Sixty-Eighth Report - Local authority administered COVID support schemes in England

Select Committee
Public Accounts Committee HC 1234 6 September 2023
Report Status Government responded
Conclusions & Recommendations 27 items (2 recs)
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Government Response (AI assessment · 27 of 27 classified)
Accepted 18
Accepted in Part 1
Acknowledged 3
Deferred 1
Not Addressed 1
Rejected 3
Government response
Treasury minutes: Government response to the Committee of Public Accounts on the Sixty-eighth report from Session 2022-23 · published 18 Nov 2023
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Recommendations & Conclusions

18 results
2 Conclusion Accepted
Ensure rigorous review of loss recovery approach, assessing public value and setting targets for recoverable figures.
Conclusion
The Departments have been slow to take effective action to recover losses – three years since the Department for Business, Energy & Industrial Strategy introduced the schemes, less than 2% of the estimated £1.1 billion lost to error and fraud … Read more
Government Response Summary
The government agrees. A review has been undertaken by the DBT's Audit and Risk Assurance Committee Chair, with findings presented. Work is underway to implement recommendations, including re-contacting local authorities, streamlining recovery processes, piloting a digital tool for viability assessment, and fast-tracking fraud referrals for litigation.
HM Treasury
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4 Conclusion Accepted
Share grant management approach across government and ensure early application in new scheme design.
Conclusion
The Department for Business and Trade needs to build on the progress made during the pandemic in developing the approach to the oversight of grants. BEIS responded to the initial and multiplying pressures on the administration of the schemes as … Read more
Government Response Summary
The government agrees and has created a new Grant Delivery Directorate (GDD) in DBT to ensure a consistent, best-in-class approach to grant management, including fraud prevention. Lessons learned will be shared through the Cabinet Office Grant Champions Forum and the upcoming Ipsos C19 evaluation report, with guidance implemented for future schemes.
HM Treasury
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9 Recommendation Accepted
Estimated £1.1 billion losses from grant scheme fraud and error, primarily in first cohort.
Recommendation
DBT currently estimates losses due to fraud and error from the grant schemes to be £1.1 billion. £985 million of this (or around 90%) is attributed to the first cohort. The much smaller estimates for the later schemes are still … Read more
Government Response Summary
The government agrees with the committee's recommendation and has implemented a review to improve recovery of irregular payments and improve value for money, including contacting local authorities, streamlining recovery processes, introducing a pilot digital tool, and fast-tracking referrals for litigation.
HM Treasury
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10 Conclusion Accepted
Delayed debt recovery guidelines and lack of enforcement for local authority recovery efforts.
Conclusion
DBT explained that the government did not issue local authorities with guidelines for undertaking debt recovery until December 2020.14 In March 2021 work started on checking a sample of payments from the first set of schemes. This work took until … Read more
Government Response Summary
The government agrees and details actions underway by December 2023 to improve recovery of irregular payments, including re-contacting local authorities, streamlining processes, introducing a pilot digital tool to assess recovery viability, and fast-tracking fraud referrals for litigation.
HM Treasury
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11 Conclusion Accepted
DBT lacks definitive figures on fraud and error split within COVID support schemes.
Conclusion
DBT does not have definitive figures on the split between fraud and error within the schemes. DBT told us the number of payments classified as fraud by local authorities were 8% of the total number of recovered payments it is … Read more
Government Response Summary
The government has accepted the finding, outlining actions taken to improve recovery of irregular payments, such as re-contacting local authorities, streamlining processes, implementing a pilot digital tool, and fast-tracking fraud referrals. The department is also working with local authorities to quantify recoverable payments and costs.
HM Treasury
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12 Conclusion Accepted
Only 2% of £1.1 billion in COVID scheme losses recovered by May 2023.
Conclusion
DBT told us that by May 2023 £20.9 million of losses had been recovered to date; this is around 2% of the £1.1 billion. We heard that £15 million had been recovered by local authorities and £6 million had been … Read more
Government Response Summary
The government agrees and details actions underway by December 2023 to improve recovery of irregular payments, including re-contacting local authorities, streamlining processes, introducing a pilot digital tool to assess recovery viability, and fast-tracking fraud referrals for litigation.
HM Treasury
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13 Conclusion Accepted
DBT faces substantial challenges and high costs in recovering irregular COVID payments.
Conclusion
DBT told us that it is considering contacting the 40% of authorities that did not respond to its fraud and error survey, to understand what was happening locally.20 However, when we questioned witnesses on what more could be done to … Read more
Government Response Summary
The government has accepted the finding, stating it has re-contacted all local authorities, streamlined recovery processes, introduced a pilot digital tool for viability assessment, and is fast-tracking fraud referrals for litigation. The department is also quantifying expected recoverable payments and costs with local authorities.
HM Treasury
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14 Conclusion Accepted
DBT reconsiders local authority recovery incentives and commissions review on irregular payments.
Conclusion
Despite these arguments, DBT and HM Treasury also sought to reassure us that the government was serious about pursuing fraud.23 When pressed by us, DBT said it would reconsider the possibility of allowing local authorities to keep a proportion of … Read more
Government Response Summary
The government has accepted the finding, stating it has re-contacted all local authorities, streamlined recovery processes, introduced a pilot digital tool for viability assessment, and is fast-tracking fraud referrals for litigation. The department is also quantifying expected recoverable payments and costs with local authorities.
HM Treasury
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15 Conclusion Accepted
Limited local authority input and outdated data contributed to COVID grant payment errors.
Conclusion
The LGA informed us that local government had little or no input into the government’s work on the design of the grant schemes up to the point of the initial announcements.26 DBT told us many of the early grants were … Read more
Government Response Summary
The government will write to the Committee by Spring 2024, detailing proposals to improve understanding of small businesses across sectors and strengthen mechanisms for receiving and acting on their feedback.
HM Treasury
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17 Conclusion Accepted
Insufficient departmental understanding of small businesses resulted in ambiguous COVID grant guidance.
Conclusion
There were also consequences arising from insufficiently granular knowledge about small businesses within the departments. We asked officials about the way that scheme designs and initial versions of guidance were unable to provide clarity about whether or how a range … Read more
Government Response Summary
The government will write to the Committee by Spring 2024, detailing proposals to improve understanding of small businesses across sectors and strengthen mechanisms for receiving and acting on their feedback.
HM Treasury
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18 Conclusion Accepted
DBT strengthened policy-delivery links; new legislation to improve business rates data sharing.
Conclusion
We were pleased to hear from DBT that the connection between policy and delivery within the department has been strengthened, and feedback from local authorities is 24 Qq 67, 72 25 Qq 22, 107–112; Letter to the Chair of the … Read more
Government Response Summary
The government confirms the recommendation is implemented, highlighting the creation of the new Grant Delivery Directorate (GDD) to centralise and oversee grant schemes, aiming for a consistent approach, protection of public money, and value for money. The GDD will also facilitate sharing best practices and lessons learned across government.
HM Treasury
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20 Conclusion Accepted
Increased departmental capacity and local engagement improved later, more targeted grant schemes.
Conclusion
BEIS conducted a review of COVID-19 business grant delivery in early 2021 and then acted to increase capacity and capability within the department.43 There were improvements within the life of the COVID-19 business grants. Later stage grants were more targeted … Read more
Government Response Summary
The government states the recommendation is implemented, having created a new Grant Delivery Directorate (GDD) within DBT to centralise and improve the design, development, and delivery of all new grant schemes, ensuring consistent protection of public money and fraud combat.
HM Treasury
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21 Conclusion Accepted
DBT has established a specialist grants directorate to improve design and delivery.
Conclusion
When we asked about the current situation, DBT told us it now has a specialist business grants and investment directorate of 120 people with 30 working on grants, which it describes as a centre of excellence. It highlighted that members … Read more
Government Response Summary
The government confirms the recommendation is implemented, stating DBT has established a new Grant Delivery Directorate to centralise and oversee the design, development, and delivery of all new DBT Grant Schemes. This directorate aims to protect public money, combat fraud, and ensure value for money, while sharing best practices.
HM Treasury
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22 Conclusion Accepted
Central and local government made significant efforts delivering pandemic business grants.
Conclusion
HM Treasury told us Ministers’ goals for the business grant schemes were to ensure sure that businesses could survive the pandemic and people stayed in employment for longer.49 We heard how civil servants in HM Treasury and BEIS (now DBT) … Read more
Government Response Summary
The government agrees with the finding and commits to publishing the delayed Ipsos evaluation report in late November 2023, after Office of National Statistics clearance. DBT will write to the Committee following publication to set out its conclusions from the evaluation.
HM Treasury
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23 Conclusion Accepted
Effectiveness of pandemic business grants and their impact remains unknown.
Conclusion
HM Treasury acknowledged that it still does not know how well the government’s goals were met and what was achieved for the money spent. It told us it wanted to answer the question of “whether this was the right thing … Read more
Government Response Summary
The government agrees with the finding and commits to publishing the delayed Ipsos evaluation report in late November 2023, after Office of National Statistics clearance. DBT will write to the Committee following publication to set out its conclusions from the evaluation.
HM Treasury
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25 Conclusion Accepted
Government lacked contingency plans for emergency country-wide business support schemes.
Conclusion
When the pandemic started, the government did not have contingency plans for the country-wide emergency business support schemes of the kind that it quickly decided were needed.59 HM Treasury told us that there had not been advance planning for a … Read more
Government Response Summary
The government agrees with the finding and commits to considering IPSOS evaluation findings, anticipated guidance from Cabinet Office and HM Treasury, and recommendations from NAO and GGMF reports when planning future schemes and contingencies by Spring 2024. DBT will also enhance understanding of local government capabilities.
HM Treasury
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26 Conclusion Accepted
Absence of contingency plans caused scramble and flawed early scheme design.
Conclusion
The absence of contingency plans contributed to the scramble at the start of the pandemic, with knock-on effects much further down the line. HM Treasury told us that it had to create a function to pay business grants from scratch … Read more
Government Response Summary
The government agrees with the finding and commits to considering IPSOS evaluation findings, anticipated guidance from Cabinet Office and HM Treasury, and recommendations from NAO and GGMF reports when planning future schemes and contingencies by Spring 2024. DBT will also enhance understanding of local government capabilities.
HM Treasury
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27 Conclusion Accepted
Pandemic lessons being fed into Cabinet Office for future grant consistency.
Conclusion
Focusing on the future, we were keen to understand whether the lessons learned from the pandemic were being turned into plans that could be safely stored and, if necessary, taken off the shelf to help in a future emergency.66 This … Read more
Government Response Summary
The government will incorporate IPSOS evaluation findings and anticipated guidance into future scheme planning and contingencies. It will also consider recommendations from pending NAO and GGMF reports and enhance understanding of local government capabilities for future delivery models.
HM Treasury
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