UK COVID-19 salary scheme fraud may hit $5 billion, watchdog says

FILE PHOTO: Workers are seen arriving during the morning rush hour at Waterloo Station in London, Britain, March 4, 2020. REUTERS/Toby Melville

LONDON (Reuters) - British companies may have fraudulently claimed up to 3.9 billion pounds ($5.1 billion) in public money by accepting funds from a salary support scheme while ordering furloughed staff to still work during lockdown, the spending watchdog said.

The National Audit Office (NAO) praised the government for rolling out support schemes for employees and the self-employed ahead of schedule when COVID-19 forced much of the economy to close down in March.

But the NAO said that under such pressure it did not have time to fully test the schemes and as a result the total scale of fraud and error was likely to be considerable. It will not know the numbers until the end of next year at the earliest.

It said in September it had estimated that fraud and error on the furlough scheme could have ranged from 5% to 10% on claims totalling 39.3 billion pounds. Fraud on the first round of the self-employed scheme could have ranged from 1-2%.

Companies could have bent the rules by keeping staff working in lockdown or claiming payments and not passing them on to employees in full. It said a fraud hotline had received 10,000 reports and an NAO survey found 9% of respondents admitted working at the request of their employer.

For a future Job Support Scheme, the government will publish the names of those employers making claims and notify employees through their tax accounts.

“It appears that the scale of fraud and error could be considerable, particularly for the furlough scheme,” said Gareth Davies, the head of the NAO. “HMRC could have done more to make clear to employees whether their employer was part of the furlough scheme.”

It also noted that 2.9 million people were not eligible for the schemes.

Reporting by Kate Holton; editing by David Evans