trends and entrepreneurial activity. But confidence in the system is undermined by errors and inaccuracies. False statements, fake entries, errors, fictional company directors and individuals named without their consent can be used to commit crime including fraud. Making a false declaration to Companies House has been a criminal offence since 2009 but there is a record of just one conviction for this offence, in 2018.

It is not clear how the Department holds to account third parties that deliver multi-billion-pound programmes on its behalf. The Committee is concerned that a laissez-faire approach may lead to failure to properly protect taxpayers’ money.

Victims of the Post Office Horizon scandal continue to suffer as they await compensation due. Staff were dismissed, the Post Office took action to attempt to recover ‘losses’ that were in fact mistakes of their own system, and criminal prosecutions were pursued with people wrongly convicted. BEIS expects to provide £579 million to the Post Office to compensate victims of the Horizon scandal while continuing to operate as a going concern. Recent media reports indicate some victims are receiving only partial payments and are still owed huge sums. The Committee is seeking the date by which the Department expects all claims to be settled.

Chair's comments

Dame Meg Hillier MP, Chair of the Public Accounts Committee, said:

“At a time of financial crisis the department for business has lost billions of taxpayers’ desperately needed funds. It shows no real signs of making the improvements that would prevent the big mistakes it has made over many years, especially during the pandemic, happening all over again. It’s moving too slowly to compensate people for the lives ruined through the Post Office Horizon scandal.

Years of slogans about Britain being open for business are undermined by a dysfunctional company registration system that gives no confidence either in the proper operation of business and VAT systems, or that it will help to prevent the fraud, now the biggest crime in this country.”

Further information

Image: UK-Parliament-Tyler-Allicock