Treasury unveils covid loan fraud crackdown

A new investigations team that can impose huge fines on those who abused Covid-19 bounce back loans has been announced by the Treasury.

In a move that has been a priority for this government for some time, the team will be able to call on £17.5 million of funding as it sets its sights on those who fraudulently claimed government-backed loans that were supposed to assist businesses during the pandemic. Those who took out such loans fraudulently could face compensation orders if they do not repay what they owe voluntarily.

Last month saw the opening of an online Covid repayment window, which gives individuals and businesses until December to return any pandemic scheme money they are not entitled to, on a no-questions-asked basis. Tellingly, this window was opened at the same time as a Covid fraud reporting website, which has now received reports of suspected wrongdoing totalling £8 million. 

When the new investigations team is considered alongside these measures, the government can at least be said to have put some thought into how it can tackle the problem. For a good while now, it has been making it clear that a taskforce would be coming after those who saw the pandemic as a chance to fraudulently take public money. In addition, the Insolvency Service has said it has secured more than 2,000 director disqualifications and 62 criminal convictions relating to abuse of Covid loans, and Covid corruption minister Tom Hayhoe has been in his position for ten months of his fixed one-year term.

Tools

So it feels as if we are now, finally, in the all-systems-go phase of efforts to regain what was taken from the public purse as the UK grappled with a pandemic. Those who have been given the task now have a decent set of tools at their disposal and the backing of a government that is keen to be seen as healing what has become a long-running financial sore.

Last month saw the Department for Business and Trade put the current value of money lost to suspected fraud involving the bounce back loan scheme and the coronavirus business interruption loan scheme at £1.93 billion. This is a big enough figure on its own. But the department also stated that there is a further £1.66 billion owed that has question marks over whether it will ever be repaid.

To be blunt, recovering anything near those amounts is going to require a very constructive use of the £17.5 million that is being put into the new investigations team. It could be the case that signs of early success may lead to more resources being pumped into it, with the government happy to put more millions in if it is regaining tens or even hundreds of millions as a result.

But such a scenario will depend on a lot of rewarding legwork being put in and / or an extremely busy Covid fraud reporting website. It will also hinge on the money still being there to be reclaimed. It is now more than five years since the UK was introducing a huge set of measures in a desperate attempt to help support businesses that faced ruin as a result of Covid. Regardless of how well-intentioned or open to abuse these schemes were, they were taken advantage of by those looking to make illegal gains. And the people behind such activity have now had years to spend or hide the proceeds. 

Identifying those people, calculating what they owe and taking action against them may well be an achievement. But how much money is actually regained as a result remains to be seen.

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