According to reports, the British government is preparing to make public a set of data showing that approximately 1.1 billion pounds ($1.27 billion) of loans given to small businesses according to a Covid-19 emergency lending scheme have already been categorized as potential fraud.
The hitherto unreleased data from the United Kingdom’s Department for Business, Energy, and Industry (BEIS) provides the first solid evidence of probable fraud levels in the scheme, which has been criticized for the quality of borrowers’ checks.
From May 2020 to May 2021, British banks made 47 billion pounds in government-guaranteed ‘bounce back loans’ to struggling small businesses affected by COVID-19 lockdowns.
A confirmed data for the release of the latest report has not been fixed as yet and reports said that the organization is yet to finalize the data.
The 1.1 billion pounds symbolizes the current level of suspicious loans, and more could be discovered.
“We’re continuing to crack down on COVID support scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers,” a spokesperson for the government said.
The support schemes were put in place quickly to save jobs, according to the spokesperson, who added that fraud projections will differ from actual losses since some funds could well be recovered or paid back.
According to the spokesperson, the government’s current central estimate for bounce back loan fraud is 3.3 billion pounds, or 7.5 per cent of total lent.
Aside from the suspected fraud, banks have claimed 2.6 billion pounds in government guarantees for defaulted loans, up from 1.6 billion pounds in March of this year, according to the source.
According to the source, an additional 1.2 billion pounds in such claims have been paid out, compared to 350 million pounds in claims as of March 31, according to data published on July 28.
According to the data from the source, 28.3 billion pounds worth of loans are being repaid on time, with another 4.7 billion fully repaid.
Concerns about a high risk of fraud have long dogged the scheme, which was set up with few checks on borrowers in order to get cash out quickly.
Under the scheme, 1.6 million people received loans of up to 50,000 pounds each. In April, the Public Accounts Committee of Parliament estimated that up to 4.9 billion pounds in loans could be fraudulent.
The National Audit Office, which examines public-sector spending, stated in December that the government failed to protect against fraud on the scheme, leaving it open to billions of pounds in losses.
In January, a junior government minister, Theodore Agnew, resigned as a result of the scheme’s handling, calling efforts to stop fraudulent abuse of the loans “woeful.”
(Adapted from Latestly.com)