Tens of billions of pounds of taxpayers money dished out as loans to keep struggling firms afloat during the pandemic are being hoarded in bank accounts instead, MPs have been told.
Some £21billion - half of the total £42billion doled out by Rishi Sunak under various schemes - has yet to be used by the businesses that claimed it, representatives of UK banks said.
The money was designed to help firms with rent and other expenses during the lockdowns and the general economic disaster that has been 2020.
They are underwritten by the Treasury, meaning the taxpayer foots the bill if they are not paid back by the recipient.
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Bounce back loan fraud ‘five times higher’ than typical levels
PA
14 December 2020, 6:11 pm
Levels of fraud from taxpayer-backed Covid-19 loan schemes are around five times higher than typical figures, according to senior UK bankers.
Bosses at Lloyds and Santander told MPs on the Treasury Select Committee that around 1% of bounce back loans have been taken out fraudulently.
David Oldfield, chief executive of Lloyds Commercial Banking, said his bank has seen 3% of applications rejected, with 2% of those approved later turning out to be fraudulent. Around two-thirds have subsequently been frozen.
He said: “That’s still a large number but as a percentage that’s about five times higher than we would normally see.
Levels of fraud from taxpayer-backed Covid-19 loan schemes are around five times higher than typical figures, according to senior UK bankers.
Bosses at Lloyds and Santander told MPs on the Treasury Select Committee that around 1% of bounce back loans have been taken out fraudulently.
David Oldfield, chief executive of Lloyds Commercial Banking, said his bank has seen 3% of applications rejected, with 2% of those approved later turning out to be fraudulent. Around two-thirds have subsequently been frozen.
He said: “That’s still a large number but as a percentage that’s about five times higher than we would normally see.
“We take fraud very seriously. I think we would all recognise that the design of that scheme was a trade-off versus the checks that we would be doing. We do screen every application.”