THE £3.5BILLION FURLOUGH FARCE

Revealed: That’s how much of YOUR cash may have been lost in fraud and blunders

UP TO £3.5 billion of furlough cash has been paid out in error or as a result of fraudulent claims, according to official estimates.

The tax office has calculated that between 5 and 10 per cent of payments have been either stolen or paid out by mistake.

The total bill for Chancellor Rishi Sunak’s job retention scheme is more than £35 billion. It is being wound down and will be scrapped entirely at the end of October.

Jim Harra, the most senior civil servant at HMRC, told the public accounts select committee: ‘We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between 5 per cent and 10 per cent.’

If the estimate is accurate, between £1.75 billion and £3.5 billion has been paid out by mistake or as a result of fraud. Former Conservative leader Sir Iain Duncan Smith said: ‘This is a huge amount of money and demonstrates exactly why the scheme needs to be brought to a close.

‘It’s rapidly being defrauded more and more because employers are making furloughed people work and telling them they can’t say anything or they’ll lose their jobs. The scheme is open to fraud and abuse and it’s hard to check where the money is actually going.

‘The sooner we bring this scheme to an end, the sooner we can stop haemorrhaging money and get the country back to work.’

Nearly 8,000 reports of furlough fraud

were reported to HMRC last month – a marked increase from the 6,749 reported as of July 22.

Whistleblowing charity Protect has reported several instances where companies are flouting the rules.

In one instance, a company had furloughed an employee without their knowledge, and the individual only discovered the issue when they received 80 percent of their pay at the end of the month. Another report said workers had been asked to return to the company as volunteers while on furlough – something which is also against the law.

Tory MP Andrew Bridgen said: ‘This was always a clear and present danger when this generous support scheme was put in place. I would just urge HMRC to be relentless in its pursuit of fraudulent claims made by those who have perpetrated this crime against the taxpayer at a time of national emergency.’

Mr Harra told MPs: ‘What we have said in our risk assessment is we are not going to set out to try to find employers who have made legitimate mistakes in compiling their claims, because this is obviously something new that everybody had to get to grips with in a very difficult time.

‘We will expect employers to check their claims and repay any excess amount, but what we will be focusing on is tackling abuse and fraud.’ Mr Harra added that a separate academic study had estimated the level of fraud and error might be even higher than 10 per cent.

It is the first time HMRC has spoken publicly about the level of potential fraud in the job retention scheme.

The state subsidy programme covered up to 80 per cent of an employee’s salary, up to £2,500 a month, while they were on furlough. The Government rolled out the huge scheme at breakneck speed, causing many experts to warn that fraud was inevitable.

By August 16, 9.6 million people had been put on Governmentsupported furlough, with 1.2 million employers claiming the support. Meanwhile, about 2.7 million selfemployed people have claimed £7.8 billion in support.

It came as MPs warned of mass redundancies in the arts and leisure sector if the scheme is not extended beyond October. In a letter to Mr Sunak, the digital, culture, media and sport select committee said 51 per cent of workers in the sectors were dependent on furlough, compared to 13 per cent across all industries.

Chairman Julian Knight said ending the scheme for all sectors ‘ does not reflect the unique situation faced by the arts and leisure sector’.

He added: ‘Ministers should recognise their duty to provide ongoing support for people hard hit by this crisis and extend the help on offer to organisations facing restrictions on how they operate.

‘We should not allow the arts and leisure sectors that contribute amazing value to our economy to become “hostages to fortune” as a result of a failure to act.’

‘Crime against the taxpayer’