The Economy Department’s handling of Covid support schemes has left scammers and embezzlers an “open target” that has “added billions to taxpayer woes,” Parliament’s spending watchdog has noted.

In its review of the Department for Business, Energy and Industrial Strategy (BEIS) annual report, the Public Accounts Committee (PAC) said it acknowledged that the government had offered crucial support to businesses at the height of the pandemic.

Efforts to identify fraud and errors came too late, however, as the money had been spent by the time they were confirmed and “the tracks will have long since dried up.”

“BEIS says it saw this risk coming but it really isn’t clear where the government was looking when it put together its first Covid response,” said PAC leader Labor MP Dame Meg Hillier.

“It presented scammers and embezzlers with an open target, and they have capitalized on it, adding billions and billions to taxpayer worries. These lessons should have been learned from the banking crisis a decade ago and could have been prepared in the government’s pandemic drills.”

The comments come amid frustration at the scale of the Covid fraud which has put billions of pounds worth of government money at risk.

Of the £79.3bn in government-guaranteed loans to support businesses in the first year of the pandemic, taxpayers are estimated to lose £4.9bn to fraud and error. Add to that a further £5.7 billion estimated to have been lost under the furlough and self-employment schemes.

The report accused BEIS of not adequately identifying or reflecting the potential risks of organized white-collar crime.

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“Some of the staggering losses so far represent only the department’s best estimates, so the actual amount of taxpayer money that will be lost could be even higher,” the PAC said, noting that it also has limited information on the true extent of the fraud was linked to the £21.8bn Covid grants being distributed by local authorities.

BEIS has only estimated fraud and error rates related to £11.5bn of those grants at around £1bn, the PAC said.

A government spokesman said: “We continue to crack down on fraud under the Covid Support Scheme and will not tolerate those who attempt to defraud consumers and taxpayers.

“These programs have been implemented at unprecedented speed to protect millions of jobs and businesses. If the government had not acted quickly, more businesses would have failed and many more jobs would have been lost.”

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