Money lost

Up to £6.3 billion of welfare packages allocated by the British authorities to support employment during the COVID-19 pandemic have been lost as a result of 'misallocation' of funds. It was revealed in a report by the National Audit Office (NAO) on Thursday.

The document criticises UK government departments, most notably HM Treasury, which distributed funds under the so-called "Self Employed Income Support Scheme" (SEISS), for a "lack of control" that led to resources being received by random people and scammers who applied for and received money under the scheme with no real entitlement to it.

The latest estimate by the National Audit Office (NAO) puts "misappropriation" at between 3.3% and 6.5% of the £96.9bn SEISS programme, noting the promise by HM Revenue Customs (HMRC) to recover around £1.1bn "if the 24 ongoing criminal investigations into fraud [in relation to SEISS] result in the recovery of funds from fraudsters".

"While estimates are still very uncertain at this point, the amounts lost through error and fraud are unlikely ever to be recovered in full," the NAO chief executive concluded in the report.

The two measures, the Self-Employment Income Support Scheme and the Coronavirus Job Retention Scheme, were introduced when the Covid-19 pandemic hit and were part of a massive spending package designed to protect workers across the country left out of work after lockdowns were introduced.

However, in a detailed 55-page report released on Thursday, auditors found that the unprecedented schemes met their objectives of protecting workers and businesses.

The actual cost of the schemes was also lower than the government had anticipated, the NAO said.

Around £5,900 was the average wage for each job sent on holiday during the scheme, while £9,700 was the average amount received by each self-employed claimant.

The report also shows that the average increase in earnings for self-employed people who received Covid-19 grants in 2020 and 2021 was an increase of over £2,200.

As of March, the NAO notes, there are currently 24 criminal investigations into fraudulent claims, while HMRC predicts it will recover around £1.1 billion over the next two years.

Dame Margaret Olivia Hillier, chair of the House of Commons Public Accounts Committee, called on the government and HMRC to "take control" of the issue.