Thousands of businesses that received Rishi Sunak’s Covid loans went bankrupt without repaying the money… leaving taxpayers with a £500m bill
- More than 16,000 businesses that received Covid rebound loans have gone bankrupt
- Businesses have failed to repay their loans – handing the taxpayer a £500m bill
- There are also 61,475 businesses in arrears which could cost £1.9billion
More than 16,000 businesses that received Covid rebound loans have gone bankrupt without repaying the money.
The mass insolvencies may have cost the taxpayer up to £500million, a figure that will rise as more businesses collapse.
The scheme was targeted by criminals because companies could self-certify to claim the money. Dozens of individuals have been arrested, while more than 150 directors have been banned from running businesses.
The staggering sum has led critics to lash out at former chancellor Rishi Sunak, 42, who built his case for being prime minister on fiscal responsibility.
Last week the Business Department revealed that businesses collectively owing £3.2billion were in arrears, while 61,475 loans were in default, which could cost the taxpayer £1.9billion . Official estimates have shown that as much as £17bn of the £47bn loaned under the scheme will not be repaid.
Fraud unit finally ready to hunt down the lost millions
An anti-fraud unit weakened by Rishi Sunak’s Treasury finally kicks off today with full powers restored.
The Public Sector Fraud Authority was due to start work last month to help recover millions of pounds of taxpayers’ money that had been wrongfully misappropriated, including Covid support loans.
At the last minute, his remit was watered down by Treasury officials. But since Mr Sunak stepped down as Chancellor, the Cabinet Office has won a behind-the-scenes battle over the powers of the unit – and it now kicks off today with its intended mandate back in place.
The unit will cost £11m to run in its first year but aims to recoup £180m from fraud. “It’s a very good return on investment,” said Efficiency Minister Jacob Rees-Mogg.
Asked why the Treasury had tried to weaken the powers of the unit, he said he thought he was “just embarrassed” that so much money had been lost to fraud at most. strong from the pandemic.
A government source said: ‘Today is a victory for the British taxpayer.
The staggering sum has led critics to turn against former chancellor Rishi Sunak, who built his case for being prime minister on fiscal responsibility.
Senior Tories have called the approach to the Covid documents “disgracefully negligent”. The latest figures, obtained by the BBC under freedom of information laws, have been described as “shocking” by a former head of the Serious Fraud Office, Sir David Green.
He said: “You wouldn’t send an army into battle without assessing the risks. And still in this situation, the risks, which were obvious, should have been assessed and addressed.
There were 114,750 small businesses in arrears on their loans at the end of June, or one in 14 of the 1.5 million loan recipients.
In March 2021, the government estimated that £4.9billion would be lost to fraud and error, but that figure had fallen to £3.5billion by March this year.
But the Government’s Taxpayer Protection Task Force had only recovered £3.5million by November 2021, just 0.2% of its £1.5billion target.
The banks claimed to have prevented £2.2bn of fraud through due diligence on loans. Mr Sunak said he was “proud of my record” and that the amount the companies are reimbursing has “far exceeded anyone’s expectations”.
The Rebound Loan Scheme has enabled small businesses to take out a government guaranteed loan of up to £50,000 to help them through the pandemic.
There were 1.56million rebound loans worth £47.4billion granted to small businesses between April 2020 and March 2021.
The Treasury has been approached for comment.