Suspected Covid loan fraud lost in 2023 rises by over £500m after review

More than 10,000 additional cases of suspected Covid loan fraud have been identified following a government review of settled loans.

As part of a review into loans which had been defaulted on and settled by the Government, over £500m in fraudulent loans from 2023 have been identified.

The number of fraud claims settled by the Government has now almost doubled from 16,846 to 31,437 culminating in a total value of the losses due to fraud rising to £1.2bn in that year, up from £648m.

In recent financial documents, it was detailed that the British Business Bank had conducted a review of loans the Government had already settled with lenders from the 2023 financial year.

All loans during the pandemic were either substantially or completely guaranteed by the Government, meaning that if someone failed to repay, the Government would refund the banks who made the loan.

However, the scheme proved controversial at the time due to the level of fraudulent loans applied for.

Under the Conservatives, former Treasury minister Lord Agnew quit the Government over what he perceived to be “schoolboy errors” over the scheme, which he described as “desperately inadequate”.

The scheme was the vision of Rishi Sunak, and amounted to one of his biggest policies during the pandemic. Sunak denied “ignoring” fraudulently claimed Covid support funds while Chancellor.

At the time, Sunak said he would “do everything we can” to recover the stolen money.

In it’s 2021/22 annual report, HM Revenue and Customs said funds including 2.5 per cent of the £19.7bn delivered through self-employed support had been lost to fraud.

Those figures came as Treasury expected to write off £4.3bn of the £5.8bn of public money fraudulently claimed by businesses during the height of the pandemic.

Last year, Rachel Reeves appointed a new Covid corruption tsar with the Treasury believing £2.6bn can be recouped from waste, fraud and flawed contracts agreed during the pandemic.

According to the most recent reports from the Insolvency Service, 1,431 company directors have been disqualified due to suspected Covid loan fraud, with 252 placed under bankruptcy restrictions.

A government spokesperson said the overall amount of losses from the scheme remained unchanged, but the amount of fraud cases from the scheme had increased.

Overall, government statistics estimate that the expected losses due to fraud and error in the Bounce Back Loan Scheme will be 6.8 per cent of loans.

Government sources told The i Paper that the additional suspected fraud identified by lenders is now being examined, and the Government will look to recover funds from the fraudulently obtained loans.

A Department for Business and Trade spokesperson said: “These figures do not represent an increase in the overall amount paid out, and instead are a result of lenders reclassifying existing payouts following their extensive work to tackle fraud in the schemes.

“This Government is committed to protecting taxpayers’ interests and the overall amount remains consistent with estimates of expected payments over the Bounce Back Loan scheme’s lifetime.”