The government should list details of the companies that have received furlough support to act as a deterrent for individuals looking to exploit the schemes, MPs have suggested.
In a report, published this week (June 30), the Public Accounts Committee (PAC) warned a lack of scrutiny and relaxed checks within Covid-19 loan schemes had led to a higher level of fraud and error.
The Department for Business, Energy and Industrial Strategy estimated the bounce back loan scheme could costs the taxpayer £27bn in fraud or credit losses, saying between 35 per cent and 60 per cent of loans might not be fully repaid.
The committee suggested firms which have benefitted from these loans and scheme should have their details published.
HMRC told the PAC it was “not reliant on the public sharing of information to manage fraud risk”, whereas BEIS said it was seeing if it could “publish something soon”.
The Pac report stated: “In written evidence the Fraud Advisory Panel told us publishing data on loan recipients would have been useful as it could have assisted with the early identification of potential instances of impersonation fraud and may have acted as deterrent for would-be fraudsters.”
The committee warned it was “essential” that the government recovers monies paid out in fraud or error, to allow taxpayers’ money to be spent on those that need it most.
Dame Meg Hillier MP, chairwoman of the committee, said: “The government knows it is losing over £26bn a year to fraud and error in the tax and benefits systems, but admits to another £25bn it can’t even detect.
"That’s over £50bn worth of public services a year given away to fraudsters and by mistakes in payments - before the frightening losses racking up in our Covid-19 spending so far, and against the backdrop of a massive surge in need.
“Fraud is never acceptable and when so many were suffering as a result of Covid the government needs to tackle the fraudsters robustly. The committee has long been concerned about the impact of departments’ own errors – including overpayments which need to be clawed back - which leads to further hardship for the already vulnerable.”
The bounce back loan scheme, which closed to applicants in March, allowed businesses to borrow between £2,000 and £50,000, or a maximum of 25 per cent of annual turnover.
But it is believed fraudsters may have claimed bounce back loans on behalf of bogus companies, whereas others channeled funds into cryptocurrencies.
Law firm RPC previously said these loans were vulnerable to exploitation as lenders have only been carrying out “light checks” due to pressure to get money to struggling businesses as quickly as possible.
The PAC report said although the government had acted quickly to provide support to those who needed it in the pandemic, it “significantly increased its exposure to fraud and error”.
This was because departments decided to relax fraud processes in order to work at speed.