Bounce Back Loan fraud could have been avoided
Digital fraud checks could have significantly reduced the £11.8 billion pounds now estimated to have been lost by the government to fraudulent and erroneous applications for Covid-19 support, according to a leading anti-money laundering specialist.
New figures from the House of Commons library show that fraud and errors involving coronavirus support schemes such as furlough and Bounce Back Loans cost taxpayers an estimated £11.8 billion. This is almost twice the amount lost as a result of Black Wednesday when Britain crashed out of the Exchange Rate Mechanism in 1992.
Martin Cheek, managing director at SmartSearch, commented: “It is disgraceful that such a vast amount of public money has been lost to preventable fraud.
“While it was essential that loans were made available swiftly so businesses could be supported after the outbreak of the pandemic, that does not justify a failure to conduct due diligence. Digital fraud checking could have been used to review within seconds the validity of claims for Bounce Back Loans and other support.
“This ineffective stewardship of taxpayers’ money is likely to have long-term implications for public finances, and has underlined the need for effective checks to be put in place when allocating public money.”
The House of Commons library used a central estimate of £11.8 billion for coronavirus fraud, and then compared this to Treasury estimates for the cost of Black Wednesday. This was £3.3 billion from August 1992 to February 1994, which when adjusted to today’s prices is around £6 billion.