UK Inquiry Tracker

COVID-19 Employment Support Schemes

Public Accounts Committee Closed Inquiry

Opened: 14 Oct 2022 Closed: 1 Jun 2023 Parliament page

In March 2020 the government announced two schemes to support employment during the pandemic: the Coronavirus Job Retention or “furlough” scheme, and the Self-Employment Income Support Scheme (SEISS). In total, the two schemes cost close to £100 billion of taxpayers’ money. A report by the National Audit Office has found … Read more In March 2020 the government announced two schemes to support employment during the pandemic: the Coronavirus Job Retention or “furlough” scheme, and the Self-Employment Income Support Scheme (SEISS). In total, the two schemes cost close to £100 billion of taxpayers’ money. A report by the National Audit Office has found that the employment support schemes achieved their primary aim of protecting jobs and businesses during the pandemic - with unemployment peaking at just over 5% - and that the actual costs of the schemes fell well below departmental estimates. However, the NAO noted that “Designing schemes at speed, coupled with the inherent uncertainty over the course of the pandemic, meant that the schemes would inevitably have flaws.” The NAO found that “it is likely that several billion pounds have been paid to claimants who saw their incomes increase during the period. The Committee will question senior officials at HMRC on whether the schemes achieved their objectives to support incomes and the labour market and reached those previously excluded from the schemes; how the Departments managed the delivery of the schemes through their later iterations, including attempts to improve the value for money of the schemes by making them more targeted while managing the risk of error and fraud; and how HMRC has estimated the level of error and fraud and undertaken compliance work to detect error and fraud. Commenting on the NAO report on Covid 19 employment support that underlies this inquiry and call for evidence, PAC Chair Dame Meg Hillier MP said: “Government's COVID employment support schemes protected millions of people and businesses from hardship during the pandemic. While it established this essential support quickly, billions of pounds were wasted through fraudulent claims and loose controls. Government was too slow to act in response. “HM Revenue & Customs must get a grip on how it measures and tackles fraud and error. Particularly at a time of constrained public finances, this could go a long way to supporting millions of citizens and essential public services.” If you have evidence on the issues raised in this inquiry, please submit it here by November 4 at 18:00. Show less

14 Recommendations

12 Conclusions

1 Report

1 Oral session

1 Letter

1 Event

Activity timeline 5 events

30 May
2023

Report published

Treasury minutes: Government response to the Committee of Public Accounts on the Fortieth report from Session 2022-23

8 Mar
2023

Report published

Fortieth Report - COVID employment support schemes

29 Nov
2022

Correspondence

Correspondence from Janet Alexander, Director Compliance Operations Directorate, HMRC, re HMRC Covid-19 Employment Support Schemes – Public…

17 Nov
2022

Oral evidence

COVID-19 Employment Support Schemes

17 Nov
2022

Formal meeting (oral evidence session) · The Grimond Room, Portcullis House

COVID-19 Employment Support Schemes

Oral evidence sessions 1 session

17 Nov 2022

View on parliament.uk

COVID-19 Employment Support Schemes

Beth Russell · HM Treasury Janet Alexander · HM Revenue and Customs Jim Harra · HMRC

Reports 1 report · click to expand

Title	HC No.	Published	Items	Response
Fortieth Report - COVID employment support schemes	HC 810	8 Mar 2023	26	Responded

Recommendations & Conclusions

3 results

5 Recommendation Rejected

Fortieth Report - COVID employment…

We are concerned that in the absence of effective criminal and civil sanctions there is...

We are concerned that in the absence of effective criminal and civil sanctions there is little incentive for those who overclaimed COVID-19 employment support to make repayments. Despite the billions of pounds lost in error and fraud, HMRC has taken … Read more

Government Response

The government disagrees with the recommendation and states that HMRC will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework but is unable to pre-determine case outcomes.

HM Treasury

View details

21 Conclusion Rejected

Fortieth Report - COVID employment…

We have previously expressed concern about the small number of criminal prosecutions for tax fraud.35...

We have previously expressed concern about the small number of criminal prosecutions for tax fraud.35 As part of our inquiry into fraud and error across COVID-19 support schemes, we were also concerned that inconsistencies between Departments in their approaches to … Read more

Government Response

The government disagrees with the Committee’s recommendation and states that HMRC will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework but is unable to pre-determine case outcomes.

HM Treasury

View details

23 Recommendation Rejected

Fortieth Report - COVID employment…

While HMRC had by October 2022 exceeded its target to open 30,000 civil cases on...

While HMRC had by October 2022 exceeded its target to open 30,000 civil cases on the employment support schemes during 2020–21 to 2022–23, the level of penalties it has issued has been small compared to both the overpayments it has … Read more While HMRC had by October 2022 exceeded its target to open 30,000 civil cases on the employment support schemes during 2020–21 to 2022–23, the level of penalties it has issued has been small compared to both the overpayments it has identified and the billions of pounds of error and fraud. By March 2022, HMRC had issued £3.5 million of penalties to those who overclaimed SEISS grants (the equivalent of 7% of total overpayments identified through its civil cases covering SEISS). For CJRS the figure was £1.1 million (0.5% of CJRS overpayments).41 We challenged HMRC about its approach on penalties as we were concerned that it does not provide an incentive for those who have identified they made an error in their claims to make a repayment. In particular, we asked HMRC why it had not issued penalties in four cases where the NAO found there were strong 34 C&AG’s Report paras 30.20, 3.36–3.37 35 For example, Committee of Public Accounts, Tackling tax fraud, 34th Report of Session 2015–16, HC 674, April 2016, pages 5 and 6; and Committee of Public Accounts, Collecting tax from high net worth individuals, 36th Report of Session 2016–17, HC 774, page 6 36 Public Accounts Committee, Fraud and Error, Ninth Report of Session 2021–22, HC 253, 30 June 2021 37 Qq 52, 84–86; C&AG’s Report, para 3.36 38 Q 84 39 Letter from Janet Alexander, Director, Compliance Operations, HM Revenue & Customs, to Chair of the Committee of Public Accounts, 21 November 2022 40 Qq 57, 84–86 41 C&AG’s Report, paras 3.26, 3.38 COVID employment support schemes 15 indications that claimants may have deliberately inflated claims beyond their entitlement.42 HMRC said that it was not enough to be suspicious or sceptical about a claim - it had to demonstrate that a person deliberately made a false claim or over an over-claim to impose financial penalties. If a case went to Tribunal it would need evidence that the false claim or over-claim was deliberate. HMRC accepted that fraud may have occurred in the four cas Show less

Government Response

HMRC disagrees and states it will continue its compliance activity on COVID-19 schemes and consider whether penalties can be charged within the legal framework. Penalties can only be applied where it is lawful for HMRC to issue them, and there is sufficient evidence of deliberate behaviour that could be shown in a tribunal or in court.

HM Treasury

View details

Government Response AI assessment · 23 of 14 classified

Accepted 13

Acknowledged 5

Not Addressed 2

Rejected 3

Total 14 recs + 12 conclusions

Correspondence 1 letter

29 Nov 2022 Correspondence from Janet Alexander, Director Compliance Operations Directorate, HMRC, re HMRC Covid-19 Employment Support Schemes – Public Accounts Committee, dated 21 November 2022

Parliament page