” £3bn fraud may have been carried out through the furlough scheme. This money may have been taken by criminal gangs and employers according to the National Audit Office.
This figure does not include other fraud which may have taken place in other areas.
The amounts involved are breath taking and highlight how poor the Government’s systems have been over the period that furlough was operated.
I have studied the report which was released today by the National Audit Office and the findings are astonishing.”
One of the ways in which this kind of fraud can be prevented for future similar schemes is to ensure that reliable information, covering as many people as possible, be used to determine eligibility so that fewer people suffering loss of income are excluded.
The Departments should also accelerate programmes to assess the total value of fraud and error, and ensure sufficient resources are committed to recover overpayments and fraudulent payments on both schemes where it is cost-effective to do so.”
Nigel Holland
An extract from the report
The scale of total fraud and error is likely to be considerable, particularly for CJRS, but HMRC will not know the actual levels until the end of 2021 at the earliest. In September HMRC’s assumption was that fraud and error could range from 5-10% on CJRS, which would equate to £2.0 billion to £3.9 billion. For the first SEISS grant, HMRC’s planning assumption was that fraud and error could range from 1-2%. Given the lack of available data, both these estimates were necessarily assumption-based rather than evidence-based. HMRC is developing its understanding of the full scale of fraud and error, and believes it will need to redeploy staff from tax compliance work to tackle fraud and error on the schemes.
BBC report
More than £3bn of furlough job protection money could have been stolen by criminal gangs and employers, the National Audit Office (NAO) has said.
The spending watchdog said up to £2bn of taxpayer money may have gone to criminals using fake companies.
Firms also claimed for workers not on furlough or inflated the money needed.
The NAO, which has already warned about “bounceback” business loan fraud, said nearly one in 10 workers on furlough had been asked to work by their boss.
The government defended the scheme as a “lifeline” without which lives would have been ruined during lockdown.
But in a report on Friday, the NAO said it was brought in so rapidly in March that “considerable levels of fraud and error” were likely.
Designed to help those who could not work due to lockdown, the Coronavirus Jobs Retention Scheme scheme supported more than 9.6 million workers at its peak.
Workers on leave have been paid 80% of their salaries, in full or part by the government, although it will be replaced by a less generous jobs scheme from 1 November.
The NAO said that a fraud hotline set up by the tax authorities, HMRC, received over 10,000 reports of contraventions, while its own survey, conducted by Ispos Mori, found 9% of furloughed workers had continued to work at the request of their boss.
