Fraud in Covid bounceback loan scheme not being addressed, say MPs

theguardian.com:

MPs have criticised the government for its “unacceptable” failure to draw up plans to recover nearly £5bn taken from the coronavirus emergency bounceback loan scheme by fraudsters.

The government must give more resources to counter-fraud agencies and account properly for how much of the money will be lost forever, according to a report published on Wednesday by parliament’s influential public accounts committee.

In a package of measures developed under the chancellor, Rishi Sunak, the government focused its support for the economy at the start of the coronavirus pandemic on companies and people in work. The bounceback loan scheme (BBLS) was aimed at supporting small businesses, while the furlough scheme covered 80% of the wages of people unable to do their jobs.

However, the MPs said that the government was “complacent in preventing fraud” in particular in bounceback loans, which were given by banks but 100% guaranteed by the state – leaving taxpayers with the bill. An estimated £4.9bn of the £47bn spent on the BBLS was lost to fraud, while another £12bn has been lost via the schememainly through businesses collapsing during the pandemic.

Another £5.7bn is estimated to have been lost from fraud and error within the furlough and self-employment schemes, two of the other key support schemes during the crisis.

The business department and the state-owned British Business Bank, which managed the bounceback scheme through 24 commercial lenders, missed opportunities to reduce the level of fraud and are relying too much on the lenders recovering stolen money, MPs said.

Government officials understood the risks entailed in the design of the scheme, and obtained a ministerial direction to override the usual requirements on value for