This is a House of Commons Committee report, with recommendations to government. The Government has two months to respond.
This is the report summary, read the full report.
The COVID-19 employment support schemes were implemented quickly at a time of crisis. They provided essential support to many individuals, businesses and the wider economy but at £97 billion, they were costly. The cost includes an estimated £4.5 billion of error and fraud and at least £5 billion paid during the first year of the schemes to self-employed people and employers whose incomes had not reduced. The extent of error and fraud and unnecessary support was made more disappointing because several million people whose incomes were affected by the COVID-19 pandemic were not eligible under the schemes’ rules.
HM Treasury and HM Revenue & Customs moved quickly to put the schemes in place but were then too slow to better target support to those in genuine need, and tackle error and fraud. Levels of unrecovered error and fraud are far too high. HM Revenue & Customs has had little success in recouping the £2.3 billion incorrectly paid to employers claiming furlough for employees who continued to work. It is winding up the Taxpayer Protection Taskforce without recovering the money expected. HMRC must now send a clear message that it is committed to recovering fraud on these schemes through its tax compliance enquires, and urgently increase the rate of repayments from those who overclaimed, including pursuing and penalising those who made fraudulent claims.
As we have reported previously lack of the right data was a key factor in the lack of equality in the deign of the schemes and contributed to some people being left without support, including the newly self-employed. Despite the obvious need, HMRC cannot say when measures to improve availability of timely data, including Making Tax Digital, will be delivered.
The UK needs to learn lessons from these schemes in how to target support more effectively and protect the public purse in future crisis interventions. HM Treasury and HMRC are taking too long to complete and publish their evaluations of the schemes and need to identify what can be learned from other countries. In the meantime, HMRC must quickly address known gaps in its data without imposing excessive administrative burdens on taxpayers, so that government can better target support in future large-scale financial interventions and ensure all those in need get assistance.