Only 1% of the estimated £1.1 billion of taxpayer cash lost to fraudulent or erroneous grants paid to businesses during the pandemic has been recovered, Whitehall’s spending watchdog has said.

The former Department for Business, Energy and Industrial Strategy (BEIS) initially did not require pre-payment checks when it started the handouts to firms that said they were hit by lockdowns in March 2020.

Ninety percent of the losses due to error and fraud arose during that first wave of Covid-19 grant schemes, the National Audit Office (NAO) said in a new report, while checks and improved data reduced the risk in later iterations.

Just under 5% of the £22.6 billion distributed to businesses between March 2020 and March 2022 was lost.

Only £11.4 million, or 1%, had been clawed back by last month.


A spokesperson for the Department for Business and Trade, recently created after Prime Minister Rishi Sunak split up BEIS, said: “This report confirms that our Covid-19 business grant schemes helped to secure millions of businesses and livelihoods through the pandemic, supporting jobs and the economy during unprecedented times.
“No amount of error and fraud is acceptable, and we are continuing to work hard to recover these funds where possible.”