Covid-19 fraud cost taxpayers £10.9bn but ‘much beyond recovery’, report finds

Fraud and error linked to financial support programmes during the coronavirus pandemic cost taxpayers £10.9 billion, a report has found.

The authors warned that only £1.8 billion has been recovered and said “much of the shortfall is now beyond recovery”.

The final report by the Covid counter fraud commissioner, Tom Hayhoe, found that many schemes, including Eat Out To Help Out and Bounce Back Loans, were rolled out quickly with significant risks.

He said many decisions taken during Covid lockdowns “paid too little attention to the risk of fraud”.

Mr Hayhoe, who was tasked by Chancellor Rachel Reeves with trying to recover the public money lost to fraud, said in his report that controls were “inadequate” and only improved later in the pandemic.

The Conservative government, which was led by Boris Johnson as prime minister during most of the pandemic, introduced policies designed to support many UK firms and workers amid the impact of the Covid-19 pandemic, such as wage furlough, bounce-back loans and the Eat Out To Help Out programme.

Many of these were credited with helping to prop up the economy but Mr Hayhoe said that prioritising speed in the delivery of this support led to a “high level” of fraud risk.

The review also highlighted significant financial losses linked to Government contracts for buying PPE (personal protective equipment).

More than 38 billion items of PPE were bought between February and July 2020.

Around 11 billion items had not been used by March 2024 and losses amounted to around £10 billion, the report said.

Recovering public money lost due to Covid fraud has been difficult as some evidence has “degraded” and stolen funds have been dispersed and moved offshore, the report said.

It added that there have been limitations in the ability to fully understand the details of Covid-era spending, as key decision-makers have moved on and information has been lost.

The report said there are still areas where it is “worthwhile” investing to recover more money paid out incorrectly, recommending that work continues.

It also recommended that the UK Government launches a scrutiny panel with senior officials in order to help implement improvements and learn lessons from the situation.

Ms Reeves said: “Leaving the front door wide open to fraud has cost the British taxpayer £10.9 billion, money that should have been funding our public services, supporting families, and strengthening our economy.

“We have started returning this money to the British people and we will leave no stone unturned in rooting out the fraudsters who profited from pandemic negligence.”