The Department for Business and Trade is setting up a "departmental emergency response function" to help it to deliver economic support in future national emergencies, permanent secretary Gareth Davies has said.
DBT's work is detailed in a letter from Davies to parliament's Public Accounts Committee in response to the panel's report on business-support schemes set up in the early days of the Covid-19 pandemic that were exploited by fraudsters.
The emergency response function will comprise a group of staff who can be mobilised to participate in a response when needed, alongside a training and exercising programme to "build departmental capability and readiness" for a future crisis, the perm sec said.
Davies's update to MPs follows last year's PAC report on eight support schemes for small business set up by DBT's predecessor, the Department for Business, Energy and Industrial Strategy, the Treasury and local authorities between March 2020 and March 2022.
The schemes lent a total of £22.6bn to help small businesses through lockdowns, via channels such as the Small Business Grant Fund; the Retail, Hospitality and Leisure Grant Fund; and the Restart Grant. However, around £1.1bn is suspected to have been illegitimately obtained.
As of January this year, just £33m of the wrongly obtained funding had been recovered, according to DBT. The department said it only expected that a total of £85m would be recovered, based on local-authority returns.
As part of their report on the loans debacle, MPs said DBT needed to work with other departments and local government to develop a contingency plan for how it would respond to support businesses in a future emergency.
DBT perm sec Davies told PAC about work to create the emergency response function in a progress update sent on 30 April, but only published yesterday.
"DBT is in the process of setting up a departmental emergency response function and procedures in line with Cabinet Office best practice, to complement sector specific plans which already exist for the critical national infrastructure sectors for which we are the lead government department," he said.
"These include a concept of operations setting out departmental emergency response procedures, the creation of an emergency response group of staff who can be mobilised to participate in a response, and a training and exercising programme to build departmental capability and readiness.
"We intend that these response procedures will also support the department to deliver future economic support should this be required in either the initial response or recovery phase of a future emergency."
DBT is also working with other government departments and the National Audit Office to contingency plan for any new future grant scheme, Davies said.
He added that DBT's newly established grant-delivery directorate had been "placed at the heart" of all new grant schemes with departmental involvement "to ensure a high level of leadership and skill is applied to arrangements for the delivery of grants".
Davies said 42 staff currently work in the grant-delivery directorate and that they have "significant" specialist knowledge. He added that there are plans for further recruitment "in the near future".
"The Covid schemes have shown that grant delivery and assurance require specialist capability and expertise," he said.
"Therefore, any future models will incorporate the requirement that staff regularly seek to ensure their knowledge and skills in grant delivery continue to be up to date and are refreshed as appropriate. By taking this approach we will ensure that key areas such as reconciliation and debt recovery are sufficiently resourced for success."
PAC's September 2023 report on the handling of support loans for small business was scathing.
Committee chair Dame Meg Hiller said the government's lack of planning meant a door had been left "wide open" for the dishonest to profit from schemes designed to keep the nation afloat at a time of crisis.
"Never again should a national emergency find policy being written as we go along, without firm planning and good local data, with local authorities not properly funded to work in partnership on the support required," she said.
"The next emergency must find the government rigorously prepared with an understanding of the optimal means to support businesses through difficult times."