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The Business Department’s handling of Covid support programs has left an “open target” for fraudsters and embezzlers that has added “billions to taxpayers’ woes”, Parliament’s spending watchdog has found.

In its review of the Department for Business, Energy and Industrial Strategy (BEIS) annual report, the Public Accounts Committee (PAC) said it recognized the government was providing crucial support to businesses at the height of of the pandemic.

However, he said efforts to identify the frauds and errors had come too late, given that by the time they are confirmed the money will have been spent and “the leads will have long since gone cold”.

“BEIS says it saw this risk coming, but it’s really unclear where the government was looking when it put together its initial response to Covid,” said PAC chairwoman, Labor MP Dame Meg Hillier.

“It offered an open target for fraudsters and embezzlers and they cashed in, adding billions and billions to taxpayers’ woes. These lessons should have been learned from the banking crisis a decade ago and could have been prepared in government pandemic exercises.

The comments come amid frustration at the extent of Covid fraud that has put billions of pounds of government cash at risk.

Of the £79.3billion in government-guaranteed loans to support businesses in the first year of the pandemic, taxpayers are estimated to lose around £4.9billion to fraud and fraud. errors. This is on top of a further £5.7bn, which would have been lost to furlough and self-employment schemes.

The report accuses BEIS of failing to sufficiently identify or reflect the potential risks of organized economic crime.

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“Some of his eye-popping losses represent only the department’s best estimates so far, so the actual amount of taxpayers’ money that will be lost could be even higher,” PAC said, noting that it there was also little information about the true level of fraud. linked to the £21.8 billion in Covid grants, which were distributed by local authorities.

BEIS only estimated levels of fraud and error related to £11.5bn of those grants at around £1bn, PAC said.

A government spokesperson said: “We continue to crack down on Covid Support Scheme fraud and will not tolerate those who seek to defraud consumers and taxpayers.

“These programs have been implemented with unprecedented speed to protect millions of jobs and businesses. If the government did not act quickly, more businesses would have failed and many more jobs would have been lost.

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