Employment support schemes introduced during the Covid-19 pandemic successfully protected jobs and businesses, although the need to design the schemes at speed led to some flaws and significant levels of fraud and error, according to the National Audit Office (NAO).
The NAO’s report, Delivery of employment support schemes in response to the Covid-19 pandemic, notes that HMRC's estimate for the total of fraud and error in the schemes is £4.5bn (4.6% of the total cost). However, the report says HMRC is unlikely ever to know how much it paid to employers opportunistically claiming furlough for working employees, which was the main cause of fraud and error. Its estimates of furlough paid for working employees (best estimate of £2.3bn) relies heavily on survey data covering just the first few months of the scheme. The tax authority expects to recover around £1.1bn of fraud and error by 2023/24 but the taxpayer protection taskforce, established in April 2021, is falling short of original expectations and investigations are taking longer than expected to complete.
The NAO recommends that HMRC works with the Cabinet Office and government's counter-fraud functions to improve the consistency of data collected on grant claimants and the pace at which data can be shared between HMRC and other public bodies in order to identify risky claims now and in the future. It should publicise the number of criminal investigations and encourage non-compliant taxpayers to return overpayments.
Gareth Davies, the head of the NAO, said: ‘The furlough and self-employed schemes prevented millions of job losses but billions went to people whose incomes increased during the pandemic, and billions more was lost in fraud and error. The government must improve the way it estimates levels of fraud and error and allocate sufficient resources to tackle this issue.’
Employment support schemes introduced during the Covid-19 pandemic successfully protected jobs and businesses, although the need to design the schemes at speed led to some flaws and significant levels of fraud and error, according to the National Audit Office (NAO).
The NAO’s report, Delivery of employment support schemes in response to the Covid-19 pandemic, notes that HMRC's estimate for the total of fraud and error in the schemes is £4.5bn (4.6% of the total cost). However, the report says HMRC is unlikely ever to know how much it paid to employers opportunistically claiming furlough for working employees, which was the main cause of fraud and error. Its estimates of furlough paid for working employees (best estimate of £2.3bn) relies heavily on survey data covering just the first few months of the scheme. The tax authority expects to recover around £1.1bn of fraud and error by 2023/24 but the taxpayer protection taskforce, established in April 2021, is falling short of original expectations and investigations are taking longer than expected to complete.
The NAO recommends that HMRC works with the Cabinet Office and government's counter-fraud functions to improve the consistency of data collected on grant claimants and the pace at which data can be shared between HMRC and other public bodies in order to identify risky claims now and in the future. It should publicise the number of criminal investigations and encourage non-compliant taxpayers to return overpayments.
Gareth Davies, the head of the NAO, said: ‘The furlough and self-employed schemes prevented millions of job losses but billions went to people whose incomes increased during the pandemic, and billions more was lost in fraud and error. The government must improve the way it estimates levels of fraud and error and allocate sufficient resources to tackle this issue.’
