BEIS Annual Report & Accounts 2020-21

Public Accounts Committee Closed Inquiry
Opened: 12 Jan 2022 Closed: 2 Sep 2022 Parliament page
Gareth Davies, the Comptroller and Auditor General (C&AG) of the National Audit Office, has qualified his audit opinion on the Department for Business, Energy and Industrial Strategy 2020-21 accounts because of the material levels of fraud and error in COVID-19 business support scheme expenditure . The Committee will question senior … Read more
4 Recommendations
16 Conclusions
1 Report
1 Letter
Activity timeline 3 events
2 Sep
2022
Report published
11 Jul
2022
Correspondence
18 May
2022
Report published
Title HC No. Published Items Response
First Report - Department for Business, Energy & Industrial Stra… HC 59 18 May 2022 20 Responded
Recommendations & Conclusions
20 results
2 Recommendation Not Addressed
First Report - Department for Busi…
The Department does not have a good enough assessment of the levels of fraud and...
The Department does not have a good enough assessment of the levels of fraud and error in local authority administered business support grants. During 2020– 21 and 2021–22 the Department has provided funds to local authorities to distribute to local … Read more
Government Response
The government response discusses Électricité de France’s (EDF) strategies, plans, and the estimated costs of decommissioning, and doesn't address the recommendation to calculate fraud estimates.
HM Treasury
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3 Recommendation Accepted
First Report - Department for Busi…
The Department does not know whether grants distributed by local authorities on its behalf have...
The Department does not know whether grants distributed by local authorities on its behalf have benefited businesses, including those most in need of that funding. Although the Department set the eligibility criteria for grant schemes administered by local authorities, it … Read more
Government Response
The government agrees with the recommendation and states that lessons learned from delivering the initial COVID-19 support grants is that greater assurance can be obtained through mandating pre-payment eligibility checks by local authorities, improved assurance sampling design, innovative data collection and management, as well as independent evaluation.
HM Treasury
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4 Conclusion Accepted
First Report - Department for Busi…
The Department was aware of heightened fraud risks within its COVID-19 business support schemes from...
The Department was aware of heightened fraud risks within its COVID-19 business support schemes from the outset but did not make full use of all the tools at its disposal to prevent and detect fraud. The Department expected that some … Read more
Government Response
The government agrees with the Committee’s recommendation and states that the exchange of letters for schemes implemented under Ministerial Direction have since been published on GOV.UK, and that external advice was received ahead of the Bounce Back Loan Scheme’s launch on measures to try to mitigate fraud.
HM Treasury
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5 Recommendation Acknowledged
First Report - Department for Busi…
The Department has yet to set out how it is learning lessons from managing its...
The Department has yet to set out how it is learning lessons from managing its COVID-19 business support schemes to better protect taxpayers’ money Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020–21 7 in future. The … Read more
Government Response
The department continues to refine its estimates of the levels of fraud and error across its COVID-19 business support schemes and will publish revised estimates in its 2021-22 annual report and accounts due to be published in Autumn 2022. The COVID-19 loan schemes are delegated schemes, and primary responsibility for detection, investigation and recovery of fraud sits with lenders, in line with their usual processes.
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6 Recommendation Accepted
First Report - Department for Busi…
The Post Office’s mismanagement of its Horizon programme has had devastating consequences for individuals wrongly...
The Post Office’s mismanagement of its Horizon programme has had devastating consequences for individuals wrongly accused of fraud. The financial cost of compensating these individuals will largely fall to the public purse. The Horizon accounting system erroneously recorded shortfalls of … Read more
Government Response
The government agrees and has provided over £2.5 billion in funding over the past decade, and is providing a further £335 million over the next three years, and will share letters with the Committee from BEIS to Post Office, providing assurances for the Historical Shortfall Scheme, interim and full payments for those with overturned criminal convictions. Further letters will be shared with the Committee at the earliest opportunity.
HM Treasury
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1 Conclusion Acknowledged
First Report - Department for Busi…
On the basis of a report by the Comptroller and Auditor General we took evidence...
On the basis of a report by the Comptroller and Auditor General we took evidence from the Department for Business, Energy & Industrial Strategy (the Department) on its performance in 2020–21.1
Government Response
The government agrees with the Committee’s recommendation and will publish revised estimates in its 2021-22 accounts. The Department will publish revised estimates in its 2021-22 accounts.
HM Treasury
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7 Conclusion Not Addressed
First Report - Department for Busi…
In addition to its guaranteed loan schemes, the Department provided £21.8 billion in grant funding...
In addition to its guaranteed loan schemes, the Department provided £21.8 billion in grant funding to local authorities to distribute to businesses in their areas. The Department set the eligibility criteria and provided guidance on grant making to local authorities.20 … Read more
Government Response
The government response discusses the Programme, committing to meet the indicative timeframe and recruit/retain skills, and manages short-term risks to value for money; it doesn't address the conclusion about grant funding.
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8 Conclusion Acknowledged
First Report - Department for Busi…
Of the £21.8 billion grant funding the Department provided to local authorities to distribute in...
Of the £21.8 billion grant funding the Department provided to local authorities to distribute in their areas in 2020–21, the Department has so far attempted to assess the extent of fraud and error in only £11.5 billion of this funding, … Read more
Government Response
The government agrees with the Committee’s recommendation. The general principle applies that local authorities are responsible and accountable for the lawful use of funds under Section 151 of the Local Government Act 1972. Further details to be provided in due course, detailing how full cooperation from local authorities will enable robust fraud and error estimates.
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9 Conclusion Acknowledged
First Report - Department for Busi…
The success of these larger samples relies on the capacity and cooperation of local authorities...
The success of these larger samples relies on the capacity and cooperation of local authorities to respond to the Department’s requests for information.34 The Department considers that it has not yet given local authorities the opportunity to do the necessary … Read more
Government Response
The government agrees with the Committee’s recommendation, noting that local authorities are responsible for the lawful use of funds and must take steps to recover any payment made in fraud or error before BEIS becomes liable. BEIS will pursue collection of all outstanding debt unless there is a value for money (VFM) case for not doing so.
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10 Conclusion Acknowledged
First Report - Department for Busi…
Despite recognising these limitations and uncertainty in its current estimates, the Department does not believe...
Despite recognising these limitations and uncertainty in its current estimates, the Department does not believe that its grant funding has been subject to significant fraud.40 It suggests that fraud will ultimately range between 1% and 2%, which it would consider … Read more
Government Response
The government acknowledges the limitations and uncertainty in its current estimates, states that over £4 million has been voluntarily repaid from large companies and debt recovery of irregular payments due to error, fraud, or non-compliance is underway, and that full assurance work is underway and expected to be completed by the end of the calendar year.
HM Treasury
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11 Conclusion Accepted
First Report - Department for Busi…
Although the Department set eligibility criteria for grant schemes administered by local authorities, it delegated...
Although the Department set eligibility criteria for grant schemes administered by local authorities, it delegated most grant decisions to them. The Department told us that it provided clear guidance to local authorities on recordkeeping requirements and the need to be … Read more
Government Response
Responsibility for checking that all grant awards were issued in a compliant manner and to eligible businesses rests with the local authority. It is a condition of BEIS grants to local authorities that they must take all reasonable and practicable steps to recover any payment made in fraud or error before BEIS becomes liable.
HM Treasury
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12 Conclusion Acknowledged
First Report - Department for Busi…
Having sampled only 476 grants distributed by local authorities out of circa one million grants...
Having sampled only 476 grants distributed by local authorities out of circa one million grants made, the Department therefore has very little visibility of which businesses have benefited from these schemes.45 It cannot say whether many businesses in receipt of … Read more
Government Response
The government agrees with the recommendation and states that lessons learned from delivering the initial COVID-19 support grants is that greater assurance can be obtained through mandating pre-payment eligibility checks by local authorities, improved assurance sampling design, innovative data collection and management, as well as independent evaluation.
HM Treasury
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13 Conclusion Acknowledged
First Report - Department for Busi…
The Department was responsible for a substantial component of government’s overall financial response to the...
The Department was responsible for a substantial component of government’s overall financial response to the pandemic, resulting in the third-largest estimated lifetime costs of any department, as reported by the National Audit Office’s COVID-19 cost tracker.46 We have previously reported … Read more
Government Response
The government acknowledges the economic crisis brought about by the COVID-19 pandemic required an extraordinary response from government and that the design of certain COVID-19 business support schemes, combined with the pace at which they were being implemented, would create a heightened vulnerability to fraud and there would be a significant risk of credit losses.
HM Treasury
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14 Conclusion Acknowledged
First Report - Department for Busi…
Registrations of new companies on Companies House increased sharply during 2020–21.
Registrations of new companies on Companies House increased sharply during 2020–21. During the period 2015–16 to 2019–20, annual new company registrations averaged 640,000. By comparison, in 2020–21 there were more than 810,000, making new company registrations in that year more … Read more
Government Response
The government agrees with the Committee’s recommendation. The economic crisis brought about by the COVID-19 pandemic required an extraordinary response from government. The department was clear at the outset that the design of certain COVID-19 business support schemes, combined with the pace at which they were being implemented, would create a heightened vulnerability to fraud and there would be a significant risk of credit losses.
HM Treasury
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15 Conclusion Acknowledged
First Report - Department for Busi…
The Department launched its first COVID-19 business support scheme shortly after the first lockdown was...
The Department launched its first COVID-19 business support scheme shortly after the first lockdown was announced on 23 March 2020. Since then, the Department has launched many more, and now has around two years’ worth of experience of designing, implementing, … Read more
Government Response
The government agrees with the Committee’s recommendation and will publish revised estimates for Cohort 1 grants and first estimates for the subsequent schemes in its 2021-22 annual report and accounts. The department will write to local authorities with the findings and asking them were relevant to start the debt recovery process.
HM Treasury
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16 Conclusion Accepted
First Report - Department for Busi…
As some COVID-19 business support schemes have increasingly become part of business as usual, the...
As some COVID-19 business support schemes have increasingly become part of business as usual, the Department told us that, for example in relation to grants distributed by local authorities, its systems and methods are now approaching maturity. It considers it … Read more
Government Response
The government agrees with the recommendation to establish a standard framework for assuring grants delivered through local authorities, with a target implementation date of December 2022.
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17 Conclusion Acknowledged
First Report - Department for Busi…
The Department has commissioned evaluation of its business support schemes; however, it cautioned that it...
The Department has commissioned evaluation of its business support schemes; however, it cautioned that it is proving challenging to separate the impact of various aspects of government’s overall support package which also included, for example the furlough scheme.61 Several of … Read more
Government Response
The government agrees with the committee's recommendation to refine estimates of fraud and error across its COVID-19 business support schemes and will publish revised estimates in its 2021-22 annual report and accounts, and will write to local authorities to start the debt recovery process.
HM Treasury
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18 Conclusion Acknowledged
First Report - Department for Busi…
Between 1997 and 2000 the Post Office implemented a new IT system called Horizon.
Between 1997 and 2000 the Post Office implemented a new IT system called Horizon. This system is now known to be responsible for accounting discrepancies that suggested, for example, shortfalls of cash in Post Office branches.62 At the time, the … Read more
Government Response
The government acknowledges the devastating impact of the Horizon scandal on postmasters and states that it is right that affected postmasters are properly compensated. They will share letters with the Committee from BEIS to Post Office, providing assurances for the Historical Shortfall Scheme, interim and full payments for those with overturned criminal convictions.
HM Treasury
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19 Conclusion Accepted
First Report - Department for Busi…
In December 2020 the Department wrote to the Post Office, noting that the number of...
In December 2020 the Department wrote to the Post Office, noting that the number of applications to the Scheme was ‘…materially higher than expected resulting in a corresponding increase in possible scheme claims and costs…’ and that the Post Office … Read more
Government Response
The government agrees with the Committee’s recommendation and states it has provided over £2.5 billion in funding to support the Post Office network over the past decade, and is providing a further £335 million over the next three years.
HM Treasury
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20 Conclusion Acknowledged
First Report - Department for Busi…
The Department currently estimates that the scheme is likely to cost £153 million, of which...
The Department currently estimates that the scheme is likely to cost £153 million, of which £89 million is from the Post Office and £65 million is from the Department.65 The Department noted that its contribution was its current best estimate, … Read more
Government Response
The government agrees with the committee's recommendation and states it has provided over £2.5 billion in funding to the Post Office network over the past decade and will provide a further £335 million over the next three years, and will share letters with the Committee from BEIS to Post Office, providing assurances for the Historical Shortfall Scheme, interim and full payments for those with overturned criminal convictions.
HM Treasury
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Government Response AI assessment · 20 of 4 classified
Accepted 6
Acknowledged 12
Not Addressed 2
Total 4 recs + 16 conclusions
Correspondence 1 letter
11 Jul 2022 Correspondence from Sarah Munby, Permanent Under-Secretary of State, Department for Business, Energy & Industrial Strategy, re follow up to the first report – BEIS Strategy Annual Report and Accounts 20-21, dated 6 July 2022
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