COVID payment fraud estimated at £4.5bn
More than £4.5 billion (4.6 per cent of the total cost) was lost to fraud or error in the government’s COVID-19 employment schemes according to the latest estimate by the National Audit Office.
The NAO found that the HMRC’s program of random checks would not have picked up certain types of fraud and it did not commission sufficient research with employees to understand how much went undetected.
It also acknowledged that it is unlikely ever to know how much it paid to employers opportunistically claiming furlough for working employees, which was the main cause of fraud and error.
The employment support schemes introduced during the COVID-19 pandemic were introduced to protect jobs and businesses, but the NAO found that the speed at which they were rolled out led to some flaws and significant levels of fraud and error.
In March 2020, the government announced two schemes to support employment during the pandemic: the Coronavirus Job Retention Scheme (CJRS) to provide grant payments to employers to cover part of the wages of furloughed employees; and the Self-Employment Income Support Scheme (SEISS) to provide grant payments to self-employed individuals whose businesses had been adversely affected by the pandemic.
The NAO found that the employment support schemes achieved their primary aim of protecting jobs and businesses during the pandemic. HM Treasury and HMRC distributed SEISS grants worth £28.1 billion to 2.9 million individuals and CJRS furlough payments worth £68.9 billion to 1.3 million employers covering 11.7 million individual jobs.
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