Lack of pandemic planning may have cost taxpayer billions, say MPs

A lack of economic planning for a pandemic may have cost the taxpayer billions of pounds through fraud and error, a Westminster watchdog has said.

The failure to prepare forced the Treasury to quickly design the financial support schemes from scratch when the country went into lockdown in March, according to the Commons Public Accounts Committee.

This was despite a pandemic have been identified as a top national risk for years.

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Image: The crisis meant HMRC was forced to switch staff from frontline tax collection

The MPs said it was “very worrying” that HM Revenue and Customs (HMRC) had estimated for the furlough scheme alone, £3.5bn of the £35.4bn paid out by mid-August may have been fraudulently claimed or paid in error.

The committee’s report said: “With at least some thinking about the economic risks of a pandemic in advance, it may have been possible to build in stronger safeguards against fraud and error, while still providing much-needed support to businesses and their employees.”

The government is now being called on to publish a list of the companies which received furlough cash in the interests of transparency.

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The committee also said the COVID-19 crisis had meant HMRC had been forced to switch staff from frontline tax collection to implement and run the various coronavirus support schemes.

As a result, the department estimated the revenue it collected through its compliance work in the first three months of the tax year 2020-21 was down 51% on the same period the previous year, and may never be recovered.

Restrictions imposed under Tiers 1, 2 and 3 of England's lockdown system

Image: Restrictions imposed under Tiers 1, 2 and 3 of England’s lockdown system

Arguing that the government should have been better prepared, committee chairman Meg Hillier said: “Our finding of the astonishing lack of economic planning for a pandemic shows how the unacceptable room for fraud against taxpayers was allowed into the government’s hastily drawn up economic support schemes.

“I would like to see the government publish a list of the companies which received furlough money.

“Where taxpayers’ money is being used, transparency should be a given. HMRC must act now to minimise fraud and error and ensure that taxpayers do not pay time and time again in the years to come.”

Track the economy's recovery from lockdown

Track the economy’s recovery from lockdown

A government spokesman said: “The government’s number one priority from the start of the outbreak has been on protecting jobs and getting support to those who need it as quickly as possible.

“Our income support schemes have provided a lifeline to millions of hard working families across the UK and we make no apology for the speed at which they were delivered. Without them lives would have been ruined.

“Our schemes were designed to minimise fraud from the outset and we have rejected thousands of fraudulent claims. We will not tolerate those who seek to defraud taxpayers and will take action against perpetrators – including criminal prosecution.”