Chancellor Rachel Reeves is set to appoint a commissioner within weeks to recover billions lost to fraud and waste during the Covid-19 pandemic. This move aims to shed light on government inefficiencies and recover substantial amounts of public funds.
The chancellor believes that £2.6 billion of taxpayer money lost to fraudulent activities during the pandemic can be reclaimed. The recruitment for a Covid corruption tsar will begin this week, in collaboration with the Department of Health and Social Care. The commissioner will report to Reeves, allowing government lawyers to start the process of recovering these funds.
What is to be investigated?
Working with HMRC, the Serious Fraud Office, and the National Crime Agency, the commissioner will investigate an estimated £7.6 billion worth of Covid-related fraud. This includes fraudulent business loans and grants, incorrect furlough claims, and misuse of the “Eat Out to Help Out” scheme.
Reeves is expected to tell parliament that this initiative will ensure that money “owed to the British people” is returned to public services, emphasising that the funds have been “in the hands of fraudsters” for too long.
“I will not tolerate waste. I will treat taxpayers’ money with respect and return stability to our public finances,” Reeves will declare. She will also criticise the previous administration, especially for the billions spent on ineffective personal protective equipment (PPE).
Reeves is expected to highlight how the past government increased taxes while allowing waste and inefficiency, particularly during the pandemic. She will point to the flawed PPE contracts signed during Sunak’s tenure as chancellor, which did not meet the NHS’s needs.
Billions could be recovered
During the election campaign, Labour claimed that billions could be recovered from fraudulent contracts, although it is believed that over £4 billion may be irrecoverable. The Labour manifesto includes plans for stricter sentencing for fraud and corruption against public services and reforms in public procurement to exclude those involved in fraud against the state.
The previous government faced significant criticism for its pandemic practices, including suspending usual procurement processes and introducing a “VIP lane” for PPE manufacturing, often benefiting those with close connections to government ministers. Official figures show nearly £10 billion was wasted on unusable PPE, with annual DHSC accounts revealing that nearly three-quarters of PPE spending during the pandemic was written off.
The former government defended its spending, citing the unique pandemic circumstances, global PPE shortages, and the urgent need to secure protective equipment for frontline workers.
New audit
Reeves has requested a new audit of public finances from the Treasury, expected to be released next week. She will deliver a parliamentary statement on the state of public finances before the recess, which will include her response to the public sector pay review. This statement will also set the date for the next budget and initiate the Office of Budget Responsibility’s forecast process.
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