Fraudsters stole nearly £5billion from the Government's Covid Bounce Back Loan scheme because basic anti-fraud measures were 'inadequate' and only put in place once more than £28billion had already been paid out, the spending watchdog has said.
Checks to ensure that a company was not applying for more than one bounce back loan were not put in place until June 2020, a month after the scheme was launched, according to a report by the National Audit Office.
By then, 61 per cent of the money that was to be lent under the scheme had already been paid out to businesses.
Other counter-fraud activities did not begin until September 2020 as the Government focused on getting out the loans to support struggling companies.
Auditing giant PwC, which has been hired by the Government, has estimated 7.5 per cent of loans might be lost to fraud, at a potential £3.5billion cost to the taxpayer. However, the report notes that the Government estimated fraudulent loans were worth £4.9billion, 11 per cent of the total, as of March.
The Government knew the risks as it launched the scheme, but had to weigh them against the consequences of not getting money to businesses rapidly, the spending watchdog added.
'Government prioritised getting bounce back loans to small businesses quickly but failed to put adequate fraud prevention measures in place. One impact of these decisions is apparent in the high levels of estimated fraud,' said NAO boss Gareth Davies.
The Government only put in some basic anti-fraud checks on the small Covid loans it was providing to businesses once more than £28 billion had already been paid out, the spending watchdog has said
The bounce back loans propped up 1.5 million businesses, potentially saving many from bankruptcy. Many businesses were also paid within 24 to 48 hours of submitting an application (stock image)
A Department of Business spokesman said: 'The Government support schemes have provided a lifeline to millions of businesses across the UK – helping them survive the pandemic and protecting millions of jobs.
'We are continuing to crack down on Covid-19 fraud and will not tolerate those that seek to defraud the British taxpayer.
'We are working closely with lenders and enforcement authorities to minimise fraud and ensure those that have committed
