HM Treasury will set up a scrutiny panel to oversee work to tackle Covid-19 fraud and ensure lessons are learned for future crises.
The Covid Fraud Scrutiny Panel will be chaired by the chief secretary to the Treasury and the Cabinet Office minister responsible for fraud.
It will comprise government members and external experts who meet every six months for two years.
The scrutiny panel was one of the recommendations in Covid corruption commissioner Tom Hayhoe's final report into fraud and error in Covid spending programmes.
The government spent an estimated £380bn between the start of the pandemic and June 2026.
Hayhoe’s report found that an estimated £10.9bn was lost to fraud and error across pandemic support schemes, although the Public Sector Fraud Authority estimates the losses could be higher.
So far, just £1.8 billion has been recovered.
In its response to the report, the government has fully accepted most of Hayhoe's recommendations to embed fraud prevention into future emergency planning, streamline data sharing for faster detection, and create stronger incentives and oversight to drive recovery efforts.
It has also agreed to reform professional accountability standards and increase transparency in public spending.
The government “partially” accepted four of the report's recommendations, including the designation of a “challenge champion” in crisis decisions to manage fraud risk. The government argued that existing risk models already cover this function and instead of creating a new title, it will clarify how current guidance applies.
The government’s response to Hayhoe’s report coincides with the launch of a new counter-fraud “squad” to intensify Covid-fraud recovery efforts.
The Public Authorities Fraud Investigation and Enforcement Service (PAFIES) has been granted “the strongest investigatory tools in a generation” to pursue suspected fraudsters, including search-and-seizure and the authority to compel information from third parties.
Additionally, powers from the Public Authorities (Fraud, Error and Recovery) Act 2025 have extended the limitation period for civil claims relating to Covid fraud against public authorities from six years to twelve, meaning that suspected fraudsters can be pursued until 2032.
It also introduces civil financial penalties to accelerate enforcement and enables the direct recovery of fraud-related debts from earnings and bank accounts following a Public Sector Fraud Authority investigation.
Chancellor Rachel Reeves said: “My message to those who owe the public purse money is clear - those who profited, will pay.”
Satvir Kaur, parliamentary secretary in the Cabinet Office, said: “Those who chose to exploit a national crisis to line their own pockets now have nowhere left to hide.
“Our decision to go after those who have cheated the system as part of our wider crackdown on fraud against public services has already helped save £7.5bn. We will use every tool at our disposal to protect public money and fund the frontline services the British people rely on.”
The government said that nearly 2,000 company directors have already been banned and 86 criminals prosecuted to date.
It added that those who did not respond to the voluntary repayment scheme last year “will now face the full force” of the new powers in the autumn.