Digital fraud checks could have significantly reduced the amount of money estimated to have been lost by the government to fraudulent applications for COVID support schemes, anti-money laundering firm SmartSearch has argued.

According to new figures published the House of Commons library, fraud and errors involving coronavirus support schemes, such as the furlough scheme and Bounce Back Loans, cost taxpayers an estimated £11.8bn.

This is almost twice the amount lost as a result of ‘Black Wednesday’, when the UK crashed out of the Exchange Rate Mechanism in 1992.

The House of Commons library used a central estimate of £11.8bn for coronavirus fraud, and then compared this to Treasury estimates for the cost of Black Wednesday. This was £3.3bn in the period between August 1992 and February 1994, which when adjusted to today’s prices is around £6bn.

“It is disgraceful that such a vast amount of public money has been lost to preventable fraud,” said SmartSearch managing director, Martin Cheek.

“While it was essential that loans were made available swiftly so businesses could be supported after the outbreak of the pandemic, that does not justify a failure to conduct due diligence. Digital fraud checking could have been used to review within seconds the validity of claims for Bounce Back Loans and other support.

“This ineffective stewardship of taxpayers’ money is likely to have long-term implications for public finances, and has underlined the need for effective checks to be put in place when allocating public money.”

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