£16m lost to fraud and error in Covid business support schemes

Fraud and errors in Covid business support schemes cost the public purse at least £16 million, auditors have told MSPS.

Between 1% and 2% of the two main schemes – which paid out a total of £1.6 billion – are thought to have been lost to fraud and error.

Holyrood’s Public Audit Committee heard from Audit Scotland officials yesterday, following their analysis of the Scottish Government’s yearly consolidated accounts.

Auditor General Stephen Boyle said the government had accepted a higher level of risk than usual given the urgent need to deliver support during the pandemic.

He said: “The government’s own assessment is that between 1% and 2% of that spending will be attributable to fraud and error. So somewhere between £16m and £32m of that is likely to

have been spent not in accordance with the associated laws.

“In our judgment, £16m to £32m of course is a hugely significant amount of public spending that hasn’t been spent properly. But in the overall materiality of the government’s accounts, we’ve already mentioned this morning of £50bn, we’re satisfied that the accounts are fairly stated.”

Committee member Willie Coffey asked about efforts to recover money which was distributed due to fraud or error.

Audit Scotland audit director Michael Oliphant said between 14% and 30% of business support applications had been rejected, which suggested there was a “good control framework” in place. He said at the end of the last financial year, just over £1m had been recovered and 150 recovery cases were under way.

The committee also heard that fraud and error in benefits delivered by the UK Department for Work and Pensions led to overpayments of an estimated £65.4m in Scotland during the year.

Following the meeting, Scottish Liberal Democrat MSP Willie Rennie said: “Now that the economic threat has receded, we need the government to get on top of chasing down fraudsters and ensuring that any money paid out in error is recovered.”

Stephen Boyle.