The Government is ‘complacent’ about preventing ‘eye-watering’ levels of fraud in the COVID Bounceback Loan Scheme (CBLS), a new report by the Public Accounts Committee (PAC) has concluded.

The CBLS was introduced as a way for the Government to support businesses during the pandemic. Approximately £47bn has been paid out in bounceback loans.

However, the PAC estimates that £17bn has been lost, with £4.9bn of that – over 10% of the loans – to fraud.

A new report by the PAC, published today, said that the Department for Business Energy & Industrial Strategy (BEIS) was ‘complacent in preventing fraud’ and has ‘no long-term plans for recovering overdue debt.’

Lenders are not incentivised to recover the loans, according to the report, and were also not required to do credit or affordability checks or even verify application information because the scheme had to be rolled out quickly. This means the taxpayer has had to pick up the tab.

The survival of businesses has come at a ‘staggering’ cost to the taxpayer, the PAC said. This money ‘could have been spent on improving existing public services, reducing taxes or to reduce Government borrowing’.

Responding to the PAC report, a Government spokesperson insisted: ‘We’re continuing to crack down on COVID support scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers.

‘These schemes were implemented at unprecedented speed to protect millions of jobs and businesses. If the Government didn’t move quickly, more businesses would have failed and many more jobs lost.’

PAC chair Meg Hillier MP commented: ‘With weary inevitability we see a government department using the speed and scale of its response to the pandemic as an excuse for complacent disregard for the cost to the taxpayer.

‘More than two years on BEIS has no long- term plans to chase overdue debt and is not focussed on lower-level fraudsters who may well just walk away with billions of taxpayers’ money.

‘The Committee was unpleasantly surprised to find how little Government learned from the 2008 banking crisis and even now are not at all confident that these hard lessons will be embedded for future emergencies.

‘BEIS must commit now to identifying what anti-fraud measures are needed at the start of any new emergency scheme so the taxpayer is better protected in future. It also needs to set out the trade-offs and what level of fraud it will tolerate at the outset.’