A third of departments set to miss annual report deadline, Treasury says

2021-22 reports will include statements on the impact of the pandemic on departmental goals plus a fraud-and-error analysis of Covid schemes

By Jim Dunton

26 Apr 2022

At least eight departments have warned they will be unable to meet publication deadlines for their 2021-2022 annual report and accounts submissions, Treasury permanent secretary Sir Tom Scholar has said.

The admission came in an update to members of parliament’s Public Accounts Committee, responding to queries about the latest cost estimates for fraud and error in relation to departments’ coronavirus support schemes.

Scholar said that for their 2021-22 ARAs, all departments were required to report on the impact of the pandemic on departmental goals, strategic objectives and priority outcomes, and provide a fraud and error analysis of Covid support schemes.

But he noted that multiple departments had given early warnings that they were unlikely to be able to produce their key annual reports in time for the target of publication before parliament breaks up for the summer recess in late July.

“We have returned to an administrative deadline of 30 June for laying ARAs,” Scholar said. “Eight departments have indicated they will not achieve a pre-recess laying date for 2021-22 (due in part to legacy issues and delays to local government pension assurance).

“The Treasury is hosting forums to identify and resolve issues that may hinder more timely reporting and will cascade relevant guidance as needed.”

Scholar did not identify the departments involved. The Department for Education is one ministry that has historically struggled to publish its ARA in summer, often because of conflicts between school accounting periods and those used in central government.

In answer to MPs’ questions on fraud and error in the government’s Covid support schemes, Scholar’s letter repeated fraud and error estimates contained in departments’ 2020-21 ARAs – most of which were published last year.

He cited HM Revenue and Customs’ estimate of an 8.7% fraud and error rate in the Coronavirus Job Retention Scheme. A total of £60.7bn was paid through the furlough scheme in 2020-21, after voluntary repayments were made.

In relation to HMRC-administered Covid schemes, Scholar reiterated the government’s March 2021 plans to recover up to £1bn from fraudulent or incorrect payments via £100m invested in the 1,265-strong Taxpayer Protection Force.

“The Taxpayer Protection Taskforce is fully funded for 2022-23, and HMRC will continue to pursue risks on the schemes for many years to come through its wider programme of compliance work,” Scholar said.

He added that the return on investment in fraud recovery on Covid loans was “much more difficult to estimate”, particularly in relation to the Bounce Back Loan Scheme for businesses, overseen by the Department for Business, Energy and Industrial Strategy.

“Recoveries for the vast majority of cases are expected to be conducted by lenders but in some cases, notably in the case of serious fraud, law enforcement agencies will also have a role,” he said.

Although the BBLS is overseen by BEIS and administered by the British Business Bank, its loans – of up to £50,000 – were made by retail banks, underwritten by the government.

In January, government efficiency minister Lord Theodore Agnew quit his job in protest at what he described as “woeful” oversight of the £47bn scheme on the part of BEIS and BBB. Agnew went on to accuse the Treasury of having “no knowledge or little interest in the consequences of fraud to or economy or society”.

Scholar’s letter quotes BEIS annual report and accounts figures for 2020-21 that gave an error and fraud range of £3.6bn to £6.4bn for the Bounce Back Loans Scheme. A National Audit Office report in December said £17bn of the total may not be repaid, although the figure is more broad-based than fraud and error, also including legitimate borrowers who are unable to pay.

Scholar’s letter said that the police-led National Investigation Service had been allocated an additional £13m in last month’s Spring Statement to “double its investigative capacity on Bounce Back Loans and fund further enforcement activity”.

He said the BBB would receive £11m in funding over three years to boost its counter-fraud and assurance programme.

Scholar added that the BBB had commissioned a full, multi-year evaluation of the business loan schemes, which is being conducted by London Economics and Ipsos MORI.

“The first report will be published in the summer, with subsequent reports following in 2023 and 2024,” he said.

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