Covid Counter-Fraud Commissioner, Pursuing Recoveries and Preventing Reoccurrence: Final Report (CP 1462, December 9, 2025)
Summary
The Final Report of the Covid Counter Fraud Commissioner, Pursuing Recoveries and Preventing Reoccurrence, CP 1462, from HM Treasury, dated December 2025 and presented to Parliament by the Chancellor of the Exchequer. The contents list an Executive Summary and chapters titled Introduction, Findings, Recovery Efforts, Adopted Commissioner Proposals, Lessons Learnt and Recommendations, followed by annexes including Recovery Methods. The introduction describes phases of work, including a second phase that launched the COVID-19 Voluntary Repayment Scheme and a COVID Fraud Reporting Site. The acknowledgements mention support from HM Treasury and the PSFA and input on PPE procurement and the COVID-19 economic stimulus programs.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Covid Counter-Fraud Commissioner, Pursuing Recoveries and Preventing Reoccurrence: Final Report (CP 1462, December 9, 2025).”
Original at assets.publishing.service.gov.uk. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/covid-counter-fraud-commissioner-pursuing-recoveries-and-preventing-re-88a4bd94e8/
, SHA-256 90baba7ab8b3c10655ca0cf6c33d1992f8c831e43321a051d3347e9fd281769b.Full text
Pursuing Recoveries
and Preventing
Reoccurrence
Final Report of the Covid
Counter Fraud Commissioner
December 2025
CP 1462
HM Treasury
Pursuing Recoveries and
Preventing Reoccurrence
Final Report of the Covid
Counter Fraud Commissioner
Presented to Parliament
by the Chancellor of the Exchequer
by Command of His Majesty
December 2025
CP 1462
© Crown copyright 2025
ISBN: 978-1-5286-6125-6
E-number: E03505750 12/25
This publication is licensed under the terms of the Open Government
Licence v3.0 except where otherwise stated. To view this licence, visit
nationalarchives.gov.uk/doc/open-government-licence/version/3.
Where we have identified any third party copyright information you will
need to obtain permission from the copyright holders concerned.
This publication is available at: www.gov.uk/official-documents.
Any enquiries regarding this publication should be sent to us at
public.enquiries@hmtreasury.gov.uk
Engagement
3
Contents
Engagement 3
Foreword 5
Executive Summary 8
Chapter 1 Introduction 12
Chapter 2 Findings 19
Chapter 3 Recovery Efforts 36
Chapter 4 Adopted Commissioner Proposals 39
Chapter 5 Lessons Learnt 42
Chapter 6 Recommendations 49
Annex A Recovery Methods 56
Annex B Example Accounting Officer Assessment
Commissioning Letter 62
Annex C Detailed Reviews of Departmental Recovery
Performance and Future Opportunities 65
Annex D Preliminary Report to the Chancellor of the Exchequer
on Recovery of Losses due to Fraud in the
Procurement of Personal Protective Equipment
during the Covid 19 Pandemic 84
Annex E Evidence Base 98
Annex F Stakeholder Engagement Summary 102
4
Foreword
It is almost six years since we first heard of a potentially life-threatening
virus detected in Wuhan. Most of us didn’t pay much notice, but within
three months we were in lockdown.
The world changed almost overnight. We learnt to wear face masks,
maintain social distancing and stood on doorsteps bashing saucepans
and clapping for carers. Neighbours directed their appreciation of “NHS
Heroes” to me because I was chair of a local NHS Trust. They didn’t
understand that the job of non-executive chair in a crisis is to keep out
of the way as executive colleagues get on with their jobs. Instead, with
increasing numbers of front-line staff absent with COVID-19, I
volunteered, in apron, face mask and gloves, as an activity co-ordinator
on one of my trust’s inpatient wards.
My trust was adequately supplied with Personal Protective Equipment
throughout the pandemic, but I knew that stocks were tight elsewhere
and heard radio interviews with doctors and nurses whose trusts were
less well prepared. An elderly friend asked if it would be helpful if she
established a sewing group to make face masks for the NHS. We soon
heard that the NHS was overwhelmed with offers of such help and had
created a “VIP lane”, officially referred to as the High Priority Lane (HPL),
so that PPE suppliers who approached MPs and NHS officials could
have these offers expedited. The next we heard were rumours of
businesses with no links to PPE supply securing lucrative contracts via
this route. Furthermore, whether from HPL suppliers or others, stories
emerged of defective and incomplete consignments and suspected
fraud.
Working in healthcare, the pandemic didn’t threaten my livelihood. I
have spent most of my career in the private sector, primarily in retail,
and knew that many businesses were very vulnerable to the disruption
from COVID-19. Consequently, I was pleased when the Government
announced furlough payments and loan schemes to support business.
But, as with PPE supply, we soon heard rumours that these schemes
were being abused and the public purse defrauded.
Fraud requires people without moral compass who are willing to
perpetrate it. However, it also requires the opportunity for fraud, which
arises from defects in or absences of controls to prevent it. I have found
through my review that many decisions taken during the COVID-19
crisis paid too little attention to the risk of fraud. In some cases, this was
accepted as necessary and proportionate to the importance of
responding rapidly to the crisis.
In this report, I criticise decisions that increased the risk of fraud and
failed to put mitigations in place. However, I recognise, and I hope
people reading this report also recognise, the extraordinary
circumstances and pressures facing public servants who were taking
5
these decisions. Notwithstanding my criticisms, I pay tribute to their
integrity and their commitment to doing the best for the public they
serve.
Time has moved on and good work has been undertaken, including
measures implemented on my recommendation since I started in
December 2024. Nonetheless, our outrage at fraud, abuse and error in
COVID-19 spending is undiminished. This report will do nothing to
reduce the anger, which will continue for years to come. However, I
hope that the work described in this report, undertaken over the past
year with the assistance of colleagues from HM Treasury and the Public
Sector Fraud Authority, helps explain why fraud occurred during
COVID-19 and how it can be avoided in future crises, provides assurance
about the work that has been undertaken across government in this
area since the pandemic, sets out what remains to be done, and
contributes to securing further recoveries.
Tom Hayhoe, Covid Counter Fraud Commissioner
6
7
Executive Summary
COVID-19 was a crisis unlike any other experienced in our lifetimes. It
demanded radical action, delivered rapidly. The government’s response
included enormous outlays of public money which exposed it to the
risk of fraud and error.
Most public organisations were unprepared for a crisis that required
spending on such a scale and with such urgency. Consequently, some
measures to protect against potential fraud were inadequate,
particularly where new delivery structures were established or novel
measures employed. This applied to Personal Protective Equipment
(PPE) procurement, where more than twelve months’ volume against
the “Reasonable Worst-Case Scenario” was ordered at a pace that
overwhelmed the newly created supply chain and involved measures
that invited mistrust, opportunism and profiteering. This also applied to
the support for small businesses, where lending relied on self-
certification with inadequate checks to prevent abuse and depended
on delivery by third-party lenders. Grants were delivered by local
authorities with varying capabilities and capacity for fraud prevention.
Much good work has been done to contain the losses and make
recoveries. The Department for Health and Social Care (DHSC) launched
its “turn the tap” programme in August 2020, cancelling PPE orders
worth £0.7 billion once it realised the scale of its over-ordering, and
established a Contract Dissolution Team which has spent the past five
years pursuing suppliers who failed to fulfil contracts. The Insolvency
Service has pursued Bounce Back Loan Scheme (BBLS) fraudsters,
securing criminal convictions and using its director disqualification
powers. The Department for Business and Trade (DBT) established the
Dissolution Objection Process (DOP) to prevent BBLS borrowers
defaulting on their loans and dissolving their companies. Around
70,000 businesses with outstanding COVID-19 loans placed in the DOP,
many of whom would have committed fraud, possibly worth £0.9
billion, have since either repaid their loans or withdrawn their
applications to dissolve. HMRC has recovered £1.3 billion in COVID-19
support scheme overpayments over the past five years.
Recoveries continue, with this government estimated to have delivered
almost £400 million in COVID-19 fraud and error benefits to date.
Important measures have also been undertaken to build capacity to
prevent further fraud. The Public Sector Fraud Authority (PSFA),
strengthening existing capability across government, was established
on 3rd August 2022. The Government Grants Function has developed
new guidelines for grant giving. The Public Authorities (Fraud, Error and
Recovery) Bill (PAFER), which creates new powers to tackle fraud and,
critically, extends the period during which actions against COVID-19
fraud can be taken by an additional six years, will shortly receive Royal
Assent. The Chancellor of the Exchequer has recently committed to the
8
funding of a new Public Authorities Fraud Investigation and
Enforcement Service. These changes represent important steps in
tackling public sector fraud.
There is much still to be done. Of the estimated £10.9 billion lost to
fraud and error from COVID-19 spending, £1.8 billion has been
recovered. Much of the shortfall is now beyond recovery, but areas
remain where investing in recovering money paid out incorrectly is
worthwhile and work should continue. HMRC, incorporated its COVID-
19 compliance work into its ‘business as usual’ investigation and
enforcement work in September 2023 and recognises that there are
further recoveries to pursue. Counter fraud and recovery activity has
varied significantly across departments, reflecting differences in
exposure to fraud during the crisis, in relationships to the stakeholders
they supported, and in their commitment, capability and investment in
counter fraud. Some departments were slow to step up recovery work.
My review of COVID-19 recovery activity across government identified
that HMRC, the Department for Media, Culture and Sport (DCMS), the
Department for Work and Pensions (DWP), the Department for
Education (DfE) and the Department for Transport (DfT) should
continue their activities in this area until completion.
Having reduced the number of disputed PPE contracts from 55 worth
£1,258 million in December 2024, DHSC should continue its work to
resolve the remaining eight PPE contested contracts representing £325
million in potential recoveries.
DBT should review the companies in the DOP, removing the objection
to dissolution for those who failed for genuine commercial reasons.
They should identify those with a reasonable suspicion of COVID-19 loan
fraud or abuse for the Insolvency Service to pursue director
disqualification orders, protect the public from former directors who
have abused the privileges given to limited liability companies, and use
compensation orders to recover public money.
The Ministry of Housing, Communities and Local Government (MHCLG)
should establish a dedicated function to monitor and support local
government, collecting data on local authorities' management of fraud
and error in the spending MHCLG does through these bodies. It should
develop a locally owned approach aimed at raising counter fraud
standards across all authorities and pursuing outstanding COVID-19
fraud using powers under PAFER.
There are also important steps required to protect against fraud in a
future crisis. Reflecting the work undertaken over the past year, I have
drawn four lessons from the pandemic experience that in turn have
generated nine recommendations for application across government
as a whole and four departmental specific recommendations.
9
Lesson One: The COVID-19 experience demonstrates that fraud
prevention is insufficiently embedded in thinking and practice across
government and, consequently:
• The government should make full use of legislative powers to tackle
fraud and promote a culture of innovation in fraud prevention.
• Fraud control should be embedded in resilience planning, and crisis
preparedness exercises should include fraud prevention and
mitigation.
Lesson Two: Ambitious programmes are intrinsically risky, requiring
robust challenge in related decision making, and can be addressed by
the following measures:
• Challenge should be built into crisis decision-taking, by designating
a “Challenge Champion” specifically charged with providing
challenge.
• The business case approval processes should recognise risk of fraud
and error and set aside an indicative 'clean-up cost' at the outset.
• Managing Public Money should be amended to require that
Ministerial Directions bearing on fraud risk are refreshed after four
months in order to continue.
Lesson Three: During a crisis and in its aftermath, there is a risk that
decision takers assume that everyone shares the same commitment to
tackling fraud and making recoveries, and consequently:
• Departments should be incentivised to maximise action to prevent
and recover fraud, including permitting departments to retain a
proportion of recovered funds.
• Working with professional bodies and regulators, the government
counter fraud community should identify how to raise standards to
protect the public against professionals assisting clients who abuse
or defraud emergency schemes.
• Preparations for future crises should include communications
directed towards reducing fraudulent behaviour, reminding people
that fraud and abuse of public spending programmes are not
victimless crimes, and demonstrating that perpetrators will be
pursued and punished.
Lesson Four: Good data and proper scrutiny are critical to good
decision-making, particularly when dealing with unknown
counterparties. These are best addressed through institutional
transparency, data and intelligence sharing and collaboration.
Consequently:
10
• PSFA should undertake a project to address how government
departments can share data more effectively during a crisis, which
should include considering whether it may be necessary to amend
the Digital Economy Act 2017.
• Public Sector bodies should be transparent in the award of grants,
loans, contracts to businesses and to other bodies, including details
of value, outline product or service description, timescale where
relevant, and beneficial ownership information. The government
should also continue to implement the small company reporting
changes in the Economic Crime and Corporate Transparency Act
2023 (ECCTA), including the requirement that Companies House
should require and publish profit and loss accounts, irrespective of
company turnover, assets or staff numbers.
• Finally, following a crisis, recognising that lessons are often not
learnt and recommendations not implemented, HM Treasury should
establish a scrutiny panel. The panel should include senior officials
from across government and external members, chaired by a
minister, to review implementation of these recommendations at six
monthly intervals for at least two years.
11
Chapter 1
Introduction
1.1 I was appointed on 3 December 2024 for a twelve-month term as
the Covid Counter Fraud Commissioner, empowered to "use every
means possible to recoup public money lost in pandemic-related fraud
and from contracts which have not delivered". In this capacity, I have
undertaken a comprehensive review of government spending arising
from the COVID-19 pandemic with four principal objectives:
a) to assess efforts to recover fraud and error to date and determine
where additional recoveries can be made, ensuring these are
vigorously pursued;
b) to provide assurance to the public and Parliament that the
government has exhausted all reasonable avenues for recovery;
c) to review individual contracts and provide additional scrutiny to
any disputed spending; and
d) to identify examples of good and bad practice during the
pandemic response.
1.2 I have developed a series of recommendations designed to
ensure that the lessons learnt from the COVID-19 pandemic are
embedded in government practice, preventing the reoccurrence of
similar mistakes in future emergency responses. These
recommendations reflect both the specific failures identified in
pandemic spending and the broader systemic improvements required
to strengthen the government's approach to preventing and
recovering fraud during periods of exceptional expenditure.
1.3 The work was structured into three distinct phases. Phase One
focused on strategy development, beginning with an examination of
Personal Protective Equipment (PPE) procurement, including both the
initial purchasing decisions and subsequent contract management.
This phase involved reviewing the existing evidence base on COVID-19
fraud, assessing ongoing and past recovery efforts, and evaluating the
potential for further recoveries. This included writing to Accounting
Officers across government asking for an account of their departments
and arm's length bodies (ALBs) work reviewing COVID-19 fraud, as
detailed in Appendix B. The foundation established during this phase
determined the approach in the next two phases.
1.4 Phase Two centred on direct action to drive recoveries and
strengthen ongoing counter fraud efforts across government. Key
initiatives included launching the COVID-19 Voluntary Repayment
Scheme and COVID Fraud Reporting Site to facilitate further recoveries.
12
These support government-wide efforts to recover COVID-19 fraud and
error.
1.5 Phase Three addressed future preparedness by identifying
lessons learnt from the COVID-19 experience and assessing their
application to government operations in both crisis and peacetime
situations. This phase culminates in the production of this report,
setting out key findings, lessons learnt and recommendations which
have been tested with stakeholders both inside and outside
government to ensure maximum impact and effectiveness.
1.6 This review has been broad in scope. The National Audit Office
(NAO) identified 389 separate measures introduced by government in
response to the pandemic in its COVID-19 Cost Tracker with an
estimated total cost of £376 billion. These measures included the
procurement of PPE, on which I focused initially, as well as a broad
variety of other schemes. These ranged from high profile economic
stimulus measures, such as the Coronavirus Job Retention Scheme
(CJRS - better known as ‘Furlough’) and the BBLS, to smaller initiatives
like the Zoo Support Fund.
1.7 My role has focused on spending by central government.
However, I have worked closely with partners in the devolved
governments and local authorities to better understand the measures
they introduced and their crucial role in the delivery of central
government schemes. One important example was the Small Business
Grants launched by the then Department for Business, Energy, and
Industrial Strategy (BEIS) but administered by local authorities.
1.8 My work forms only one strand in the government’s effort to
review, assess and learn from the pandemic. Many departments have
conducted internal lessons learnt exercises. Bodies such as the NAO
and Public Accounts Committee (PAC) have provided expert
assessments of spending during and after the pandemic.
1.9 The UK COVID-19 Inquiry, chaired by Baroness Hallett, continues
to explore key decisions taken during the pandemic, providing
comprehensive scrutiny and a detailed account of the government’s
response. Other institutions, including law enforcement, are pursuing
action into aspects of the government’s COVID-19 response. I have
sought to build on these initiatives rather than replicate them. I am
grateful to the tireless efforts of those inside and outside government to
learn from the pandemic and address its legacy.
13
Scope of the Report
1.10 My brief is focused on the issue of fraud against UK government
spending related to COVID-19. ‘Fraud’ here refers to individuals
dishonestly making a false representation, failing to disclose
information when legally obligated to do so, or abusing a position of
trust to gain something for themselves or another, or to cause a loss to
someone else. It is the act of intentionally deceiving another party to
obtain an advantage, which can be financial or otherwise, and can be
committed in various ways. In common with counter fraud work across
government, fraud is often considered alongside ‘error’, which refers to
cases where incorrect payments arise from genuine mistakes, made
either by the government or the customer. My review includes some
consideration of debt created by COVID-19 spending and particularly
the use of loan schemes to provide economic support. ‘Debt’ here refers
specifically to overdue amounts owed to the government, whether
arising from error, credit losses, or other sources.
1.11 Reflecting the terms of my brief and that of other organisations
examining the UK government response to COVID-19, there are some
important questions that this report does not attempt to answer. Many
of these issues are being considered by the UK COVID-19 Inquiry.
1.12 Cases involving existing criminal investigation or civil litigation
have not been covered here to avoid interfering with these processes.
The information about them provided in the report is limited to
departments’ confirmation of the numbers of active cases, without
specific details. However, insights derived from the continuing cases
and outcomes from those that have been resolved in recent months
have informed my findings.
1.13 The report also does not address allegations of corruption or
cronyism in PPE procurement. These important allegations have
understandably led to high levels of public interest. My core focus as
Covid Counter Fraud Commissioner has been on the pressing and
distinct issue of fraud against the public purse. While allegations of
corruption and cronyism in PPE procurement have understandably
generated high levels of public interest, these issues are often less
clearly defined and fell outside the formal scope of this review.
Nonetheless, fraud and corruption are frequently intertwined, and my
work has therefore addressed instances where these broader
allegations involved underlying fraudulent activity. This strategic focus
allowed me to dedicate the available support and expertise to
thoroughly address fraud, although the measures considered in this
report are also relevant to tackling related issues of corruption.
1.14 My review of fraud and abuse in PPE procurement has included
examining the governance of the programme and the High Priority
Lane (HPL), also known as the ‘VIP lane’, in particular. I have consulted
14
with leading figures in the anti-corruption field and have been grateful
for contributions from UK’s Anti-Corruption Coalition member
organisations including Transparency International, Spotlight on
Corruption and the Good Law Project.
1.15 My review has concentrated on the management of fraud and
error in new schemes and measures created to respond to the
pandemic, rather than in existing schemes that saw increased demand.
The most prominent example of these existing schemes is the
increased expenditure on Universal Credit (UC) uplift from March 2020.
Although I consider the management of the Department of Work and
Pension’s (DWP) schemes created specifically in response to COVID-19,
UC is not extensively covered in this report.
1.16 My report looks at COVID-19 spending through the lens of fraud
and necessarily highlights flaws. The report does not criticise the aims
of the COVID-19 support schemes or minimise their benefits in
protecting lives, businesses and public services. Further, I have not
commented on the efficacy or appropriateness of different measures.
My focus has been on their management of fraud and error in design,
implementation and subsequent administration.
Covid Counter Fraud Commissioner Approach
1.17 My work has been informed by a set of core principles designed
to deliver meaningful results:
a) Looking forward: emphasising recoveries and adopting an
'improvement mindset' rather than ascribing blame or
developing a blow-by-blow account of the pandemic.
b) Learning lessons rather than finding scapegoats: using the
diagnosis of what went wrong to develop and embed robust
improvements in practice and, whilst recognising accountability
for decisions taken, not ascribing blame for its own sake.
c) Celebrating success: as well as calling out mistakes and learning
from them, highlighting good practice and learning from success
stories.
d) Collaboration: encouraging candour and co-operation with
stakeholders involved in policy decisions relating to COVID-19
spending and in its subsequent management to benefit from
their skills and knowledge.
e) Practicality: looking for achievable solutions which can be
realistically delivered within the wider fiscal context and in the
near future to maximise impact.
15
f) Additionality: adding value rather than replicating existing
efforts. I have reviewed existing programmes to provide
assurance about the work that has been done and made
recommendations that build on existing work.
g) Delivering for taxpayers: looking for cost-effective solutions and
maximising financial returns for the taxpayer, so that public
money is spent on education, healthcare and other priorities
rather than enriching fraudsters.
1.18 I have drawn extensively on my own knowledge and experience
from working in the private sector, in the NHS, and in professional
regulation. Notwithstanding my collaborative, solutions-focused
approach, I have provided robust challenge to individuals and to
departments where necessary, addressing mistakes made during the
pandemic and errors and omissions in efforts to make recoveries since. I
have responded to the expectation of the public that every effort
should be made to recover money lost to fraud and error during the
pandemic and that we should be protected against any repetition in
future.
1.19 This work is not a comprehensive audit of all COVID-19 related
frauds. It has not been possible within my twelve-month tenure,
outside the specific brief to review PPE procurement, to closely review
all expenditure. Rather, this report focuses on areas with the greatest
levels of loss and the highest prospects for recovery. It looks at those
areas assessed to have the highest risk of fraud and those where
counter fraud activity to date has room for improvement.
Engagement
1.20 Although based in His Majesty’s Treasury (HMT) and reporting
directly to the Chancellor of the Exchequer, the project has been a
cross-government effort. The findings and recommendations
presented in this report are based on a variety of sources. I have sought
to achieve a balanced view and to support practical recommendations
that can deliver real value.
1.21 I have engaged extensively with key stakeholders across
government through a series of roundtables, complemented by
numerous formal meetings and informal discussions. Current and
former civil servants have provided invaluable insight into the period of
the pandemic and also highlighted the continuing challenges and
opportunities in driving counter fraud activity.
1.22 The report's approach has been informed by the earlier scrutiny
of COVID-19 spending by other organisations including the PSFA, the
NAO, and the Government Internal Audit Agency (GIAA). I have drawn
16
on the extensive evidence already available on the issue of fraud in
government COVID-19 spending but, where necessary, I have
commissioned new analysis to ensure recommendations are made on
a sound footing.
1.23 I am grateful for input from outside government. Evidence
submitted by organisations and conversations with individuals
motivated by public spirit have informed my thinking. Private and third
sector organisations and individuals have provided useful challenge to
government viewpoints. I am grateful to members of the public with
relevant expertise who approached me to share their experience. I have
consulted leading figures in healthcare management, the insurance
industry and academic study of risk and crisis management. Tackling
fraud and improving government capability has been a team effort.
Time since the pandemic
1.24 Attention may have moved on, but strong emotions continue to
surround the COVID-19 pandemic and the response of the UK
government.
1.25 Approaching six years since the first COVID-19 lockdown, the
landscape has changed greatly. Government has improved its counter
fraud capability through legislative measures such as the Procurement
Act 2023, administrative changes including the creation of the PSFA,
and provision of guidelines to public bodies from the Government
Commercial Function (GCF), Government Grant Management Function
(GGMF) and Government Debt Management Function (GDMF).
1.26 Recovering public money lost to COVID-19 fraud is harder now
than it would have been in the immediate aftermath of the pandemic.
In many cases, evidence has degraded, stolen funds have been
dispersed or moved offshore, and the justice system has had to deal
with other priorities, which means that there is limited capacity to
pursue COVID-19 fraud cases without deprioritising other issues. There
have also been significant limitations on the ability to get a full picture
of the details of COVID-19 spending, as key decision makers have
moved on and information has been lost.
1.27 Nonetheless, this project has demonstrated that it is possible to
achieve results, despite the passage of time, by recovering funds for the
taxpayer and learning lessons after the conclusion of a crisis. The Public
Authorities (Fraud, Error and Recoveries) Bill (PAFER) - which is
currently awaiting Royal Assent - provides new powers and,
importantly, will allow for action against COVID-19 fraud to continue for
a further six years beyond the normal limit.
17
1.28 Counter fraud work has not stopped, with experts across
government continuing to investigate suspected fraud and error. The
current government is estimated to have delivered almost £400 million
in COVID-19 fraud and error benefits, including fraud recoveries related
to PPE expenditure, the BBLS and HMRC schemes. I believe there is
much still to be done.
18
Chapter 2
Findings
2.1 This section contains chapters covering PPE procurement,
government support to businesses and individuals, and recovery efforts
by government. These findings reflect the analysis, undertaken with the
assistance of my team, of the wide range of information provided by
government departments and others.
PPE Procurement
Introduction
2.2 This chapter addresses the performance of DHSC recovering
money lost to fraud, abuse and error in PPE procurement during the
pandemic, primarily the spending by the ‘PPE Cell’ which brought
together DHSC, NHS England and the Government Commercial
Function (GCF) to co-ordinate UK government spending on PPE. I
reported to the Chancellor on the outcome of this work at the
beginning of April 2025. A copy of the full report appears in Appendix D,
edited only to exclude confidential material bearing on continuing or
future litigation against PPE suppliers.
Key Findings
2.3 The cross-government effort through the PPE Cell purchased far
more PPE than proved necessary, as a result of lack of preparedness
and lack of visibility of front-line stock. The UK spent considerably more
than comparable health economies on PPE, accounting for 65% of all
European spending on PPE in 2020 compared to 14% in 2019. DHSC’s
Annual Reports and its evidence to the COVID-19 Inquiry describe the
purchase of over 38 billion items of PPE between February and July
2020, of which 11 billion items had not been used by March 2024, and
losses of £10.0 billion. This sum is more than three times the amount
spent each year by the NHS on maternity services and neo-natal care in
England, or roughly 70% of the mental health budget. The over-
purchasing resulted from the UK being unprepared for the pandemic
because of problems with its emergency stockholding and lack of
visibility of the distribution of stock around the NHS, which led to
complaints from clinicians about PPE shortages in the early weeks of
the pandemic, and lack of supply to community services.
2.4 There was a high level of fraud compared to actual PPE usage.
DHSC’s 2023-2024 accounts estimate PPE fraud of £324 million,
equivalent to 2.4% of the PPE total spend on PPE during the pandemic.
19
However, this figure does not tell the whole story and must be
considered alongside the issue of over-ordering. Over-ordering and the
subsequent write-downs and write-offs mean that fraud makes up a
much larger proportion of the PPE that we actually used and paid fair
prices for. Over-ordering both increased the risk and amount of fraud
while obscuring its total impact. £324 million in estimated fraud, while
representing 2.4% of PPE total spend, is equivalent to 8.5% of the net
value, at regular non-crisis prices, of the PPE actually used.
2.5 Over-purchasing reflected poor forecasting and modelling, and a
commitment made early in the pandemic to very rapidly purchase 12
months stock in advance. The DHSC, with external consultancy support,
developed forecasts of demand which projected the need for 2.15 billion
pieces of PPE per month which was double the level demanded in any
single month during the pandemic. The DHSC then placed orders on
these volumes to cover the next twelve months, with a further
contingency of 20% to cover the risk that some supplies would not
arrive. The challenging conditions of the early months of the pandemic
created considerable uncertainty and justified purchasing at the high
levels forecast until the actual patterns of demand became clear.
However, placing orders for twelve months ahead at these levels proved
extremely costly and created an environment in which profiteering and
fraud was more likely.
2.6 The intensity of UK Government PPE Cell purchasing increased
the risk that it would pay higher prices and need to engage with
unknown and untested suppliers. While the urgent, intense purchasing
by the UK Government PPE Cell was necessary to mitigate the critical
risk of a national PPE shortage (which could have led to hospitals being
overwhelmed and a far greater loss of life), this approach also amplified
the risks to procurement. Specifically, the intense purchasing increased
the likelihood that the government would pay higher prices and need
to engage with unknown and untested suppliers. DHSC’s purchases
were on a scale that are likely to have driven prices up in a way that
would not otherwise have arisen from the activity of a medium sized
nation and raised the concerns of the public about alleged price-
gouging and profiteering. Factories understandably responded to the
surge in demand by selling their capacity to the highest bidder,
exploiting the opportunity to make profits while they could. The over-
ordering resulted in government paying spot prices at the top of the
market, not just to address urgent short-term needs but for long-term
supply. Prices for PPE are reported to have started falling from June
2020, by which point most of the PPE Cell’s orders had been placed.
Purchasing such a volume in a short period reduced the opportunity to
make repeat purchases from suppliers with a track record. A more
evenly paced approach to ordering would have resulted in government
taking advantage of prices falling after their early peak and making a
more realistic assessment of demand before committing to long-term
supply arrangements.
20
2.7 Over-purchasing created problems in making recoveries
against disputed contracts. The over-ordering also resulted in such a
flood of PPE supply that the DHSC’s warehouse and inbound goods
handling capacity was rapidly exceeded. This meant that PPE remained
in shipping containers for as long as two years before being inspected,
with the consequent problems for contract dispute resolution.
2.8 Most of the value of the disputed PPE contracts came from
contracts to purchase gowns, which were the PPE item most over-
purchased. At the end of March 2023, DHSC was holding over 104
months stock of gowns. Gowns represented 84% of the value in dispute,
with 52%, by value, of gown supplies being non-compliant either in
documentation, specification, or quality.
2.9 Lack of transparency, delayed contract publication and the HPL
undermined public trust, although do not appear to have contributed
to the problem of contested contracts. Questions have been raised
about the quality of deliveries from suppliers introduced to DHSC via
the HPL. Under this scheme, suppliers introduced by officials or
politicians were treated as high priority to enter the process for
consideration ahead of others. They were then subject to the same
review as other potential suppliers although in the first phase of the
pandemic this required few checks. I was told that the HPL was
developed as a response to the DHSC being flooded with well-meaning
offers to supply small quantities of unsuitable product, in response to a
“Call to Arms” from the Prime Minister and the DHSC Secretary of State.
Notwithstanding concerns from early reports about the quality of
deliveries by HPL suppliers, my analysis of the HPL contracts suggests
that they were no more likely to be subject to dispute than those from
outside the HPL. However, the absence of a material difference in the
quality of deliveries does not justify the departure from good
procurement practice and the impact on public trust created by the
existence of the HPL. Similarly, the failure to publish details of PPE
contracts on time, highlighted by the UK Anti-Corruption Coalition,
undermined public trust in government and invited suspicions about
corruption.
2.10 DHSC responded effectively once the scale of over-purchasing
had been recognised. In August 2020, DHSC established the “Turn the
Tap” programme to renegotiate contracts where possible, cancelling
orders worth £0.7 billion. It established the Contract Dissolution Team,
originally with 30 staff, reducing to 4 by 2024, to challenge
underperforming suppliers where problems with documentation, non-
compliance with specification, or quality had not been resolved by
replacing defective product, providing required documentation or
refunding payments. DHSC disputed 64 contracts worth £1,479 million
placed through the Parallel Supply Chain. 55 contracts worth £1,258
million remained unresolved or were awaiting a ministerial decision for
write-off in December 2024, including some approved by ministers
before the 2024 election but held over by the incoming government
until I could consider the case independently for them to be written off
21
or the claim abandoned. Having reviewed the unresolved contracts
with the DHSC Contracts Dissolution Team, including discussing the
more complex cases with lawyers retained to advise and represent
DHSC, I endorsed the proposals of officials to ministers for claims
against suppliers relating to 49 contracts worth £762 million to be
waived or abandoned. The recommendations reflect the low prospect
for success in litigation to recover money from the suppliers, in relation
to the cost of taking further action.
2.11 DHSC engaged effectively with others to pursue fraud after
the crisis. DHSC referred suppliers and contracts to law enforcement
partners where there were suspicions of fraudulent activity. In addition,
DHSC shared PPE, Test & Trace and ventilator procurement data with
HMRC so it could check that the correct tax had been paid by those
companies. This cross-government collaboration has resulted in HMRC
opening both civil and criminal investigations for suspected under-
declarations of tax.
2.12 Further action on recoveries remains possible. 8 contracts
worth £325 million remain live with litigation to recover disputed sums
either under way or in prospect. DHSC’s litigation against PPE MedPro
was successful, and action continues to recover the £122 million
settlement ordered by the High Court. A handful of the suppliers
involved have been referred to the National Crime Agency for
investigation for possible fraud. In addition to the live contracts, there
may be potential for some financial recovery from the liquidators of 7
suppliers, who were accountable for disputed contracts worth £95
million. Fraud may be involved in some of these cases but taking them
further is frustrated by key individuals being outside the UK.
Government support to businesses and
individuals
Introduction
2.13 This chapter sets out my findings on the economic support
provided by the UK government to businesses and individuals during
the pandemic. It provides an overview of the economic support as well
as the design and implementation of counter fraud controls in this
spending.
2.14 Government responded to the economic impact of the
pandemic with a package of measures, including additional
expenditure for existing programmes and newly created schemes
specifically designed to alleviate the pandemic’s impact. According to
the NAO COVID-19 Cost Tracker, between the start of the pandemic and
June 2022, the UK government is estimated to have spent £147 billion
on support for businesses, £59 billion for support for individuals, £3
billion for other support, and £2 billion for operational costs.
22
2.15 The chapter first covers the headline findings of my review,
before providing a more detailed view of spending as broken down by
the three primary delivery mechanisms for economic support: loans,
grants, and direct sectoral support.
Key Findings
2.16 Economic support measures were highly varied. The NAO
identified 70 separate measures in support of individuals and 73
measures supporting businesses, but these ranged from the £69 billion
spent on the CJRS to the £800,000 spent by the Department for
Environment, Food & Rural Affairs (DEFRA) in grants to support
England’s ports and fishing industry. The form of support also varied
significantly, including grants, loans and direct support to sectors such
as the rail industry.
2.17 Spending was spread across government with varied results.
Economic support measures were spread across almost every
department and public body. This shared the burden of providing
economic support and drew on the expertise of different organisations.
However, it also led to inconsistent outcomes. Many public bodies had
never made payments on this scale before, and counter fraud capability
varied significantly.
2.18 Government often lacked the necessary data to effectively
target economic support. In some cases, such as support to the rail
industry, the government already had detailed information and an
established relationship with the partners it was supporting. However,
in others, such as the small business sector, it had very little data.
Departments shared data slowly, if at all, making it easy for fraudsters
to claim under more than one scheme and secure dual funding.
2.19 Where multiple organisations were involved in the delivery of
spending, visibility and counter fraud controls were often
compromised. Significant volumes of central government expenditure
were delivered in collaboration with other organisations, most notably
commercial lenders in the DBT COVID-19 Loans Schemes and local
authorities. Collaborating with these organisations allowed central
government to draw on their existing capabilities but led to reduced
visibility in how this spending was managed. The responsibility for
managing fraud risk was unclear or insufficiently incentivised in some
schemes that had a 100% government guarantee.
2.20 Departments generally worked independently to design their
own schemes from scratch. The high degree of novelty in the design
of many COVID-19 support schemes introduced greater fraud risk,
especially since cross-government fraud expertise was often not
brought in to advise on risk mitigation. Developing schemes from a
prepared playbook would have been a more secure approach,
leveraging existing counter-fraud knowledge to reduce vulnerabilities.
23
2.21 Prioritising speed in the design and delivery of economic
support resulted in a high level of fraud risk. It was accepted in many
schemes that the rapid design entailed accepting a high level of fraud
risk, without plans for managing or mitigating this risk. Ministerial
Directions to proceed with, or accelerate, a scheme were often treated
as the end of the conversation rather than the start of a process to
iterate and improve counter fraud controls.
2.22 Counter fraud controls were improved only gradually in many
schemes. Over time, the government reduced the level of fraud risk in
COVID-19 support schemes through increased controls. However, the
pace of these improvements was inconsistent. Many schemes retained
weak controls far beyond the end of the initial crisis period. For
example, Cifas, the fraud prevention database service, was only
engaged to banks share data about BBLS lending, to prevent multiple
loans to the same borrower, after two thirds of the funding had been
disbursed.
2.23 Unprecedented economic support resulted in large increases in
overdue debt owed to government, putting pressure on recovery
functions. Extensive financial support led to the creation of new debt,
driven by defaults, errors and fraud. Many departments that had not
previously managed significant recovery programmes found
themselves responsible for large debt portfolios. Worsening financial
circumstances for individuals and businesses further increased
departmental debt balances. Collectively, these factors led to a sharp
rise in overdue debt owed to government from typically £22-24 billion
prior to the pandemic, to a historic high of £64.3 billon on 31 March 2021.
Progress has been made in recovering debt owed to government, but
the level of debt remains significantly higher than pre-pandemic
figures at approximately £53.5 billion on 31 March 2025.
Grants
2.24 Many government departments and ALBs supported the
economy, including the third sector, through grants. Many public
bodies are familiar with spending through grants. Consequently,
governance arrangements are generally better established for grants
than loans.
2.25 Many grants and loan schemes were launched without Fraud
Risk Assessments (FRAs) or were slow to update them. Assessing the
fraud risks associated with a scheme is the first step to managing them
and limiting the loss to the taxpayer. My team’s review of the responses
of the Accounting Officers’ responses to my enquiries and previous
work by the PSFA revealed areas of both weakness and good practice
in FRAs. Many FRAs were only conducted after a scheme’s launch, as
with the BBLS, or were not conducted at all. Where FRAs were
conducted, their effectiveness was inconsistent. Some public bodies,
like the DfE, had their FRAs prepared or reviewed by experienced
counter fraud professionals. In other cases, central functions such as the
24
Grants Management Function, conducted these reviews. Additionally,
some bodies, such as Arts Council England (ACE) with the cultural
recovery fund, demonstrated an iterative approach, refining their FRAs
and strengthening controls as spending progressed.
2.26 Many schemes utilised well-established controls to help
prevent and detect fraud. Prior to the pandemic there was already a
range of ‘off the shelf’ counter fraud controls provided by third parties
such as the Government Grant Management Function’s Spotlight tool,
credit reference checks, Cifas and the National Fraud Initiative (NFI).
These controls enabled public bodies to check an applicant’s eligibility
for schemes, confirm an applicant’s identity, often known as Know Your
Customer checks, and verify that bank account details match the grant
applicant. These checks could also ensure that the applicant is not
already a known fraudster, for whom more detailed scrutiny of their
eligibility may be appropriate. In some cases, where the support was
going to a regulated industry, such as charities or food production,
public bodies were also able to draw on their own internal or external
registers to ensure government support went only to those eligible.
2.27 Data sharing between public bodies to detect and recover
fraud and error proved difficult during and after the pandemic.
Effective data sharing is crucial for verifying grant eligibility, preventing
dual funding (where businesses claimed COVID-19 related costs from
multiple bodies), and detecting inflated turnover to either access a
scheme or increase the size of the grant being claimed. Several
departments, including DCMS, DSIT, and DfE, recognised dual funding
risks in their grant schemes, especially with HMRC's CJRS. Despite
HMRC confirming a legal gateway to enable data sharing, ACE
struggled to secure timely data sharing so relied on self-reporting
surveys. NAO reports consistently highlight data sharing challenges in
both routine operations and emergencies. Improved data sharing could
have prevented issues with grants schemes by:
a) Verifying grant eligibility: Data sharing powers between
departments would have been invaluable for authenticating
applicants' businesses and recovering incorrectly paid funds for
grants.
b) Preventing dual funding: Timely agreements to share data
between departments and local authorities would have identified
businesses claiming the same COVID-19 related costs from
different local authorities or central departments. I have seen
examples of departments checking and working on dual funding
recovery after payments have been made.
c) Addressing sole trader activity and business
misrepresentations: Wider data sharing with HMRC regarding
sole trader activity may have significantly aided departmental
and local authority fraud teams in identifying businesses
misrepresentations before grants were issued.
25
d) Providing real-time data between departments and local
authorities: Many local authorities needed real-time data from
various sources, including utility providers and financial
institutions, to identify liable parties, update records, and prevent
application fraud. 63% of councils cited lack of powers to acquire
data as a major barrier, limiting their ability to investigate and
respond effectively. The biennial NFI process was often out of
sync with these real-time needs.
e) Overcoming reluctance to share data: The reluctance of public
bodies, banks and financial institutions to share data was a major
obstacle. More clearly defined legal gateways and, in some cases,
powers to compel data disclosure would have enabled more
effective verification and recovery efforts.
2.28 Grants delivered through other public bodies enabled faster
or more targeted support but often compromised accountability to
Parliament for the propriety and regularity of that spending.
Departments channelled grant expenditure through either ALBs or
local authorities. When grants were delivered via ALBs, there was
typically greater clarity and accountability regarding fraud and error
levels. However, accountability became more challenging when
support was delivered through local authorities. Managing Public
Money (MPM) acknowledges this inherent tension, outlining
considerations for Accounting Officers when spending with third
parties, emphasising that:
“The autonomy of each organisation needs to be
buttressed by sufficient accountability to give Parliament
and the public confidence that public resources are used
wisely” (MPM para 7.1.2)
2.29 MHCLG could not provide me with assurance on the levels of
fraud and error in its COVID-19 spending. MHCLG’s response to my
request for information about further fraud detection and recovery
activity on COVID-19 spending explains most of MHCLG spending was
conducted through local authorities. The response indicates that, in the
Accounting Officer’s view, accountability for grant expenditure fraud
and error rests with the local authorities in line with the Local
Government Accountability Framework in the MHCLG Accounting
Officer System Statement. However, the Accounting Officer System
Statement also clarifies that the Accounting Officer remains
responsible for the regularity, propriety and value for money of
spending related to departmental priorities, which includes the areas
where MHCLG spent money during COVID-19 (homelessness,
supporting communities, delivering local economic growth).
26
2.30 Differences in departmental approaches to accountability for
spending through local authorities led to an inconsistent view of the
levels of fraud and error in COVID-19 spending. MHCLG’s approach
contrasts with DBT’s, whose Grants Delivery Directorates worked with
local authorities. DBT established a referral process for local authorities
to report irregularities and recovery.
2.31 Officials told me that capability and capacity to tackle fraud in
local authorities is highly variable. This perspective was endorsed by
local government finance officers I spoke to who cited examples of
outstanding practice as well as examples of local authorities who have
applied little resource to this area. The NAO’s 2023 report on COVID-19
Business Grant Schemes echoes this concern, highlighting the
challenges faced by local authorities in effectively delivering, at pace,
central government schemes that they had little input and insight into.
My review suggests that Accounting Officers are not receiving sufficient
assurance that grants are being used as intended, including whether
sufficient efforts have been made to manage and recover fraud and
error in line with Parliament’s intention.
2.32 My review revealed a range of approaches adopted by public
bodies for managing their potential fraud risks. Not all are suitable for
every scheme, particularly in urgent crisis situations. Nevertheless, the
evidence suggests that these methods were effective in combatting
fraud. The approaches included:
a) Scoping risks: Some public bodies mitigated fraud risks by only
dealing with known organisations. For example, Historic England
limited its capital grants to entities with whom it had a prior
relationship. However, this was not an option for many other
bodies.
b) Risk scoring the population of grant applicants and targeting
assurance and review: Some public bodies were able to risk
score grant applicants, allowing them to focus their counter
fraud detection and recovery efforts more effectively.
c) Iterating controls as schemes continued spending: Some
departments and ALBs refined fraud and error controls as
spending progressed. For example, ACE introduced payee
verification and began using the NFI to check grants in the third
round of the Cultural Recovery Fund.
d) Enhanced scrutiny for larger grants: Some public bodies
adopted a risk-based approach, applying greater scrutiny to
larger expenditures or those deemed higher risk. The National
Lottery Community Fund (TNLCF) implemented this strategy.
e) Continuing to publish grant and loan recipient data: Some
organisations published their COVID-19 grants and loans, such as
UK Research and Innovation (UKRI) who released the details of
the grants they awarded. Although this transparency does not
27
directly prevent fraud and error, it does provide a potential
deterrent.
f) Outsourcing detection work to professional service firms: The
National Lottery Community Fund outsourced its detection work
to professional accounting firms. This approach should be
considered by departments and ALBs lacking the internal
expertise or capacity within their existing counter fraud teams.
g) Delivering schemes at a slower pace, allowing greater
opportunity to prepare to manage fraud: Scheme design
generally improved over the course of the pandemic, reducing
the risk of fraud. In the Business Support Grant schemes
delivered by BEIS, for instance, the NAO found that 90% of losses
to fraud and error arose during the initial wave of schemes.
Scrutiny was often effective in driving improvements. For
example, following an audit by the GIAA, DEFRA strengthened
controls for the ‘Zoo Animal Fund’ scheme, reducing the
estimated level of fraud and error from 15.8% to 1.68%.
Loans
2.33 Loan schemes were also used by government to support
businesses and other organisations during the pandemic. Loans, as a
form of government economic support, were less established than
grants and their associated governance was similarly less developed. It
is estimated that a total of £133 billion was guaranteed or disbursed by
HM Government in major loan schemes during the pandemic, with £82
billion issued by lenders under a government backed schemes
overseen by BEIS and its ALB the British Business Bank (BBB),
according to the NAO Cost Tracker as at June 2022. DCMS provided
£474 million in loans to support UK sporting and cultural organisations.
The Bank of England extended £38 billion in support to the largest
companies via the COVID-19 Corporate Financing Facility (CCFF). This
scheme had a low fraud risk, with loans going to very large, well-
established firms. All borrowing from the CCFF was fully repaid by
March 2022, yielding a profit of £60 million. This facility has not been a
focus of my review.
Business support loans from DBT and BBB
2.34 BBB utilised loans to support small, medium and large
businesses, principally through commercial lenders but also directly.
The Bounce Back Loan Scheme (BBLS), Coronavirus Business
Interruption Loan Scheme (CBILS), Coronavirus Large Business
Interruption Loan schemes (CLBILS) and Recovery Loan Scheme
(Phases 1 and 2) provided government guaranteed loans (up to 100%)
via different commercial lenders. The Future Fund scheme, also
managed by DBT through BBB, was a convertible loan scheme
designed to support companies looking for venture capital during the
pandemic when there was limited appetite to lend to SMEs, where
28
loans convert to equity shares when certain thresholds have been met
and upon private sector investment. Table A provides an overview of
the loan schemes.
Table 2.A Overview of BBB managed pandemic loan
schemes as of September 2025
Loans
Loans defaulted
Percentage Loans in where the
Total of loan Loans fullypartially default government Outstanding
amount guaranteed repaid by repaid by or guarantee has loan balances
1
loaned by borrower borrower arrears been paid being repaid
Scheme (£bn) government (£bn) (£bn) (£bn) (£bn) (£bn)
BBLS 46.5 100% 7.8 19.1 1.3 11.4 6.9
CBILS 25.8 80% 15.6 7.3 0.2 1.1 1.7
CLBILS 4.5 80% 4.4 0.02 0.03 0.04 0.1
RLS
(P1&2) 4.3 70% 1.4 1.4 0.1 0.4 1.1
Future
Fund 1.1 n/a 0.1 n/a 0.3 n/a 0.75
Source: COVID-19 loan guarantee schemes repayment data: September 2025,
Recovery Loan Scheme (iterations 1 & 2) Performance Data as at 30 September
2025 and Future Fund Portfolio Overview as at 30 September 2025
2.35 These loan schemes represented some of government's
largest economic support measures. As many borrowers did not
repay and the lenders claimed on the government guarantee, the
financial loss to the taxpayer was significant. Around 27% of all BBLS
loans by value were either in default, arrears or lenders had drawn on
1 Loans where the government guarantee has been paid represents where lenders have sought to
claim the guarantee from government.
2 0.0% is the result of rounding and should not be taken to imply that the final figure is 0.
3 0.0% is the result of rounding and should not be taken to imply that the final figure is 0.
4 0.0% is the result of rounding and should not be taken to imply that the final figure is 0.
5 The £0.7bn outstanding loan balance on Future Fund comprises £65million of outstanding loan
balances and a £668 million in borrowing company shares the BBB holds the government’s
interest in.
29
the government guarantee as of September 2025. For the Future Fund,
which addresses the same group of businesses as the BBLS, the default
rate is similar at 26%. The equivalent figures for CBILS and RLS are 4%,
and 16% respectively. The CLBILS, which was only available to larger
businesses, saw the government guarantee being called in for only 1%
of the total amount loaned. Many of these guaranteed claims are an
expected consequence of business failures, particularly during the
challenging economic conditions of the pandemic. However, in
addition to this genuine credit loss, there is also evidence of loss due to
fraud.
2.36 While fraud and error have been detected across most
schemes, BBLS has received particular attention. The first reason for
this emphasis is that the overall spend and cost to the taxpayer of
claims against the BBLS loan guarantee are greater than the other
COVID-19 loan schemes. The second, acknowledged by stakeholders
within and outside BEIS, is that the design of the BBLS created specific
vulnerabilities to fraud and error. Current estimates indicate fraud and
error losses of up to £2.8 billion in the scheme. Lenders have reported
over £1.9 billion in BBLS loans flagged as ‘suspected fraud’ to the British
Business Bank (BBB) on which the government has paid out the
guarantee for £1.6 billion. The PSFA believe the actual level of fraud and
error is likely to be higher than these figures. This is because the
detection controls within the scheme will not always pick up some of
the known fraud types, particularly the risks of borrowers declaring
inflated turnover and using the funds for non-business purposes.
2.37 BEIS and subsequently DBT, along with BBB, lacked the
necessary capabilities to effectively manage the fraud and error
risks associated with a substantial loan portfolio. Both organisations
recognised the high fraud risk of the BBLS from its inception, leading
them to seek, and ultimately receive, Ministerial Direction to proceed. (A
Ministerial Direction is a formal instruction issued by a Minister to
proceed with a course of action despite the departmental Accounting
Officer's written objection that the proposal breaches one or more of
the core principles within Managing Public Money.) BBB raised its own
concerns about the BBLS in a Reservation Notice to BEIS Secretary of
State on 2 May 2020. (A Reservation Notice is equivalent to a
department seeking a Ministerial Direction and is used when a public
body has concerns regarding the propriety, value for money or
feasibility of a proposal.) They explicitly identified concerns about the
“compressed timetable” for scheme delivery, stating that it would
impede the establishment of ‘robust controls and governance’ essential
for the appropriate use of funds. Despite these concerns from the
Accounting Officers, DBT struggled to adequately resource the
management of counter fraud within the BBLS scheme. Lord Agnew
drew attention to this in his January 2022 resignation speech, noting
that there were only two counter fraud staff in the department at the
start of the pandemic.
30
2.38 Inadequate checks facilitated significant volumes of
fraudulent applications. Demand for BBLS exceeded the department’s
initial expectations, with the scheme making 1.5 million loans worth
£46.5 billion by September 2021. Applicants were able to claim BBLS
loans with limited checks beyond standard banking fraud controls. For
the government to pay out on the guarantee, lenders were required to
conduct standard Anti Money Laundering, “Know Your Customer”
checks, and their standard fraud checks, but it is unclear how
consistently this was undertaken. Standard controls that are suited to
commercial lending were not necessarily sufficient to deal with the
unique fraud risk profile of the BBLS. For example, thousands of
businesses received multiple loans in contravention of the scheme’s
rules, partly because multiple loan checks only started in June 2020,
after the majority of loans had already been paid out. BBB estimated
that up to 2.3% of approved applications were multiples. Loans were
limited to 25% of the borrower’s turnover in the previous year (or a
maximum of £50,000) but this relied on self-certification alone, not least
because small limited companies are not required to file profit and loss
accounts at Companies House. Applicants for BBLS loans were required
to declare that their business “has been adversely impacted by COVID-
19" but no detail was required of the nature of their business activity
and the adverse impacts, and no checks were made. Restrictions were
placed on the purposes to which loans were used, including capital
expenditure and payment of dividends, but without any ready means of
detection or ways to monitor compliance.
2.39 BEIS and BBB were slow to improve counter fraud controls as
clear issues emerged. The BBLS was launched within two weeks of the
Chancellor proposing it to BEIS, providing insufficient time for full
consideration of fraud risk and the design of counter fraud controls. A
full FRA was not started until October 2020, five months after launch.
The Cifas multiple loan check was made available to banks from 2 June
2020 but was not mandated until 25 June and with no guidance
provided to lenders until 25 September. Crucially there was no
contractual arrangement to oblige lenders to undertake this check. A
flag to identify inactive companies applying for BBLS using Companies
House data was not introduced until July 2020 when 69% of loans by
value had already been paid out. Had the speed of the scheme’s launch
been matched by the introduction of controls, significant volumes of
fraud could have been prevented. An earlier implementation of the
multiple loan check could have, by itself, potentially prevented
hundreds of millions of pounds of fraud and error against the taxpayer,
2.40 The delegation of responsibility to lenders created challenges
for detecting and pursuing fraud and error. BBB delivered the BBLS
loan scheme through partnerships with 25 commercial lenders ranging
from major high street banks to newer, smaller ‘challenger’ institutions,
and over 100 lenders in the case of CBILS. This enabled BBB to leverage
its existing infrastructure and distribute funds at exceptional speed.
However, the 100% government guarantee diluted lenders’ financial
incentive to detect and pursue fraud. Some BBLS lenders also had little
31
experience in giving loans of this size to small businesses which,
without significant checks, increased the risk of fraud going
undetected. Few borrowers had experienced such easy access to credit
which created conditions that encouraged ‘opportunistic’ fraud. The
loans fell outside Financial Conduct Authority (FCA) regulation.
2.41 DBT and BBB have struggled since the scheme’s launch, to
agree consistent action to tackle fraud and error, given the need to
work with multiple lenders. The involvement of commercial lenders in
the loan schemes created difficulties in coordination and governance,
as any policy or operational change required negotiation across
multiple lenders, each with their own compliance and approval
processes. As the loans were ‘owned’ by the commercial lenders, there
were frequent delays or difficulties in obtaining and acting on key data
related to the BBLS. I witnessed these in the design and
implementation of the Voluntary Repayment Scheme, which is
discussed below. Designing and agreeing a light touch scheme took
around six months as we navigated complex governance routes and
numerous stakeholders, often with differing viewpoints. Despite its
persistence, PSFA experienced similar problems implementing a letter-
writing pilot to encourage repayment, which took a year from
conception to delivery.
2.42 Data analytics has played a role in targeting potential fraud
and error for enforcement and recovery from BBLS, but there is
more work to do. BBLS borrowers' data has been analysed extensively,
principally by the PSFA. This work has produced indicators of fraud and
error ranging from multiple loans and turnover inflation to applications
from non-trading entities. The GIAA has recognised savings of £531
million, representing a combination of fraud and credit loss prevention,
government guarantee removal from loans (which places any loss from
a loan on the lenders rather the taxpayer) and cash recoveries. However,
I have recommended further analytical approaches to DBT for
exploring this data.
2.43 The Dissolutions Objections Process (DOP) helped protect the
taxpayer from losses in BBB’s COVID-loan schemes6. DBT, in
collaboration with Companies House and PSFA, created a process
identifying companies who applied to be dissolved while having an
outstanding BBB COVID-19 loan. Companies dissolve (also known as
‘striking off’) when they have ceased trading and settled their
outstanding liabilities. In the case of BBB loans (BBLS, in particular),
early analysis indicated abuse of this process, with companies applying
to dissolve without settling their loans. Under the DOP, if a company
6 A dissolution objection is raised against any company which holds an outstanding government
guaranteed Covid loan facility (including BBLS, CBILS, CLBILS, RLS and Future Fund) Dissolution
objections are raised regardless of whether the company director(s) or the Registrar of Companies
has placed the Gazette notice. The raising of a dissolution objection is not indicative of borrower
misconduct relating to a Covid loan facility.
32
attempts to abuse the dissolution system to avoid the scrutiny an
insolvency process would place on its conduct, strike off can be
blocked. In the case of companies with outstanding COVID-19 support
scheme loans, DBT has blocked all applications to strike off. This
prevents companies who have received a COVID-19 loan fraudulently
from simply dissolving rather than repaying and encourages them to
instead repay the loan. Around 250,000 companies with outstanding
COVID-19 loans have been prevented from dissolving using the DOP.
2.44 While the DOP has helped to limit losses from BBB COVID-19
loan schemes there is still much that needs to be done to bring
resolution to the process. The DOP has been successful in prompting
some 70,000 businesses with outstanding COVID-19 loans not to
dissolve, many of whom would have committed fraud. PSFA estimates
this has resulted in £264 million in benefits to date, with potentially
around £600 million more to come as companies who have withdrawn
from dissolution continue to trade and repay their loans. However,
limited capacity to investigate whether the loan was obtained
fraudulently means that many companies that have become insolvent
for legitimate, non-fraud reasons have been prevented from dissolving.
These companies could engage in a formal insolvency process but, with
no prospect of recovering funds and no fraud suspects, it would offer
little value for money for either side. DBT told me that around 180,000
companies remain blocked by a dissolution objection, and there is no
clear route to identifying and resolving the non-fraud cases or
investigating many of the suspected frauds. I have provided
recommendations that are likely to generate fresh, cost-effective routes
to resolving these problems. These have been accepted by the
government, with funding allocated at the recent Budget.
2.45 The Future Fund represents an area of ongoing activity where
BBB needs to manage the fraud risks. Under the Future Fund,
applicants could take out a repayable loan which would convert into
equity shares when the loan matured or if the company raised
additional capital. BBB lent £1.1 billion through Future Fund of which
£0.67 billion has been converted into shares which government now
owns (Table A). BBB used a range of measures during the application
process to identify potentially ineligible or fraudulent applications.
Borrowers are obliged to provide quarterly management information to
BBB while Future Fund borrowings remain as a loan. However, this
becomes optional when the loan converts into shares, which increases
the fraud risk as BBB has less insight into the companies. BBB has
explained that, as with loans, it has restricted companies from
dissolution using the DOP where it holds shares. BBB has identified
companies which it has concerns about and is referring these on to an
enforcement partner for potential action.
DCMS
2.46 DCMS provided loans to cultural and sporting organisations as
part of its COVID-19 support to the sport and culture sectors. DCMS
33
lent approximately £474 million as part of the Cultural Recovery Fund
(CRF) and Sport Survival Package (SSP) measures. These loans were
managed by the ACE and Sport England respectively. DCMS had no
prior experience of administering loans. Its management of the COVID-
19 loan book has come under scrutiny from both the NAO and the PAC.
2.47 Lending to a smaller group of organisations known to the
DCMS ALBs allowed it to conduct greater checks than DBT and BBB
could through their loan schemes. Compared to DBT, DCMS made
fewer loans, largely to known entities with whom the ALBs had a prior
relationship. The ALBs were able to implement a wider range of
controls and closer monitoring of the loans it gave out including:
financial viability checks, Know Your Customer/Know Your Business
verification, checks to sanctions lists, ID verification for applications to
the SSP, checks on staff numbers, and bank account analysis. Sport
England told me that it clawed back £0.3 million from 2 loans resulting
from overstatement of need, in one case due to an accounting error
and in another because the club received a COVID-19 related insurance
payment.
Direct Support
2.48 Government departments also used direct support initiatives to
assist the economy, in addition to grants and loans.
2.49 Direct support to large businesses can protect economic
activity with a low risk of fraud. DfT provided around £20 billion
through a range of grants and direct support to the transport sector
during COVID-19 of which £14 billion was direct support to the rail
sector. This substantial funding of a small number of organisations
afforded DfT enhanced scrutiny of the costs paid to support the rail
franchises. DfT used continuous monitoring with a finance manager for
each franchise and with disallowable costs registers to deter
opportunistic cost claims. DfT claim that it has a high level of
confidence that key risks were effectively managed, with any isolated
instances of irregularity addressed promptly and ineligible costs
recovered.
2.50 HMRC’s expertise in counter fraud led to it being well placed
to manage the risks associated with its COVID-19 schemes. HMRC
spent around £98 billion through the three support schemes it was
tasked to deliver (CJRS, Self-Employment Income Support Scheme -
SEISS and Eat Out to Help Out – EOHO). HMRC has a well-resourced
and experienced counter fraud function. HMRC assured me that it
considered the fraud risks carefully:
a) HMRC used risk ratings for CJRS, SEISS and EOHO claims to
target its investigatory work. These ratings were built using its
own data on claimants and allowed it to focus on the highest risk
claims.
34
b) HMRC opened a reporting gateway which resulted in 23,000
intelligence reports to assess and a further 900 were received
from the Public Sector Fraud Authority.
c) HMRC iterated its approach, for example by adding new sources
of intelligence. It also identified opportunities to find fraud by
comparing claims between schemes. For example, a claim
through EOHO by an employer could signpost an excessive claim
for CJRS. This example of cross-scheme checking contrasts with
the situation found in COVID-19 loan schemes.
2.51 DWP pandemic spending was primarily outside COVID-19
specific schemes. Spending on existing DWP programmes, most
notably UC, increased significantly in response to the pandemic. Fraud
and error in these programmes also increased as controls were eased.
As this fraud took place outside COVID-19 support schemes and has
received extensive scrutiny, notably from the PAC and NAO, I have not
reviewed it for this report. DWP did deliver COVID-19 specific schemes
however, including the Kickstart and Restart schemes which were
designed to help unemployed people return to work and to mitigate
the negative effects of unemployment. Subsequent scrutiny by the PAC
has raised concerns about the management of fraud risk in Kickstart,
including a lack of visibility into how employers used the funds they
received through the scheme.
35
Chapter 3
Recovery Efforts
Introduction
3.1 This chapter describes government work to investigate, penalise
and recover COVID-19 fraud and error. Following the previous section’s
examination of how the design and implementation of COVID-19
support schemes contributed to levels of fraud and error, this chapter
looks at why more money lost to fraud and error was not then
recovered.
3.2 Preventing fraud is usually more effective and delivers better
results than attempting to recover it after the event. Nonetheless,
recovery efforts remain important, both to return money to the
taxpayer and to deter bad actors from committing fraud in the future.
To date, of the estimated £10.9 billion lost to fraud and error from
COVID-19 spending, £1.8 billion has been recovered, of which £1.3 billion
has been recovered by HMRC.
3.3 Tackling fraud is not exclusively a financial question. In my review
and in this chapter, I have focused primarily on the goal of recovering
funds for the taxpayer. However, even in the absence of a financial
return, penalties and sanctions can serve the interests of justice, deter
future fraud and, by limiting the ability of bad actors to offend again,
protect the public.
3.4 This chapter draws on my analysis and that of other
organisations who have investigated recovery efforts on COVID-19
fraud. PPE is also largely excluded from this discussion as it is covered
separately in the dedicated chapter above. Further detail on methods
used for recovery is provided in Appendix A and on counter fraud efforts
by departments in Appendix C.
Findings
3.5 Recovery mechanisms received only limited up-front
investment. Despite the amount spent supporting businesses and
individuals during COVID-19 and an acknowledged high risk of fraud,
investment in fraud recovery was modest. Public sector fraud increased
without a corresponding increase in the capacity to recover losses.
3.6 There was insufficient capacity in existing enforcement
agencies. Traditional methods of addressing fraud, including the
criminal and civil justice systems and enforcement agencies such as
the National Crime Agency, Serious Fraud Office and Insolvency Service,
were not adequately resourced to handle the unprecedented volume of
36
new cases generated by COVID-19 related fraud. The Insolvency Service
has disqualified 2,516 directors for COVID-19 related misconduct since
the start of the pandemic, but this is only a small fraction of the number
of suspected cases.
3.7 Effective recovery programmes used a variety of methods,
appropriately targeted according to circumstance. Successful fraud
and error recovery programmes, such as HMRC’s, used a targeted
combination of approaches, tailored to the specific features of the
scheme and the characteristics of the audience being addressed. This
approach enabled public bodies to overcome constraints in any one
method, such as limited court capacity, to deliver results efficiently.
3.8 Counter fraud capability is unevenly distributed across public
bodies. Many departments responsible for significant spending lacked
counter fraud capabilities prior to the pandemic. They did not have the
necessary legal powers (both criminal and civil), skills, and experience to
conduct effective recovery action. HMRC and DWP are the two main
departments who have well-developed investigation and enforcement
capability.
3.9 Commitment to fraud recovery varied. The commitment to
recovering fraud varied across government, in some cases reflecting
institutional culture and in others as a result of the level of public, press
and political scrutiny. Areas in the spotlight, such as PPE procurement,
received sustained attention and achieved better results. The absence
of comparable external challenges probably reduced recoveries in less
public-facing programmes. Furthermore, new priorities and the
pressures to deliver ‘business as usual’ activity diverted attention and
resources away from COVID-19 fraud recovery work.
3.10 Incentives were often absent or misaligned. Feedback from
across central government, including the PSFA, indicated concerns that
in certain schemes, particularly those delivered through commercial
lenders with a 100% government guarantee and local authorities,
delivery partners may have lacked sufficient incentives to pursue
recoveries. I also interviewed people who suggested that in some
instances the attention given to criminal investigation distracted from
pursuit of recoveries and imposition of sanctions via civil routes which
offered the prospect of an attractive return on taxpayer funds.
3.11 Poor data quality and access. Limited data sharing between
public bodies and across sectors was an obstacle to cross-government
anti-fraud efforts, slowing or even halting recovery projects. These
difficulties were compounded by issues of governance, convoluted
sign-off processes and a lack of understanding of the powers available
under the Digital Economy Act 2017.
3.12 Debt recovery capacity and capability was not considered in
scheme design and deployment. Well-designed recovery processes
are important in the repayment of outstanding government debts,
irrespective of consideration of possible fraudulent intent. Failure to
37
consider debt recovery capacity and capability during scheme
development contributed to higher outstanding debt balances. This,
coupled with stretched teams and limited resources, led to insufficient
focus on recovery once the schemes concluded. The absence of clear
recovery plans and dedicated recovery capacity in the scheme design
hindered the resolution of errors and recovery of funds. Without robust
recovery mechanisms, schemes were susceptible to abuse, stemming
not necessarily from fraud, but from inherent weaknesses in scheme
design, recovery planning, and operational capacity.
3.13 Lack of urgency and decisiveness. The most favourable
prospects for successful fraud recovery exist in the immediate
aftermath of a crisis when evidence is readily available and funds have
not yet been dissipated. Regrettably, the urgency with which COVID-19
spending programmes were delivered was rarely matched by the
counter fraud recovery response. In some cases, a reluctance to make
difficult decisions, such as which cases to write-off, impeded effective
action.
38
Chapter 4
Adopted Commissioner
Proposals
4.1 Over the past year I have championed efforts to increase
recoveries of COVID-19 fraud. Some of my recommendations have
already been accepted and are in the process of being implemented.
The Chancellor agreed to prioritise these recommendations as
immediate and relatively low-cost actions government can take to
recover money lost to COVID-19 fraud.
Covid Voluntary Repayment Scheme
4.2 On 12 September 2025 the government announced the
‘Voluntary Repayment Scheme’ (VRS) on my recommendation: a three-
month window in which individuals and businesses can repay COVID-19
support money that they were not entitled to, misused or simply did
not need. This initiative is in addition to existing government
repayment schemes.
4.3 The scheme is low-cost to run, meaning that any recoveries
made are paid directly to government, without the need for costly
investigations. The VRS encourages individuals and businesses who
received money they were not entitled to, or did not need, to voluntarily
repay those funds. Individuals who repay the funds do not receive any
legal guarantees of immunity and there is no legal settlement involved.
However, their cooperation will be considered in targeting decisions for
future civil or criminal investigations. The scheme does not require any
admission of guilt or ask questions about the circumstances in which
the support was claimed.
4.4 It also lays the groundwork for more robust enforcement down
the line, by giving individuals and businesses one last chance to do the
right thing before new enforcement powers come into effect through
PAFER and new enforcement action begins following the publication of
this report.
Covid Fraud Reporting Site
4.5 Also on 12 September 2025, the government launched the Covid
Fraud Reporting Site (CFRS), a website where members of the public
can anonymously report suspected cases of COVID-19 fraud. This is a
spiritual successor of the COVID-19 fraud reporting hotline that ran
between October 2020 and September 2022, which allowed members
of the public to phone in to report suspected COVID-19 fraud.
39
4.6 Information provided through the form is received by the PSFA
Intelligence team who triage and disseminate to the organisation
responsible for administering the COVID-19 spending for consideration
for investigation. Decisions on whether to open investigations based on
CFRS reports ultimately rest with the organisation who receives the
intelligence. Cases chosen for investigation may result in civil or
criminal proceedings and in recoveries for the taxpayer.
4.7 I recommended bringing back an easy way for the public to
report COVID-19 fraud, in a lower cost manner than a phone hotline. I
wanted to give members of the public the opportunity to do the right
thing, even five years down the line, and to ensure that the public has
been given every chance to report suspected COVID-19 fraud.
4.8 Initial results from the CFRS suggest a continued public interest
in COVID-19 fraud, with members of the public coming forward to
report over 300 allegations fraud with a total value of over £35 million.
The initial response also validates the importance of continued focus of
the BBLS with 69% of all reports to the CFRS in its first month relating
to that one specific scheme.
Covid Fraud Recovery Retention
4.9 The Chancellor announced in the 2025 Spring Statement, on my
recommendation, that HM Treasury would allow departments to retain
the proceeds of COVID-19 fraud recoveries, with the expectation that
departments would extend this scheme to their agencies and local
authority partners. This change is designed to improve the incentives
for public organisations to pursue fraud by allowing them to repurpose
the recoveries without undue HM Treasury interference. This excludes
HMRC, because all of HMRC's COVID-19 scheme recoveries are included
in tax receipts for the Exchequer.
4.10 I recommend that we make this arrangement ‘business as usual’
for the Treasury and ensure that departments extend this arrangement
to their ALBs and local authority partners to provide a direct financial
incentive for all of government to go after fraud against the taxpayer in
all its forms.
Further Enforcement Action
4.11 I have further recommended that government makes full use of
existing and forthcoming legislative powers to tackle fraud; and
pursues innovative strategies to recover fraud and error quickly and
cost-effectively. I saw particular value for this approach in the BBLS
where the potential to significantly increase recoveries remains.
4.12 The government has accepted this recommendation and the
Chancellor confirmed in the Autumn Budget the establishment of the
new Public Authorities Fraud Investigation and Enforcement Service,
together with plans to trial innovative approaches to enforcement
40
action for BBLs. This will operate on a ‘test and learn’ basis: gathering
data to discover how best to reclaim COVID-19 fraud and draw lessons
for all kinds of fraud against the taxpayer. Costing £17.5 million over 3
years, these projects trial new ways of going after low-level COVID-19
fraud and placing sanctions on more COVID-19 fraudsters.
4.13 The powers available to the Insolvency Service include
disqualifying company directors for up to 15 years for misconduct,
which includes committing fraud against the taxpayer. It can also apply
to the High Court for a compensation order against a disqualified
director, in favour of the company’s creditors. I have proposed
operational efficiencies for trial by the Insolvency Service to allow it to
handle more cases at lower cost than at present.
4.14 The final part of this package addresses the problem of
companies caught up in the Dissolution Objections Process because of
COVID-19 loan default that was for genuine commercial reasons, have
not committed fraud, provide no prospects of achieving any recovery
and an insolvency process would not offer good value for money for
either the directors or the creditors. I have recommended to DBT and
the Insolvency Service that they introduce a new screening process
over the DOP population to identify these companies and make
arrangement for their removal.
41
Chapter 5
Lessons Learnt
Introduction
5.1 There is no point in identifying lessons learnt if they are not
embedded. As an NHS Trust chair for thirteen years, I was the audience
for reports into serious clinical incidents, all of which would include a
“lessons learnt” section. It was frustrating how often the same lessons
were repeated in reports following similar incidents only a few years
later, suggesting that lessons identified previously had not been
embedded. This is not unusual. In his guide to managing in a crisis,
‘How to Survive a Crisis’, Sir David Omand provides an account of his
work advising ministers during the 2002 fuel crisis:
“I was fond of telling civil contingencies training courses
the cautionary tale of COBR and how ministers decided
not to designate taxis as essential services, which would
have qualified them for priority fuel. It had taken rather
more time than it should for ministers to debate this issue
around the COBR table, balancing the convenience of the
public in areas not well served with public transport
(which of course did have priority status) with the issue of
not wanting to appear to favour ‘luxury’ that benefited
only the better off. Taxis were eventually declared not to
be an essential service, but within a few hours that
decision had to be rescinded as hospital trusts reported
that their local taxi companies needed to be on the
priority list since they had entered into contracts with
them to take key staff home after late emergency shifts.
To my chagrin, after the crisis was over I discovered -
having glanced at the volume of the official History of the
Second World War that dealt with oil supplies, held in the
Cabinet Secretary's outer office - that our predecessors in
1941 had considered the same issue and made the same
mistake.”7
I hope we can do better this time.
Scope
5.2 An adequate response to the next crisis requires that we learn
the lessons from the COVID-19 pandemic, though future crises will
undoubtedly present different challenges too. In line with my brief, this
7 How to Survive a Crisis: Lessons in Resilience and Avoiding Disaster, Sir David Omand, 2023
42
review focuses specifically on lessons pertaining to fraud and the
misuse of public funds.
5.3 While every crisis is unique and not all COVID-19 lessons will be
universally applicable, the pandemic’s experience offers invaluable
insights for enhancing government’s counter fraud response in both
emergency situations and routine operations.
5.4 These lessons are drawn from the specific circumstances of the
COVID-19 crisis, particularly experiences in crisis procurement and the
operation of economic stimulus and business support schemes. The
following lessons are a distillation of my findings and the perspectives
shared with us.
Lesson One: The COVID-19 experience
demonstrates that fraud prevention is
insufficiently embedded in thinking and
practice across government
5.5 The COVID-19 pandemic demonstrated numerous examples of
best practice in preventing, detecting and recovering fraud and error.
Government guidance on responsibilities for managing fraud is set out
clearly, for instance in HMT’s guidance to Accounting Officers on
Managing Public Money. However, during my review I encountered
significant inconsistencies of application and many examples of best
practice not being followed as a result of measures, for which there was
little preparation, being taken at speed.
5.6 Without adequate crisis preparation, including regular rehearsal,
testing, and updating of contingency plans, crises are prone to
mismanagement, leading to waste and increased exposure to fraud.
Much of the public sector entered the recent crisis unprepared.
Without preparation, in the urgency to respond to a crisis, measures to
prevent fraud are likely to be missed.
5.7 The NHS, in many respects, demonstrated preparedness.
Significant proportions of the system are adept at responding to serious
incidents, activating command structures, repurposing facilities, and
reallocating teams in emergencies. Indeed, this responsiveness and
readiness to take action in a crisis may have had perverse outcomes.
The proactive efforts of local teams, who reacted to early signals and
placed PPE orders to secure their own trust’s position, may have
contributed to initial PPE shortages elsewhere.
5.8 However, NHS preparedness was not as robust as initially
believed, as evidenced by the inadequacy of its Pandemic Influenza
Preparedness Programme stock. The response was a heroic action
programme that involved building a supply chain from scratch and an
43
ambitious purchasing strategy based on demand projections that
seemingly bore little relation to actual requirements. This over-
purchasing created significant opportunities for fraud, abuse, practices
that attracted allegations of corruption, and waste. Furthermore, this
excess purchasing complicated litigation against suppliers who failed
to deliver, reducing the prospect of fraud recovery.
5.9 There is little evidence that the government was prepared for a
crisis that would disrupt the economy through extensive quarantine
restrictions. Lockdown measures effectively halted parts of the
economy for several weeks and interfered with regular activity for many
months. Thorough desk-top simulations or exercises, such as the
“rubber windmills” programmes used by the NHS in the 1990s to test
future scenarios, would have identified the challenges encountered.
Such preparations could have ensured that important steps, including
the design of business support schemes, were more robust and less
susceptible to fraud and abuse than the BBLS.
5.10 Schemes were often launched without a full understanding of
the risk of fraud and error, with many departments choosing not to
conduct an FRA before launch. In many cases this reflected an
understandable response to the urgency of the pandemic. Nonetheless,
a greater use of FRAs before or soon after launch could have reduced
exposure to fraud and enabled better mitigations.
5.11 During the pandemic, many departments and public bodies took
responsibility for new forms and levels of spending. This allowed
government to draw on these bodies’ skills and expertise. However, in
too many cases the question of whether the public bodies had
sufficient capability and capacity to handle the resulting fraud was not
examined.
5.12 Some organisations took innovative approaches to managing
fraud and error in COVID-19 schemes. This often drew on collaboration
with other bodies, such as the work of the PSFA and DBT in using data
analytics to identify potential fraud in the BBLS. Others brought in
outside expertise to enhance departmental capability, as in the case of
DHSC’s work on contract dissolution. This proactive approach to work
around capacity constraints was not found consistently across
government.
5.13 I have found that the most successful organisations in managing
fraud and error were those that acted swiftly and decisively, striking
while the iron was hot to design and implement an effective counter
fraud response, often reflecting good preparation and embedded
counter fraud thinking. HMRC acted quickly to fund and establish the
Taxpayer Protection Taskforce, clearly targeting its work and using a
variety of methods to recover fraud and error. Had more departments
and public bodies been as prepared, fraud conscious, and followed a
similar strategy to HMRC, recovery values may well have been higher.
44
Lesson 2: Ambitious programmes are
intrinsically risky and require robust challenge
in related decision making
5.14 The more ambitious a programme is in terms of its size, novelty,
complexity and speed, the greater the inherent risk of fraud, error and
abuse. Such ambition can lead to risks being overlooked, the need for
mitigation missed, and corners being cut. This necessitates a critical
evaluation of whether a programme truly needs to be so extensive,
intricate, or rapidly deployed. Is immediate delivery of all components
essential? Can the project be simplified, and its complexity reduced, by
breaking it down into discrete modules? Can the costs and risks
associated with the programme’s ambition be mitigated by scaling
back on one or more of these dimensions? Would a phased delivery
approach allow for refinement and risk reduction, applying lessons
from earlier stages to subsequent ones?
5.15 The challenges encountered in PPE procurement were
exacerbated by the decision to purchase twelve months forward stock
(later extended by an additional four months, with further contingency),
based on projections made in April 2020 that proved to be
unreasonably high. It is important to note that in April 2020, amidst an
unprecedented global crisis, there was indeed no certainty that PPE
prices would fall; they could just as easily have continued to rise. There
was also no consensus on when or if an effective vaccine would be
available at scale. This made early procurement seem like a necessary
and prudent step to secure essential supplies and protect the nation's
health. The decision was made under immense pressure and
uncertainty, prioritising availability over potential future price
fluctuations.
5.16 However, this strategy resulted in the UK making most of its
purchases at the market’s peak, just before prices began to decline at
the end of May. An alternative, more nuanced approach could have
involved procuring an initial, critical stockpile for immediate needs,
coupled with robust, real-time data collection from rolling demand
forecasts. This would have allowed for more accurate adjustments as
the crisis evolved and facilitated purchases based on more soundly
forecasted demand, thereby benefiting from lower prices and reducing
risks of over-purchasing at peak market rates. Such a phased and
dynamically responsive strategy could have mitigated the
vulnerabilities observed in the initial, less flexible approach.
5.17 Similarly, the BBLS was ambitious in the numbers of potential
businesses to be supported, the level of support to be provided, and
speed with which it was to be delivered. This introduced a high risk of
potential fraud, error or abuse. In contrast to the schemes designed to
support larger businesses, there was less reliance on lender knowledge
of the borrower and less transparency of the financial standing. The
number of potential borrowers was very large and essentially unknown,
45
giving rise to the scheme being much larger than anticipated. Late in
the day, the size of the maximum loan was increased from £25,000 to
£50,000, which is likely to have increased its attractiveness to
opportunistic and, in many cases, fraudulent applications.
5.18 Embedding robust challenge mechanisms is crucial for sound
decision-making during a crisis. This ensures that risks, including fraud,
are thoroughly considered, and that human tendencies like system-
gaming and self-interest are fully accounted for. Well-informed,
capable, and experienced individuals of unquestionable integrity made
decisions during the COVID-19 crisis that, in retrospect, appear difficult
to comprehend. Accounts from my review highlight how easily
individuals can be swept into an emerging consensus or defer to those
with higher status or direct accountability, thereby failing to provide
critical challenge to decision makers. I encountered mid-ranking
personnel who questioned the volume of PPE being purchased, and
former board level executives from high street banks who had
expressed doubts to senior officials and ministers regarding the design
on the BBLS. The phenomenon ‘Groupthink,’ first widely used in the
context of the USA’s Bay of Pigs Invasion in 1961, appears to have been a
contributing factor to the fraud, abuse, and waste that resulted from
COVID-19 responses in 2020.
Lesson 3: During a crisis and in the aftermath,
there is a risk that decision-makers assume
that everyone shares the same commitment to
tackling fraud and making recoveries.
5.19 Officials and ministers concerned about fraud and financial
recoveries must not assume a universal commitment to these efforts
across public service. Not everyone is equally sensitive to the risk of
fraud and abuse, particularly during a national crisis. While the COVID-
19 crisis evoked a spirit of national unity and shared goodwill,
policymakers should remain mindful of inherent human tendencies,
such as self-interest. When the spirit of Dunkirk and the Blitz were
evoked during COVID-19, the opportunism of the black marketeers like
Dad’s Army’s Private Walker appeared to be forgotten.
5.20 Post crisis, the pressures of business-as-usual activities and
budget constraints can divert attention and resources away from
pursuing fraud and making recoveries. Given limited individual
bandwidth, counter fraud activity and financial recoveries often
compete with other duties and obligations. To ensure sustained
attention to these critical areas, individuals and departments require
support through appropriate targets and incentives. The Chancellor’s
commitment in the Spring Statement, allowing departments and ALBs
to retain recoveries, represented a significant step towards fostering a
shared commitment to tackling fraud and maximising recoveries. The
46
initiative has garnered a positive response from departments and local
authorities, but a comprehensive review of its impact will be essential to
truly measure its success.
Lesson 4: Good data and proper scrutiny are
critical to good decision-making, particularly
when dealing with unknown counterparties.
These are best delivered through institutional
transparency, data and intelligence sharing
and collaboration.
5.21 Widespread access to high-quality data is fundamental for sound
decision-making, as demonstrated during the COVID-19 crisis in both
procurement and business stimulus programmes. At the programme
level and for individual transactions, the NHS initially lacked clear
visibility into the PPE stock levels. While some Trusts and regions had
adequate, or even surplus stock, others faced dangerous shortages.
There was no overarching system for managing stock across the entire
NHS, despite its requirements arguably being no more complex than a
basic retail electronic point of sale system. The projections used to
model the demand for PPE, which contributed to the over-purchasing,
appear to have been based on a desk-top exercise rather than actual
data.
5.22 Dealing with unknown counterparties inherently increases risk,
necessitating robust mitigation measures even during a crisis as
profound as COVID-19. While guardrails are typically in place to reduce
the risk of fraud, abuse and waste in normal time, understanding the
counterparty significantly mitigates the risk associated with relaxing
these controls. Under such circumstances, it is important to reduce
fraud risk by making the most of whatever data is available.
5.23 For example, minimal checks, largely based around self-
certification, were required for BBLS loans. The government’s
understandable desire to get funds to businesses facing severe cash
flow issues rapidly meant it had limited insight into the risk it was
undertaking, evidenced by the 50% underestimate of the demand for
loans. Crucially, there was insufficient information available regarding
the recipients of the loans it was guaranteeing, even whether there
were reasonable grounds for their claims that they were adversely
affected by COVID-19. Another significant factor contributing to BBLS
fraud was the number of businesses applying for multiple loans, despite
clear rules limiting them to one. Sometime after the scheme’s launch,
Cifas was only engaged to facilitate data sharing among Bounce Back
Lenders regarding loan applicants some time after the scheme’s
launch. This information enabled banks to prevent businesses from
47
taking out multiple loans but around £29 billion in loans had been
disbursed by this point and the damage had been done.
International lessons
5.24 My engagement with international partners, directly and
through groups such as the International Public Sector Fraud Forum
(IPSFF), has underscored to me the immense value of learning from
peers abroad. In particular, the IPSFF stands out as an excellent
example of collaborative work, fostering mutual learning and sharing
valuable guidance notes that others can adapt to their specific needs. It
would be highly beneficial for such collaborative efforts to be replicated
with European partners. International responses to the pandemic
showcased a diverse array of strategies. While not all of these
approaches would necessarily have been appropriate for the UK, I have
highlighted instances of good, innovative practice that offer valuable
insights for strengthening counter fraud measures and improving crisis
management. These include:
a) Data Analytics and Transparency: The US experience highlights
the benefits of employing data analytics at scale and the
publishing information about grant awards. This approach
enhanced transparency and provided a robust foundation for
identifying and mitigating fraud risks.
b) Forgivable Loans for Clawback: The use of "forgivable loans" in
the US facilitated the recovery of questionable grant claims. The
US Payment Protection Programme provided loans to
companies to support them in keeping workers employed.
Although a loan scheme, the loans were partially or fully forgiven
if the business kept its employee counts and employee wages
stable. However, where fraud or other impropriety was found the
government was able to pursue the debt. This mechanism
provides a clear pathway for recovering public funds when
entitlement is not met, offering an opportunity for repayment
outside of traditional enforcement.
c) Procurement Frameworks: European nations demonstrated the
effectiveness of utilising established procurement approaches
during the crisis, including existing procurement frameworks.
Discussions with academics who have studied international
responses suggest that the UK was alone in abandoning its
existing supply chain arrangements and its “call to arms”. These
frameworks can streamline purchasing, ensure due diligence,
and reduce vulnerabilities to fraud and waste, even under urgent
conditions. They are already widely used in the public sector for
procurement but need to be designed to respond to crisis
conditions.
48
Chapter 6
Recommendations
6.1 The following cross-cutting recommendations reflect the lessons
learnt.
Lesson One: The COVID-19 experience
demonstrates that fraud prevention is
insufficiently embedded in thinking and
practice across government.
Recommendation 1: Public Sector Fraud Reform
6.2 Throughout my tenure, organisations told me they lacked the
capability, capacity and legal powers to deal with COVID-19 fraud yet
have generally not sought innovative approaches or to use outside
expertise. Government has made steps towards public sector fraud
reform since the pandemic, through new legislation and the set-up of
the PSFA. The PSFA has set out a vision for how fraud against the public
sector can be tackled by focusing on prevention and improving
capability. I recommend that:
a) PSFA sets out an action plan for how it will work with other
government departments and other public bodies to make full
use of existing and forthcoming legislative powers (including the
Economic Crime and Corporate Transparency Act 2023 (ECCTA)
and Public Authorities (Fraud, Error and Recovery) Act 2025
(PAFER)) to tackle fraud.
b) PSFA should continue to deliver its vision reflecting on the
lessons learnt outlined in this report.
c) The PSFA and the Government Counter Fraud Function (GCFF)
should promote a culture of innovation in countering fraud that
is evidence-led and includes evaluation of how a range of private
sector expertise can be successfully drawn upon where capability
or capacity within a government body is insufficient.
Recommendation 2: Crisis Response Preparedness
6.3 Since the pandemic, the subject of better preparation has been
raised by numerous reviews and such processes have been revamped.
This is a welcome development, but the issue of fraud control is still not
49
embedded within resilience thinking, for example in the recent
“Exercise Pegasus” run by the Cabinet Office. I recommend that:
a) PSFA should work with the COBR Directorate to embed fraud
control in resilience planning, and crisis preparedness exercises
should include fraud prevention and mitigation. This should
include how effective data sharing and public communications
can support counter fraud responses during emergency
spending.
b) HMT and PSFA should collaborate with the Government
Commercial, Grant and Debt Management Functions to design a
framework of economic stimulus schemes for crisis situations
that incorporates proportionate counter fraud controls. These
scheme designs should then be tested in crisis preparedness
exercises.
Lesson 2: Ambitious programmes are
intrinsically risky and require robust challenge
in related decision-making
Recommendation 3: Fraud-Sensitive Crisis Decisions
6.4 Candid accounts provided to me of some critical decisions
during the COVID-19 crisis suggest a lack of challenge contributed
significantly to substantial levels of waste through fraud, error and
abuse. Furthermore, when high fraud risk is tolerated in a crisis (for
example when a Ministerial Direction is given), consideration needs to
be given to the extra counter fraud work this brings down the line. I
recommend that:
a) When novel decisions are taken under the pressures of a crisis, at
least one participant in the decision-taking process, of equal
seniority or standing to those leading the discussion, is
designated “Challenge Champion” and specifically charged with
providing challenge. Fraud challenge champions should be
required to record the key decision their department makes in
relation to managing fraud risks as well as conducting a lesson
learnt activity after the emergency for the department, which is
to be shared with PSFA.
b) HMT should amend the Green Book to recognise the risk of fraud
and error in appraisal. HMT should also amend the business case
approval process guidance to prompt departments to set aside
an indicative 'clean-up cost' for recovery and enforcement at the
outset of future crisis programmes.
50
c) HMT should amend Managing Public Money to require
Accounting Officers who have sought a Ministerial Direction
regarding fraud risk to provide an update on how they have
managed the fraud risk to their minister, the NAO and PAC every
four months until the spending is brought back in line with
Managing Public Money and recovery work is complete.
Lesson 3: During a crisis and in its aftermath,
there is a risk that decision makers assume
that everyone shares the same commitment to
tackling fraud and making recoveries.
Recommendation 4: Incentives to drive fraud and error
recovery
6.5 My review has found there are few incentives for departments
outside HMRC and DWP to prioritise fraud and error prevention and
recovery. I recommend that:
a) HMT should ensure incentives are in place for departments to
maximise action, by amending the consolidated budget
guidance to better capture the benefits of action to tackle public
sector fraud, and by permitting departments to retain a
proportion of recovered funds.
Recommendation 5: Professional Accountability
6.6 Whilst law enforcement and HMRC have action plans for
engagement with professions and their regulators to deal with
professional enablers of economic crime, there are many other areas of
the public sector counter fraud response that do not, and who would
benefit from such an approach. The Home Office's Joint Anti-
Corruption Unit's UK Anti-Corruption Strategy considers some of the
risks professional enablers have in assisting fraudsters. I recommend
that:
a) GCFF and JACU should work directly with professional bodies
and regulators to produce an action plan on how best they can
collaborate to raise standards that ensure the public are
protected against professionals assisting individuals and
companies who abuse or defraud government schemes.
Recommendation 6: Public Engagement / Comms
6.7 Government was not able to inform the public about every BBLS
fraud prosecution as it happened, so could not create any real deterrent
effect through its communication about COVID-19 fraud. The public
51
perceived that fraud was rife and people were getting away with it.
Preparations for future crises should include communications directed
towards reducing fraudulent behaviour, reminding people that fraud
and abuse of public spending programmes are not victimless crimes,
and demonstrating that perpetrators will be pursued and punished. I
recommend that:
a) The Government Communication Service (GCS) should work with
the PSFA and other government organisations to develop a pre-
prepared communications framework for future emergency
spending programmes. This framework should consider
behavioural science insights such as “nudge” principles to deter
fraudulent behaviour and evidence-based messaging that
demonstrates fraud is not victimless and that perpetrators will be
pursued. GCS should also establish protocols for timely
communications about enforcement activity during crises. The
framework should be tested and ready for deployment before
the next emergency in line with Recommendation 2.
Lesson 4: Good data and proper scrutiny are
critical to good decision making, particularly
when dealing with unknown counterparties.
These are best delivered through institutional
transparency, data and intelligence sharing
and collaboration.
Recommendation 7: Data and Intelligence Sharing and
Collaboration
6.8 Sharing data and intelligence to detect and prevent fraud is far
harder and more time consuming than it should be in normal times,
which will make it near-impossible to do at pace when the next crisis
arises. Understanding the level of fraud risk and tackling fraud and error
effectively is made more challenging where departments need to
utilise third parties such as local government bodies or lenders to
distribute loan and grant funding.
a) PSFA should undertake a project to address how government
departments can share data more effectively during a crisis,
which should include lessons it has learnt from the pandemic
and its letter writing pilot. This should include considering
whether it may be necessary to amend the Digital Economy Act
and what the minimum data departments should be expected to
collect when they spend taxpayer money through third parties.
52
Recommendation 8: Institutional Transparency
6.9 A lack of transparency inhibited proper due diligence before
money was disbursed, and an opportunity was missed for transparency
to be used as a deterrent to abuse and fraud. The paucity of public
information on companies that enjoy the benefits of limited liability
made preventing, detecting and recovering fraud at pace near-
impossible. This applied to verification of turnover for BBLS loan
applicants and scrutiny of the financial affairs of some PPE suppliers
whose limited assets and staff numbers allowed them to file abridged
accounts, concealing profits and dividend payments. Similarly, I find it
concerning that government publishes details of companies who have
won government contracts but does not do similarly for grants or loans
despite being recommended to do so by both the PAC and the NAO. I
recommend that:
a) Public Sector bodies should be transparent in the award of
grants and loans to businesses and to other public bodies.
b) DBT should also continue to implement the small company
reporting changes in the ECCTA 2023, including the requirement
for all companies to publish profit and loss accounts at
Companies House.
Recommendation 9: Governance and Monitoring
6.10 The design of the programme of work that follows my
appointment should draw on lessons from the Pandemic Response
Accountability Committee of the Council of the United States
Inspectors General on Integrity and Efficiency. I recommend that:
a) HMT should establish a scrutiny panel chaired by a minister to
undertake six monthly reviews for at least 2 years of the
implementation of these recommendations, both those above
that apply across government and those set out for departments
in the Appendix C. The panel of scrutineers should be drawn from
senior officials from across Whitehall and external members,
drawing on international and non-government experience as
well as the wider UK public sector.
53
Departmental Recommendations
6.11 The most substantial recommendations for implementation by
departments are listed below.
Recommendation 10: DHSC should…
a) Continue to pursue settlement of the remaining PPE contracts in
dispute through negotiation, mediation or litigation.
b) Consult the HM Treasury spending team responsible for DHSC
(replacing the Covid Counter Fraud Commissioner for this
purpose) before passing recommendations to ministers for
claims against suppliers to be waived or abandoned.
Recommendation 11: DBT should…
a) Review the companies in the DOP, removing the objection to
dissolution for those who failed for genuine commercial reasons
and identify those with a reasonable suspicion of COVID-19 loan
fraud or abuse for the Insolvency Service to pursue director
disqualification orders. This review should seek to protect the
public from former directors who have abused the privileges
given to limited liability companies and use compensation
orders, to recover public money.
b) Develop and implement an approach making use of powers
under PAFER to address cases of suspect Bounce Back Loan
fraud undertaken by sole traders and third sector organisations.
Recommendation 12: MHCLG should…
a) Establish a monitoring function within the department that
provides the Accounting Officer with annual data on the levels of
expenditure, fraud and error detected and recovered in the
spending MHCLG does through local bodies, including for grant
spending, under Section 31.
b) The department should make sure that it does not miss the
once-in-a-generation opportunity presented by the continuing
process creating brand new unitary authorities. It should use its
convening powers working alongside the Local Government
Association and other interested parties, to establish where
counter-fraud capability gaps exist in local government. This
must be followed by the development of a locally owned
approach aimed at raising counter-fraud standards across
authorities and pursuing outstanding COVID-19 fraud using
powers under PAFER. Furthermore, once established, the Local
Audit Office should undertake an early thematic review of local
authority counter fraud capability and capacity.
54
Recommendation 13: Other government departments
• The principal recommendation arising from my analysis of the
returns from other departments is that Department for Media,
Culture and Sport (DCMS), the Department for Education (DfE),
the Department for Work and Pensions (DWP), HMRC and the
Department for Transport (DfT) should continue their activities in
this area until completion. The detailed recommendations for
departments arising from my review and findings in relation to
their counter fraud and recovery activity appear within Appendix
C.
55
Annex A
Recovery Methods
A.1 A range of methods to recover fraud and error were employed by
government. This section examines examples of some of the primary
methods used and considers their efficacy during the pandemic. Not all
options were available to every department, due to variations in their
legal powers or the design of the schemes they administered.
Criminal prosecutions / Proceeds of Crime Act
confiscations
A.2 Individuals were prosecuted for fraud against COVID-19 support
schemes by several organisations including HMRC, the Insolvency
Service and in some cases, local police. Criminal penalties, including
custodial sentences and the confiscation of assets obtained through
criminal activity, were applied to fraud involving numerous schemes
including Bounce Back Loans, Small Business Grants and Eat Out to
Help Out.
A.3 Criminal prosecutions are necessary to address the most serious
and significant cases of fraud and serve as a powerful deterrent.
However, prosecutions are lengthy, resource intensive, and place
further strain on an already stretched justice system. Although the
Proceeds of Crime Act 2002 provides for the confiscations of criminal
assets, these powers are complex to apply. Criminal prosecutions rarely
provide straightforward value for money for financial recoveries and
have to be justified by their wider benefits to society.
A.4 DBT’s contract with the National Investigation Service (NATIS)
illustrates the challenge of competing priorities in tackling fraud
through criminal prosecutions. The operational model of NATIS, an
organisation that evolved from Thurrock Borough Council’s Counter
Fraud team in 2018, appears to have been flawed and not fit for making
significant financial recoveries. NATIS was originally instructed by BEIS
to prioritise Serious Organised Crime. This focus was subsequently
broadened to include making financial recoveries. It was reported in
July 2022 that NATIS had opened 273 BBLS investigations, worth £160
million, and made 49 arrests. DBT’s statement on 15 May 2025
announcing that INSS would take over NATIS’ existing investigations
stated that the contract had cost the taxpayer approximately £38.5
million and had resulted in only 14 convictions so far with the overall
amount recovered by NATIS at £7m so far, and further cases awaiting
hearing in the courts. I have been advised that, irrespective of any
deficiencies in the contract or NATIS itself, this model is ill suited to
56
maximising cash recovery, because of the complexity and systematic
nature of the fraud.
A.5 Many departments, for example the Department of Education,
who do not possess their own prosecution capabilities also reported
that they struggled to find law enforcement agencies willing to take on
their cases. meaning they were unable to use this method for
recoveries. This is consistent with the report in the 2023 Fraud Strategy:
Stopping Scams and Protecting the Public that fraud receives less than
1% of police resources, and this is primarily focused on cases in the
private sector.
Letter writing / Compliance campaigns
A.6 Government departments and ALBs communicate with
individuals or businesses who have outstanding debts, as outlined in
the Government Functional Standard on Debt. Departments have also
used specific “one-to-many" campaigns where fraud and error is
suspected, sometimes referred to as behavioural or nudge
interventions, in which individuals are contacted and given a chance to
repay rather than face further action. HMRC is the most prominent user
of these campaigns and officials described to me its history of success
using them.
A.7 Compliance campaigns rely on the credible threat of action if
funds are not repaid. Compared with most other departments, HMRC
have a wide range of powers at their disposal, including criminal
investigation and civil penalties, but the risk of insolvency proceedings
alone can prompt a repayment.
A.8 HMRC continued to apply and refine this approach against fraud
in their COVID-19 schemes, integrating it effectively into its broader
compliance and recovery framework. However, the method was not
widely adopted elsewhere, with limited uptake beyond HMRC. The
PSFA, along with DBT, BBB and several commercial lenders have very
recently begun to trial a similar letter writing campaign within the
BBLS. Despite the fact this initiative was launched several years after
the pandemic, which has the potential to reduce the impact and overall
effectiveness, the early indications are that this pilot has been
successful with over £2million in commitments to repay made already.
A.9 Such compliance campaigns are cheaper, quicker and reduce
burden on the courts compared to immediately using criminal or civil
penalties. However, there are notable obstacles to wider adoption, and
their potential remains largely untapped outside tax compliance. Most
government departments lack HMRC’s data, expertise and experience
in targeting non-compliant groups. I have found some organisations to
be extremely risk-averse about proactive communications to debtors
who are suspected of committing fraud, due to perceived legal and
reputational concern.
57
Use of debt collection agencies
A.10 Overdue or outstanding debts are regularly outsourced by public
bodies to specialist private-sector providers, typically third-party debt
collection agencies (DCAs). This process is used as standard by HMRC
for lower value debts as well as many other public bodies who typically
use suppliers on framework agreements negotiated by the Crown
Commercial Service.
A.11 The use of DCAs enables government to access external
expertise and operational capacity to manage the significant workload
generated by emergency support schemes, that would be very difficult
to justify funding in-house. However, their effectiveness in responding
to the volume of debt created by the pandemic was constrained by
limited capacity and specialist capability within the debt collection
market, as highlighted by the PAC.
Civil recovery (including penalties)
A.12 Civil recovery is a legal process used by government
departments to reclaim funds owed to the public sector without
pursuing criminal prosecution. It typically involves initiating
proceedings in civil courts to recover overpayments, misclaimed funds,
or fraudulently obtained public money, often accompanied by financial
penalties to incentivise compliance. During the COVID-19 pandemic,
civil recovery and associated penalties were used extensively to tackle
fraud and error. HMRC’s Taxpayer Protection Taskforce used civil
penalties to address fraud and error across schemes it administered,
recovering an estimated c£40 million through their use. HMRC also
have a Publishing Details of Deliberate Tax Defaulters Programme
(PDDD). Under this programme, the details of deliberate tax defaulters
are published on Gov.uk for a period of 12 months. Since HMRC began
COVID-19 schemes compliance, details of 195 people have been
published for deliberately overclaiming CJRS and/or EOHO.
A.13 Civil courts require a lower burden of proof than criminal
proceedings and civil cases are usually faster and cheaper to pursue,
making them suitable for mid-tier or less egregious cases. Cost and
complexity remain significant constraints, particularly for large scale
deployment against widespread COVID-19 fraud. However, I have
spoken to organisations who have developed artificial intelligence-
based solutions that offer the opportunity to dramatically lower the cost
of such action. Civil recovery can also be challenging for departments or
organisations with less developed counter fraud capabilities, where
case preparation, evidence gathering, and enforcement require
specialised skills.
A.14 Evidence from the pandemic suggests that civil recovery is most
effective when integrated into a broader suite of tools: it acts as a “stick”
to encourage voluntary repayment, addresses cases that are serious
enough to warrant formal action but not criminal prosecution, and
58
complements other mechanisms such as voluntary repayments,
offsetting, and insolvency procedures. It is not usually a standalone
solution for high-volume fraud due to operational and cost constraints,
but it plays a critical role in ensuring accountability, recovering funds
efficiently, and deterring future abuse.
Offsetting vs future payments/orders
A.15 Some departments recovered overpayments by offsetting
against future payments (or orders to the value of the amount owed) to
the same entity, rather than pursuing separate enforcement action, to
ensure a cash payment.
A.16 During the pandemic, offsetting was applied in several contexts,
including overpayments to bus operators under Department of
Transport (DfT) schemes, and PPE suppliers. In these cases, the method
delivered tangible benefits for the taxpayer, allowing for departments
to recover funds efficiently without lengthy enforcement proceedings.
A.17 However, offsetting is applicable only in certain contexts where
recipients have ongoing interactions with government and are willing
to repay funds to continue these relationships – and where the conduct
is not sufficiently serious to warrant a more serious sanction. In the
BBLS, offsetting was used successfully to manage recoveries from
lenders, typically where the government guarantee was removed on
one or more loans and the amount due was deducted from the next
batch of claims.
Civil Litigation
A.18 Civil courts were also used for litigation, particularly in the cases
of contracts where fraud or error were suspected. In some cases,
financial penalties or damages were also sought.
A.19 Civil litigation provides a high profile means of recovering on
contracts that did not deliver, enabling a strong deterrent effect.
However, civil cases can be complex and unpredictable while placing
further pressures on the court system. The costs of pursuing civil
litigation – including legal fees, court costs, and administrative
overhead – were frequently substantial relative to the amounts
recovered, particularly in complex fraud cases. There is also no
guarantee, even when successfully securing a judgement, of getting
the money back.
Insolvency Routes
A.20 Use of the insolvency route has typically involved the creditor
(e.g. the public body that has been defrauded) applying to the court to
place the debtor (the person that committed the fraud) into insolvency,
with a view to recovering the debt from the assets of the insolvent
estate.
59
A.21 The effectiveness of the insolvency routes is limited by structural
and legislative factors. The Insolvency Service faces significant capacity
constraints, which were further compounded by the Corporate
Insolvency and Governance Act 2020. This temporarily halted certain
liquidation processes to protect businesses during the pandemic. This
led to a substantial backlog of insolvency cases and delayed recovery of
funds.
A.22 HMRC, supported by its dedicated insolvency team, resumed use
of this route for COVID-19 compliance debts once the moratorium on
petitioning ended and court capacity improved. However, insolvency
proceedings can be costly relative to the size of the fraud, and many
small companies have insufficient assets to deliver meaningful
recoveries. Through its dedicated insolvency team, HMRC has taken
extra steps to respond to the risk of insolvency in companies found to
have overclaimed COVID-19 support grants. These steps include
proactively contacting the Insolvency Service to seek Director
Disqualifications and utilising legislation contained within Sch16
Finance Act 2020 to make officers of insolvent companies jointly and
severally liable to income tax. HMRC have issued over 50 Joint and
Several Liability notices protecting over £4.5m of overclaimed COVID-19
support grants that would otherwise have been lost through
insolvency. While limited liability shields directors from personal liability,
the INSS did pursue compensation orders against individual directors in
misconduct cases, securing £3.6 million through on COVID-19 fraud
cases according to its Annual Report and Accounts 2024-25.
A.23 Despite Insolvency Service commitment to devoting a significant
proportion of resources to tackling COVID-19 fraud, there are challenges
in significantly scaling up this approach further under current
processes. Doing so would require large scale recruitment at a level
that would neither be feasible nor cost-effective. It could also divert
resources from the services broader priorities in tackling corporate
fraud and misconduct. As I recommend in my report, government
should explore means to make the liquidation, director disqualification
and compensation order process quicker and cheaper for
straightforward cases through greater use of private sector firms and
better use of technology. This will support the strategic use of
insolvency to target the most appropriate cases as part of a wider
portfolio of recovery methods.
Voluntary Repayments
A.24 Voluntary repayments are mechanisms by which individuals or
organisations proactively return overpaid, or misclaimed funds to the
government without the need for formal enforcement or legal action.
They are designed to encourage compliance, reduce administrative
burdens, and recover funds efficiently by providing a clear, structured
process with incentives, such as reduced penalties or simplified
procedures, for those who come forward voluntarily.
60
A.25 During the COVID-19 pandemic, voluntary repayment schemes
played an important role in recouping funds from emergency support
programmes. The most successful examples were the dedicated
voluntary disclosure portals introduced by HMRC where claimants
could repay grants they had received from HMRC schemes. Returns
through these schemes included grants that were not needed, as well
as repayments of fraud and error, but the HMRC example nevertheless
represents an important case study of a straightforward, low-cost
measure. HMRC’s repayment schemes used an intuitive user interface
and an end-to-end process, making it user friendly and effective in
encouraging individuals and businesses to disclose errors or
underpayments proactively. They also benefited from the strong
reputation of HMRC’s counter fraud capability, inspiring a credible
threat of further action if they did not repay, and in many cases public
pressure on large firms to repay COVID-19 funds they did not need.
A.26 Other voluntary repayment initiatives across government
included Department for Transport Bus Operator Grants, where
companies were allowed to repay overclaimed pandemic support
without formal enforcement. DWP provided benefit recipients the
opportunity to settle overpayments voluntarily, avoiding lengthy
enforcement action.
A.27 Although there are significant limitations on the effectiveness
and public acceptability of using voluntary repayment mechanisms to
tackle more serious cases of fraud, the experience of the pandemic
demonstrates that they can be proportionate, low cost and visible
means of encouraging compliance. These approaches allow individuals
or businesses who may have made accidental or low-level errors to “do
the right thing” by repaying voluntarily, without the need for costly or
lengthy enforcement action.
61
Annex B
Example Accounting
Officer Assessment
Commissioning Letter
Dear [Accounting Officer],
In December, I was appointed Covid Counter-Fraud Commissioner by
the Chancellor of the Exchequer. I will be in post for one year and have
been tasked with recouping public money lost in pandemic-related
fraud and error and contracts that have not delivered.
To fulfil this brief, I am taking a deeper look into COVID-19 spending
across government, and reviewing losses of public money to fraud,
error and underperforming contracts. My initial area of focus, until the
end of March this year, is on PPE procurement and potential recoveries
that could be made. I will then turn to the review of other Covid
schemes and grants, such as the Coronavirus Job Retention Scheme
and Bounce Back Loans.
At the end of my fixed term, I will be presenting a report to the
Chancellor, and to Parliament, which will summarise my findings and
generate lessons and recommendations for government procurement
in the face of future crises.
To support my assessment of counter-fraud efforts to date and to
provide assurance that the maximum recovery work has been taken
ahead of my final report, I would be grateful for your assistance. I am
keen to understand more about what [Government Department] has
already done to contribute to COVID-19 counter-fraud efforts, whether
there is still work ongoing, and how your department has assessed the
scope for further recoveries in future.
In the first instance, I would welcome the chance to meet you to
discuss this. I would be pleased to explain in more detail the context to
my work and how I hope to be of assistance. My office will be in touch
with yours to see if this can be arranged.
Further, I would be grateful if you could provide as the Accounting
Officer for [Government Departments]:
1. A summary of the efforts your department has undertaken to date
to pursue COVID-19-related fraud, and what work is ongoing; and
62
2. If there are further losses to be declared in your department’s future
accounts, your intended approach to securing value for money in
relation to those losses.
Your response should take a particular focus on [high risk schemes
identified by the PSFA]. Please consider the questions listed in the
Annex when considering your response.
I would be grateful if you could provide this by 21 March. I would be
grateful if you could pass on this request to relevant Accounting
Officers within your departmental group for a response from the
perspectives of the following Arm’s Length
Bodies: [named ALB’s responsible for the administration of any high risk
schemes identified by the PSFA].
Your reply will form an important part of my work to improve
understanding of COVID-19 fraud and error, to explore the potential for
further action and consider the lessons learned from the experience of
the pandemic. Responses will be reviewed alongside other sources of
information by my team in HMT along with partners including the
Public Sector Fraud Authority (PSFA), the Government Commercial
Function (GCF), the Government Debt Management Function (GDMF)
and others, and will directly inform my report to Parliament. Thank you
in advance for your support; I stand ready to discuss anything in this
letter (or my wider brief) if that would be of assistance to you.
Yours,
TOM HAYHOE
COVID COUNTER FRAUD COMMISSIONER
VFM and Controls
1. What was your department's assessment of how the original fraud
and error controls implemented on your COVID-19 spending delivered
Value for Money?
2. How did your department determine the value for money impact of
implementing (or not implementing) further fraud and error controls
on your COVID-19 spending, after the original business case was
approved?
63
Please consider…
• How many instances of fraud and error did your controls detect, and to
what value?
• How much of this have you been able to recover, and what remains
outstanding?
• What is your assessment of the level of undetected fraud and irregular
payments in your COVID-19 spending (including your best estimate of
the value of undetected irregular spending)?
VFM and Recovery
3. What is your level of confidence that all steps have been taken to
ensure Covid-19 spending that was subject to fraud and error will be
recovered (where this recovery represents Value for Money)?
Please consider…
• Have you reviewed every individual instance of detected fraud and
error for recovery potential?
• Have you conducted a triage or data-based process to estimate this?
VFM of Further Action
4. Can you evaluate the value for money of taking forward further or
ongoing efforts to both detect and recover fraud and error within
departmental COVID-19 spending?
Please consider…
• Where are the areas of your COVID-19 spending where there is most
likely to be fraud and error that has not yet been detected?
• Where are the areas of your COVID-19 spending where there are
overpayments due to fraud and error that could be recovered?
• If you were required to take further action on COVID-19 fraud and
error, what areas would you focus on and how would you take this
action? What would your expectation of a return on investment be for
taking action and how would you work this out?
64
Annex C
Detailed Reviews of
Departmental Recovery
Performance and Future
Opportunities
C.1 This part of the report sets out the detailed work that
underpinned my review of the strengths and weaknesses within the
government’s fraud recovery activity to-date, and the opportunities to
go further. In reviewing COVID-19 fraud and error I took a risk-based
approach, using an update prepared by the PSFA of their Global Fraud
Risk Assessment (GFRA) of COVID-19 spending schemes, originally
undertaken in 2020 and 2021.
C.2 In March and April 2025, I wrote to the Accounting Officers of
central government departments who implemented COVID-19 specific
schemes to ask for their assessment of the depth of their fraud efforts
to date. I asked them to analyse opportunities for further action, and
the value for money of those opportunities. An example of the letter I
sent is included at the end of this appendix.
C.3 I engaged experts from the PSFA to conduct in-depth reviews of
the material provided by each Accounting Officer. Alongside their
responses, the PSFA reviewed its own evidence base on COVID-19 fraud,
which included quarterly performance reporting on fraud and error
dating back to the start of the pandemic, post-event assurance action
plans and in some cases, FRAs. Where there were further questions or
gaps in the evidence provided, I requested further information, and
where necessary met with Accounting Officers in person to ask detailed
questions.
C.4 Based on the content of these PSFA reviews I formed a
judgement on the viability and value of further work for each
department. The outcome of the reviews fell into three broad
categories:
a) Work Concluded - where I am satisfied there is no further work to
do that offers good value for money.
b) Keep Going - where there is more work to do but I am satisfied
that the plans in train are sufficient.
65
c) Do More - where there is more work to, and I have determined it
requires new initiatives and plans to be developed.
C.5 Each departmental summary also includes their total spend on
COVID-19 schemes, the total amounts of fraud and error detected and
recovered (up to 30 June 2025) and short summaries of the nature of
their spending and general approach to managing fraud.
66
Department for Culture, Media and Sport
(DCMS)
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£1.9 billion £10.1 million £8.7 million DO MORE
Summary of Spending
C.6 DCMS funding supported sport, culture and heritage sectors
during the pandemic. Most of this (£1.2 billion) was given as grants
through the Cultural Recovery Fund in three rounds from 2020 to 2022,
to help organisations cover costs and keep activities going. The
Department also provided £474 million of loans to 120 organisations
from the sport and culture sector. Funding was distributed via DCMS
arms‑length bodies, such as Arts Council England, Historic England, the
National Lottery Cultural Fund, the National Lottery Heritage Fund and
Sport England. The schemes used eligibility checks to determine who
could receive support, with different grant and loan formats including
direct emergency funding, resource grants for recovery and capital
grants.
Summary of Counter Fraud Approach
C.7 DCMS and its ALBs carried out fraud risk reviews, put in
preventative controls and did detection and recovery work where
appropriate. ACE has recovered £8.5m of identified dual funding,
through retaining grant funding and offsetting against future
payments. There are currently litigation proceedings to recover further
debt related to dual funding. Historic England prioritised Post-Event
Assurance on larger grants, as well as running a whistleblower hotline.
Whilst Historic England identified four instances of suspected fraud,
these instances did not result in a material loss to the organisation.
Sport England reported £335,000 of fraud across high‑risk schemes.
Nine borrowers (£46.1 million) were insolvent as outlined in the NAO’s
report (December 2024). The department anticipates that 38–46% of
the total of outstanding insolvent loans will be recovered. Sport
England identified fraud losses of circa £135k within grant funding, in
addition to preventing a £200k loss. It has not identified any material
fraud loss in the SSP loan book.
67
Summary of Review Outcome
C.8 The review recommended that DCMS and ACE continue activity
to detect and recover ineligible CRF payments. This includes
concluding the data-matching activity with HMRC to identify dual
funding from the CRF and CJRS, and to ensure subsequent fraud
investigation and recovery activity is sufficiently resourced.
68
Department of Health and Social Care (DHSC)
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£86.1 billion £535.7 million £104.9 million KEEP GOING
Summary of Spending
C.9 DHSC spent £86 billion on COVID-19 health and social care
measures, with the largest elements being NHS Test & Trace (£29.3
billon) and PPE procurement (£13.6 billion). Significant expenditure was
also made within the Vaccine Taskforce (£4.4 billion), for the domestic
vaccine deployment (£3.6 billion) and the Infection Control Fund and
Social Care Workforce Recruitment (£2.2 billion). Procurement of
emergency equipment and testing capability accounted for most of the
spend, with NHS England and UKHSA delivering vaccination and
testing activities, while responsibilities for some schemes lay with local
authorities.
Summary of Counter Fraud Approach
C.10 Activity predominantly focused upon mitigating fraud and error
within PPE, with efforts to introduce enhanced due diligence in the
procurement process. Such activity has helped the department prevent
£163m of estimated PPE fraud loss. Where loss has been identified due
to fraud, the department has pursued recovery through civil litigation
or escalated to enforcement agencies in more serious cases. Detection
work in other areas such as NHS Test & Trace and vaccination
deployment was more limited in comparison. UKHSA has identified a
high volume of low value fraudulent payments made to isolating
individuals as part of the Managed Quarantine Service, totalling around
£18m. UKHSA has recovered around £2.6m of this loss, and continues to
seek recovery where possible. DHSC has recovered £104.9m in fraud
error, which excludes contract settlement relating to PPE that are
commercially sensitive and do not wholly relate to fraud and error.
Summary of Review Outcome
C.11 DHSC should continue to seek recovery of fraudulent or
underperforming PPE contracts, either through the Contract
Dissolution process or through civil or criminal courts. UKHSA should
continue to seek recovery of Managed Quarantine Service payments
where possible, given the challenge in enforcing recovery of low value
fraudulent payments.
69
Department of Education (DfE)
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£7.2 billion £9.7 million £5.1 million KEEP GOING
Summary of Spending
C.12 DfE spent £7.2 billion on measures to support educational
delivery during the pandemic and recovery funding for educational
providers. The Education Skills Funding Agency (ESFA), which merged
with DfE at the beginning of FY 2025/26, administered much of this
expenditure on behalf of the department. Emergency measures
included providing laptops to vulnerable students, introducing a
national voucher scheme in place of free school meals, and creating the
Oak National Academy for online classroom resources. Later support
focused on pandemic recovery, including tutoring programmes,
workforce funds for schools, and a hardship fund for university students,
as well as incentives for employers to take on apprenticeships and
trainees.
Summary of counter fraud approach
C.13 DfE conducted a programme of post-event assurance in FY
2021/22, where fraud risk assessments were conducted across priority
areas of expenditure. Through testing the efficacy of controls, the
department monitored irregularity for exceptional costs for schools;
free school meal vouchers; the National Tutoring programme; and
provision of technology to schools to support remote learning. Circa
£200k of erroneous payments were identified and recovered through
this process. ESFA have conducted a continuous programme of
assurance of payments made to employers to create traineeships and
apprenticeships, identifying fraud and error totalling £4.7m. ESFA has
pursued recovery of these funds and has recovered around £1m in total
to date.
Summary of review outcome
C.14 The department should continue pursuing recovery of fraud and
error linked to employer incentives. Where the pursuit of civil recovery
has been unsuccessful, the department should consider utilising
70
external enforcement resourcing given the extension of the statute of
limitations extension granted by PAFER.
71
Department of Work and Pensions (DWP)
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£2.94 billion £0.1m £0.0m KEEP GOING
Summary of spending
C.15 DWP's Restart and Kickstart schemes had a total spend of £2.94
billion. Restart provided intensive support to help unemployed people
get back into work, while Kickstart funded six‑month paid placements
for young people on Universal Credit to help them move into
employment. The Restart scheme was delivered through a series of
contracts with commercial providers, whereas Kickstart could be
applied for directly by employers or through a gateway provider that
assisted a company with its application.
Summary of counter fraud approach
C.16 Restart governance relied on a portfolio of prime contracts (12)
and a large extended supply chain (around 77 providers) plus
open‑book accounting and payment‑by‑results verification linked to
real-time HMRC data. For Kickstart, around 10% of initial payments were
checked using bank accounting verification and credit checks. The
department claims substantial measures to prevent overpayments (e.g.
around £128 million prevented), however this has not been submitted
to the cross-government prevention panel for assurance on the
methodology. DWP has taken forward cases with credible fraud
suspicions into the wider investigation pool.
Summary of review outcome
C.17 DWP should continue the existing work, conclude live
investigations and prioritising resources to any potential further fraud
cases as per the department’s targeting policy.
72
HM Revenue & Customs (HMRC)
COVID-19 ESTIMATED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£98.1 billion £5.0 billion £1.3 billion KEEP GOING
Summary of spending
C.18 HMRC’s COVID-19 spend comprised three major schemes: the
Coronavirus Job Retention Scheme (CJRS) with £69 billion in support to
employers to keep furloughed staff on the payroll; the Self-Employment
Income Support Scheme (SEISS) with £28 billion to provide grants to
self-employed individuals; and Eat Out to Help Out (EOHO) with £0.8
billion to subsidise dining out in participating venues. Together these
programmes totalled about £98.1 billion of government support,
making them among the largest COVID-19 related interventions.
Summary of counter fraud approach
C.19 HMRC designed several preventative controls across the three
schemes it managed focusing on utilising extensive automated digital
checks and prepayment screening that blocked over 65,000 claims,
preventing £430 million of fraud and error. HMRC’s approach to post
payment compliance, drew on its extensive work tackling tax non-
compliance, risk scoring applications for potential fraud and error to
enable it to target its compliance activity which yielded a total of £1.3
billion. HMRC also gathered intelligence through a Fraud Reporting
Gateway it set up and via PSFA. Realising the level of fraud and error
that it may need to manage through the £98.1 billion spending, HMRC
secured £100 million from HMT to build and run the Taxpayer
Protection Taskforce, which generated a return on investment of £693
million of the £1.3 billion. In addition to the £1.3 billion recovered via
post-payment compliance activity, HMRC's voluntary disclosure portals
have results in unprompted disclosures and voluntary repayments of
over £1 billion for CJRS; £51 million for SEISS; and £2 million for EOHO, to
date. HMRC has prevented or successfully recovered over £1.7 billion
across the three schemes. HMRC transitioned the Taxpayer Protection
Taskforce back into BAU compliance activity in September 2023,
arguing that TPT offered a lower yield per full time equivalent (£0.27
million verses £1.1 million). HMRC told me that it recognises the
continued importance of addressing error and fraud across COVID-19
support schemes and remains committed to doing so where
appropriate.
73
Summary of review outcome
C.20 The review found that HMRC should continue the existing work
and conclude live investigations as per its targeting policy.
74
Department for the Environment, Food and
Rural Affairs (DEFRA)
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£0.4 billion £4.6 million £0.2 million WORK
CONCLUDED
Summary of spending
C.21 DEFRA administered a range of schemes, including food-related
support, zoo funding and environmental/other relief programmes. The
largest documented element was the Green Recovery Challenge Fund,
followed by Local Authority food grants. Other schemes covered the
Zoo Support Fund, Zoo Animals Fund, Fisheries/Seafood Funds, Food
support for vulnerable groups, Food waste distribution and Dairy/Food-
related initiatives. Overall, the documented spend across the listed
DEFRA schemes amounted to almost £400 million.
Summary of counter fraud approach
C.22 DEFRA completed FRAs for its high‑risk schemes and post‑event
assurance and detection activity was used to test controls after
payments. GIAA audits informed control improvement for the zoo
schemes, and PSFA’s post‑event assurance action plans tracked fraud
and error management across schemes. The zoo schemes showed
notable error findings and recoveries, using lessons learnt from phase 1
to inform improvements in phase 2. Food Parcels Shielding showed
detected error through testing, with some overpayments identified.
Summary of review outcome
C.23 The review concluded that there are no further opportunities for
detection and recovery action that would offer good value for money,
therefore its work is concluded.
75
Department for Science Innovation and
Technology (DSIT)
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£1.2 billion £1.6 million £ 1.5 million WORK
CONCLUDED
Summary of spending
C.24 DSIT’s (formerly BEIS) COVID-19 expenditure was mostly
administered via UK Research & Innovation. UKRI made grant awards of
£883.6 million for research and innovation and the repurposing of £300
million of existing research awards. Other notable DSIT expenditure
relating to the COVID-19 response included £268.1 million for COVID-19
vaccine innovation and manufacturing, £21.4 million in five SURE fund
loans, £0.3 million in SURE grants, and £2.6 million for space-enabled
technologies/services via the UK Space Agency.
Summary of counter fraud approach
C.25 UKRI conducted a data‑matching pilot with HMRC to identify
dual funding, published a list of grant awardees (offering greater
transparency) and generally followed BAU practices (accelerated rather
than simplified), which minimised disruptions to existing controls. DSIT
had pre‑award controls in place for SURE fund loans, and UKRI’s
resource deployment and staff perceptions indicated a level of
counter‑fraud maturity and operational robustness, even if processes
were strained by workload pressures. Overall, DSIT’s own detection
activity was limited beyond the cases that resulted in £1.6 million
detected, and there is little further recoverable activity or a clear value
for money case for additional detection work.
Summary of review outcome
C.26 The review concluded that there are no further opportunities for
detection and recovery action that would offer good value for money,
therefore its work is concluded.
76
Department for Business and Trade (DBT) -
GRANTS
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£22.6 billion £71.2 million £46.1 million KEEP GOING
Summary of spending
C.27 Total expenditure on the small business grants portfolio between
March 2020 and December 2021 was £22.6 billion, allocated across three
cohorts. The first cohort - including the Small Business Grant Fund, the
Retail, Hospitality and Leisure Fund (RHLGF) and the Local Authority
Discretionary Grant Fund - paid out £11.7bn in response to the first
lockdown in 2020. The latter cohorts were launched in response to
outbreaks in winter 2020 and 2021 and represented £7.4bn and £3.5bn
of grant payments respectively. In total, over 4.5 million grant payments
were made to around 700,000 businesses.
Summary of counter fraud approach
C.28 DBT set up a referral process for local authorities to report
irregular payments they identified. £71.2 million from 10,065 irregular
payments has been identified by local authorities, of which 724 (7%)
were categorised as fraud. The department planned to wind down the
referral process by end-2025 and to complete triage by mid-2026, with
aims to close all activity by March 2027. Of the £71.2 million identified as
irregular payments by local authorities, £46.1 million has been repaid to
DBT and £1.9 million is still to be repaid to DBT. £21.3 of the total million
has been referred as a debt, of which about £2 million is considered not
recoverable. This yields a recovery rate of about 65% of debt referred.
Recovery may become hampered by the aged nature of many debts
and the lower value of individual grants (average around £5,000). DBT
has used external litigation selectively by balancing the cost against the
possibility of recovery on a case-by-case basis.
Summary of review outcome
C.29 The review found that DBT should conclude its ongoing referral
and grant recovery programme by March 2027 as planned.
77
Department for Business and Trade (DBT) -
LOANS
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£82.3 billion £1.7 billion £79.7 million8 DO MORE
Summary of spending
C.30 DBT’s COVID-19 loans issued totalled £82.3 billion across five
schemes to support businesses through the difficult trading conditions
brought about by the pandemic: Bounce Back Loans (BBLS) £46.5
billion, Coronavirus Business Interruption Loan Scheme (CBILS) £25.8
billion, Coronavirus Large Business Interruption Loan Scheme (CLBILS)
£4.5 billion, Recovery Loan Scheme (phases 1 and 2) £4.3 billion and
Future Fund £1.1 billion. The schemes were administered by the British
Business Bank through a network of commercial lenders. All the loan
schemes except Future Fund used commercial lenders to manage loan
applications and distribute funding with government providing
guarantees to the lenders for all or some of the loan amount.
Summary of counter fraud approach
C.31 DBT/BBB delegated counter fraud controls at the application
stage to the lenders including anti-money laundering, know-your-
customer checks and other standard fraud controls that varied
between lenders. These controls gradually improved over time (e.g.
with the introduction of Cifas checks for multiple loans), but in the
BBLS the lender fraud controls that work for routine commercial
lending did not address some of the key fraud risks specific to the
scheme. A core element of DBT’s counter fraud approach has been to
block companies attempting to dissolve that have outstanding COVID-
19 loans. This has been successful in keeping future enforcement action
open, and in encouraging repayment of loans that would have
otherwise defaulted. There has also been significant activity to identify
borrowers where there is an indication of fraud using data analytics and
8 This represents the amount recovered which had previously been paid out in guarantee claims
for facilities flagged by lenders as suspected fraud. Recoveries are from defaulted borrowers or
from lenders where claims have been paid on guarantees that were subsequently identified as
being ineligible for cover. This includes facilities which were flagged by lenders as suspected fraud
at the time the guarantee claim was paid, or flagged in the quarter following the payment of the
guarantee claim, and which have continuously been marked as suspected fraud since payment of
the guarantee claim.
78
loans that the 100% government guarantee could be removed or repaid
due to preventable fraud or error by the lender. Between 2021 and the
end of September 2025, the Insolvency Service has disqualified 2,516
directors who abused COVID-19 schemes and there have been
successful recovery pilots with some lenders.
Summary of review outcome
C.32 DBT should set out a comprehensive resolution plan for BBLS
that covers ongoing live investigations, intelligence reports and any
data analytics flags that may indicate potential fraud and have not yet
been distributed to lenders. It should also define a desired end state for
the programme that sets out the right mix of criminal and civil actions
(such as director disqualification and future letter campaigns using
threat of penalties under the PAFER, together with how write-offs will
be managed operationally.
79
Department for Transport (DfT)
COVID-19 DETECTED RECOVERED REVIEW
SCHEME SPEND FRAUD AND FRAUD AND OUTCOME
ERROR ERROR
£20.4 billion £16.5 million £14.3 million KEEP GOING
Summary of spending
C.33 DfT spent £20.4 billion on emergency transport support between
April 2020 and March 2022. DfT provided £13.6bn of support to train
operating companies (TOCs) to ensure rail services could run,
implementing Rail Emergency Measures Agreements (EMAs) from 1st
March 2020 and then Rail Emergency Recovery Measures Agreements
(ERMAs) from September 2020. Equivalent support was provided to bus
providers via the COVID-19 Bus Services Support Grant (CBSSG),
totalling £1.7bn in expenditure. The department also provided support
to aviation, light rail and ferry routes, and the Emergency Active Travel
Fund. Transport for London (TFL) was given £4.2bn of emergency
support to maintain essential services during the pandemic, albeit this
was regarded as delegated expenditure and not a focus of the
Commissioner’s review.
Summary of counter fraud approach
C.34 DfT implemented financial oversight and continuous monitoring
for EMAs and ERMAs, assigning via an assigned finance manager for
each TOC. The department also introduced a disallowable costs register
to act as a deterrent against opportunistic cost claims. The department
have stated no material fraud or error loss was identified through these
controls. The scheme’s accessibility was restricted to existing Bus
Services Operators Grant (BSOG) recipients to ensure only vetted
operators could access the funding. Upfront due diligence included
using BSOG data and third-party sources (like Spotlight and Companies
House) to validate applications, with reconciliation exercises against
audited profit and loss accounts used to pursue any identified excess
payments through existing BSOG debt recovery routes. The CBSSG
accounts for most of the identified fraud and error, with DfT recovering
£10.4m. The remaining active CBSSG debt cases are being pursued
through standard recovery channels, though further recovery may be
affected by insolvency processes.
80
Summary of review outcome
C.35 The department should continue recovery attempts from six
CBSGG debts totalling £2.2 million, including cases where operators
have entered insolvency, with recoveries assessed on a case-by-case
basis based on value for money of civil recovery. Given that PAFER will
extend the statute of limitations from six to twelve years for fraud
against the public sector, enforcement options should be considered
before writing off any debt.
81
Other Government Departments
DEPARTMENT COVID-19 REVIEW OUTCOME
EXPENDITURE
Cabinet Office £1.0bn WORK COMPLETE
Department for Energy NIL N/A
Security & Net Zero
Foreign, £2.5bn WORK COMPLETE
Commonwealth &
Development Office
Home Office £3.2bn WORK COMPLETE
Ministry of Housing, £10.3bn UNVERIFIABLE
Communities and Local
Government
Ministry of Justice £0.5bn WORK COMPLETE
Ministry of Defence £0.1bn WORK COMPLETE
Summary of spending
C.36 This summary of other government departments covers
pandemic spending in the departments above. These government
departments had lower levels of spending or assessed risk relative to
other areas of government and did not report detecting fraud in their
COVID-19 related spending. As such I have taken a risk-based approach
to their review in line with my overall approach.
C.37 Cabinet Office spending focused principally on HM government’s
public information campaign and attempt to encourage the
production scale up of mechanical ventilators known as the ‘Ventilator
Challenge’. The Department for Energy and Net Zero was formed after
the pandemic and did not inherit any of the Department for Business,
Energy and Industrial Strategy spending areas from the pandemic
when it was created (these went to DBT and DSIT). FCDO spending
82
focused on the government’s international response, particularly
adapting existing development support towards supporting other
countries responses to COVID-19 and through COVAX in distribution of
vaccines to developing countries (£0.5 billion). Home Office spent on a
range of measures to support the policing and asylum systems with
provision of additional asylum accommodation being the largest area
of additional spending (£1.4bn). MoJ spent around £0.5 billion focused
on aiding recovery of the criminal justice system from COVID-19. MOD
spent an additional £93 million according to the NAO cost tracker,
principally in providing military aid and data analytics support to local
authorities.
Summary of counter fraud approach
C.38 Departments gave differing levels of detail in their responses,
partly due to the complexity of the spending. Some, such as FCDO,
cited the use of FRAs and assurance processes that involved
compliance with existing guidance of, or review by, central functions
such as the Government Commercial Function. Some departments also
referred to undertaking some level of post event assurance. For
example, MOJ tested 45 contracts over £1 million that were part of its
COVID-19 spending and did not identify any fraud and error in these
contracts. No further COVID-19 fraud work that would offer value for
money to recover has been identified in these departments. MHCLG
told me it is not accountable for the additional expenditure it made
during Covid, which contrasts from the response I have received from
other government departments, such as DBT in its spending through
local authorities.
83
Annex D
Preliminary Report to
the Chancellor of the
Exchequer on Recovery
of Losses due to Fraud in
the Procurement of
Personal Protective
Equipment during the
Covid 19 Pandemic
84
Preliminary Report to the Chancellor of the
Exchequer on Recovery of Losses due to Fraud
in the Procurement of Personal Protective
Equipment during the Covid 19 Pandemic
3 April 2025
The appendices of this report have been removed on commercial
grounds and due to the sensitivity of ongoing cases. These removals
are necessary to protect confidential business information and to
avoid prejudicing current legal processes.
85
Contents
1. Executive Summary
2. Background to the CCFC review of PPE contracts
3. Analysis of the performance of Covid 19 PPE contracts
a. Supplier and contract performance
b. Analysis of disputed contracts
c. Differences in supplier and contract performance by
product category
d. Evidence surrounding performance of suppliers in “VIP”
lane and with due diligence flags
4. Factors contributing to the level of alleged fraud and profiteering
in Covid 19 PPE supply and the difficulties in recovery of losses
5. Next steps
86
Executive Summary
1. I have prepared this report in response to concerns about the levels
of alleged fraud and profiteering in the procurement of Protective
Personal Equipment (PPE) during the Covid 19 pandemic.
2. At the start of December 2024, 55 contracts worth £1,258 million
placed through the Parallel Supply Chain (PSC) established by the
Department of Health and Social Care (DHSC) were still unresolved
or awaiting a ministerial decision for claims to be written off or
abandoned. They were part of a total of 64 contracts originally
worth £1,479 million before partial settlements in relation to seven
contracts[i]. Disputes had generally arisen because of problems with
documentation, non-compliance with specification, or quality that
had not been resolved by replacement of defective product,
provision of required documentation or refund of payments. The
contracts were part of the £7.9 billion of PPE procured through the
PSC, which itself was part of the £13.6 billion total outlay on PPE
(through this route, through contracts with existing suppliers of
Supply Chain Co-ordination Limited (SCCL), and through newly
commissioned UK manufacturing supply through “UK Make”).
DHSC estimated in its 2023-2024 losses through PPE fraud of £324
million, 2.4% of the PPE spend.
3. Having reviewed the unresolved contracts with the DHSC Contracts
Dissolution Team, including discussing the more complex cases
with lawyers retained to advise and represent DHSC, I have
endorsed the proposals of officials to ministers for claims against
suppliers relating to 49 contracts worth £762[ii] million to be waived
or abandoned. These include some contracts where proposals for
them to be waived or abandoned had been approved previously by
ministers prior to the general election last year. The
recommendations reflect the low prospect for success in litigation
to recover money from the suppliers in relation to the cost of taking
further action[iii].
4. Overall, I can provide assurance to the Chancellor about the efforts
that have been and continue to be made by the DHSC Contracts
Dissolution Team and Anti-Fraud Unit to recover public money lost
through problems with the procurement of PPE during the
pandemic and suspected fraud.
5. 13 contracts worth £468 million remain live[iv], with litigation to
recover sums in dispute either under way or in prospect. A handful
of the suppliers involved have been referred to the National Crime
Agency for investigation for possible fraud. In addition to the live
contracts, there may be potential for some financial recovery from
the liquidators of 7 suppliers accountable for disputed contracts
worth £95 million. Fraud may be involved in some of these cases,
but taking them further appears to be frustrated by key individuals
87
being outside the UK.
6. The disputed contracts are concentrated in the supply of gowns,
which represent 84% of the value in dispute, with 52% by value of
gown supplies being non-compliant either in documentation,
specification, or quality. The DHSC’s case against suppliers has
been compromised by problems with its own contract
documentation, changing specifications, delays of as much as two
years in inspecting goods supplied (providing grounds for
challenges about storage conditions in the meantime), and product
passing use-by dates before any defects were identified.
7. Questions have been raised about the quality of deliveries from
suppliers introduced to DHSC via the “high priority lane” (HPL) or
“VIP” channel. However, this is not reflected in examination of the
problem contracts. HPL contracts account for 27% of the value of
problem contracts, whereas they represent 32% of the resolved
contracts. (The difference between this analysis and previously
raised concerns about HPL contracts might be explained if HPL
suppliers whose deliveries were defective were more willing than
others to settle with DHSC.)
8. The review of the performance of the PPE contracts and the work
undertaken on recoveries does not account for the barriers to
achieving satisfactory settlements to disputed contracts. It also
does not address the concerns of the public about alleged price-
gouging and profiteering. Both appear to have their roots in the
extraordinary degree of over-ordering of PPE undertaken during
the early months of the pandemic.
9. DHSC Annual Reports and its evidence to the Covid 19 Inquiry
describe the purchase of over 38 billion items of PPE between
February and July 2020 of which 11 billion had not been used by
March 2024, and losses of £10.0 billion (against an outlay of £13.6
billion). The lack of preparedness for the pandemic in terms of
emergency stockholding is well-documented and there were
widespread complaints from clinicians about PPE shortages in the
early weeks of the pandemic, and lack of supply to community
services. The evidence of a consequent overreaction is compelling,
with the DHSC working at the end of April 2020 on forecast
demand 2.15 billion pieces per month, which was more than twice
the level demand in any single month during the pandemic and
buying 12 months ahead.
10. The over-ordering resulted in DHSC paying spot prices at the top of
the market, but for long term supply. The scale of the DHSC
intervention in the PPE market over such a short period may well
on its own have increased prices. Factories responded by selling
their capacity to highest bidder, and exploited the opportunity to
make profits while they could. A more evenly paced approach to
88
ordering would have resulted in DHSC taking advantage of prices
falling after their early peak and making a more realistic
assessment of demand before committing to long term supply
arrangements.
11. The over-ordering also resulted in such a flood of PPE supply that
the DHSC’s warehouse and inbound goods handling capacity was
rapidly exceeded with the result that PPE remained in shipping
containers and goods were not inspected for as long as two years
before being inspected, with the consequent problems for contract
dispute resolution.
89
Background to the CCFC review of PPE contracts
12. Very early in the Covid 19 pandemic, the DHSC established that the
there was insufficient stock of PPE available, either in the regular
NHS supply chain managed by Supply Chain Co-ordination Limited
(SCCL) or in the Pandemic Influenza Preparedness Programme
(PIPP) stock managed by Public Health England. It established new
emergency supply arrangements within DHSC known as the
Parallel Supply Chain to manage procurement and logistics. Initially
this ran alongside SCCL but soon took over the management of all
PPE from SCCL, which continued to manage the procurement of
other supplies for the NHS. The staffing of the PSC numbered over
500 at its peak, include around 100 staff provided by the MoD.
13. The total outlay on PPE amounted to £13.6 billion, with the bulk of
the purchasing taking place between February and July 2020. £7.9
billion of the purchases were from suppliers not previously known
to the DHSC or SCCL. The balance was from existing suppliers of
SCCL and domestically manufactured supply through “UK Make”.
14. Given the emergency circumstance, the Cabinet Office issued
information and guidance that public bodies could procure with
extreme urgency using regulation 32(2)(c) under The Public
Contracts Regulations 2015. In response to a “call to arms” by the
Secretary of State, the PSC was flooded with offers to supply PPE. It
appears that most of these offers were from organisations that were
not able to provide goods to the specifications required or in the
volumes required. Nonetheless, they required at least an initial
review even if they did not progress to the multi-stage due
diligence examination undertaken by the team in DHSC.
Controversially, a fast-track process was established to undertake at
least the initial screening of offers from suppliers introduced by
politicians and senior officials. This was initially known as the VIP
Lane before being formally described as the HPL. This attracted
considerable criticism and charges of cronyism and favouritism.
Non-governmental organisations including Transparency
International, Spotlight on Corruption and the Good Law Project
provided reports into the performance of supplies provided through
the HPL and, using information supplied in response to FOI
requests, suggested that HPL introductions were overrepresented
among the suppliers chosen to supply PPE and, in addition,
underperformed in terms of delivery of quality PPE compared to
other suppliers.
15. PPE procured that did not pass an initial quality assurance process
was immediately categorised as Do Not Supply and quarantined for
detailed review and rectification, if possible, before being made
available for distribution to front-line NHS staff. This applied to 176
of the 394 contracts procured through the PSC, representing a
contract value of £3.9 billion. This also applied to £548 million in
deliveries from 35 of the existing SCCL suppliers. On further review,
90
the issues with the SCCL supplier stock were resolved as were all
PSC contracts except those described in the next paragraph.
Resolution took various forms, including receipt of new
documentation demonstrating that product was indeed fit for use,
replacement product being provided, cash returned, or recognition
that product, although fit for use when delivered, was out of date by
the time that it would have been distributed to the front-line.
16. At the start of December 2024, 55 contracts worth £1,258 million
placed through the PSC established by DHSC were still unresolved
or awaiting a ministerial decision for claims to be written off or
abandoned. They were part of a total of 64 contracts originally
worth £1,479 million before partial settlements in relation to 7
contracts (described in Appendix 1 - Appendix Removed). Disputes
had generally arisen because of problems with documentation,
non-compliance with specification, or quality that had not been
resolved by replacement of defective product, provision of required
documentation or refund of payments. The contracts were part of
the £7.9 billion of PPE procured through the PSC, which itself was
part of the £13.6 billion total outlay on PPE (through the PSC,
through contracts with existing suppliers of Supply Chain Co-
ordination Limited, and through newly commissioned UK
manufacturing supply through “UK Make”).
17. In addition to the problem contracts, DHSC estimated in its 2023-
2024 Annual Report losses through PPE fraud of £324 million, 2.4%
of the PPE spend.
91
Analysis of the performance of Covid 19 PPE contracts
18. Overall, I can provide assurance to the Chancellor about the efforts
that have been and continue to be made by the DHSC Contracts
Dissolution Team and Anti-Fraud Unit to recover public money lost
through problems with the procurement of PPE during the
pandemic and suspected fraud. They have been tenacious and
resourceful in seeking satisfactory resolution and appear to “have
left no stone unturned.”
19. Having reviewed the unresolved contracts with the DHSC Contracts
Dissolution Team, including discussing the more complex cases
with lawyers retained to advise and represent DHSC, I have
endorsed the proposals of officials to ministers for claims against
suppliers worth £762 million[v] to be waived or abandoned. The
recommendations reflects the low prospect for success in litigation
to recover money from the suppliers in relation to the cost of taking
further action.
20. The reasons for the low prospect of success in litigation and high
cost of further action include:
a. Difficulties litigating with Chinese counterparties
b. Untraceable counterparties
c. Contractual shortcomings, including contracts that do not
specify the jurisdiction for litigation, let alone specifying
the Courts of England and Wales
d. Corrupted or missing schedules in the original contracts
e. Contested claims about the storage condition of goods
between delivery to UK and them being checked (for
example, some deliveries remained in shipping containers
for over two years)
f. Disputes between laboratories used by DHSC and
suppliers over the testing of goods for sterility when finally
checked
g. Goods being unlikely to be used before expiration of use-
by dates because of over-procurement (see paragraph 24)
undermining the case for payment of damages.
21. A representative selection of the unresolved contracts is provided in
Appendix 2 (Appendix removed). to illustrate the reasons for the
recommendations made to ministers for claims to waived or
abandoned.
22. 12 contracts worth £468 million remain live, with litigation to
recover sums in dispute either under way or in prospect[vi]. A
handful of the suppliers involved have been referred to the National
Crime Agency for investigation for possible fraud. A director of a
company in one of the live cases is currently facing investigation for
tax fraud.
92
23. In addition to the live contracts, there may be potential for some
financial recovery from the liquidators of seven suppliers
accountable for disputed contracts worth £95 million. Fraud may be
involved in some of these cases, but taking them further appears to
be frustrated by key individuals being outside the UK. The disputed
contracts are concentrated in the supply of gowns, which represent
84% of the value in dispute, with 52% by value of gown supplies
being non-compliant either in documentation, specification, or
quality. The concentration in one product category raises the
possibility that there were underlying systemic shortcomings in the
contracting for gowns, but I have not explored this issue in any
detail.
24. External organisations have raised questions about the quality of
deliveries from suppliers introduced to DHSC via the HPL.
Transparency International also raised concerns about the contracts
awarded with due diligence “red flags” such as recent incorporation,
offshore ownership and late publication of notice of contract award.
93
However, HPL contracts account for 27% of the value of problem
contracts, whereas they represent 32% of the resolved contracts.
Companies with at least three Transparency International red flags
are slightly more likely to be represented among the resolved
contracts than the problem contracts. I have not yet had the
opportunity to test this somewhat unexpected outcome with
Transparency International or the other external organisations. I also
have not explored whether this outcome reflects another variable
such as product mix which may be important given the findings set
out paragraph 22. Nonetheless, I do not believe these findings argue
against the importance of due diligence in procurement or
undermine the argument that the HPL appears naïve and failed the
“sniff test”.
Factors contributing to the level of alleged fraud and profiteering in
Covid 19 PPE supply and the difficulties in recovery of losses
25. The review of the performance of the PPE contracts and the work
on recoveries does not account for the barriers to achieving
satisfactory settlements to disputed contracts. It also does not
address public concerns about alleged price-gouging and
profiteering. Both have their roots in the extraordinary degree of
over-ordering of PPE during the early months of the pandemic.
26. DHSC annual reports and its evidence to the Covid 19 Inquiry
describe the purchase of over 38 billion items of PPE between
February and July 2020 of which 11 billion had not been used by
March 2024, contributing to losses of £10.0 billion (compared to
£13.6 billion outlaid).[vii] The lack of preparedness in terms of
emergency stockholding is well-documented and there were
widespread complaints from clinicians about PPE shortages in the
early weeks of the pandemic, and lack of supply to community
services. These were serious, and required urgent action to ensure
PPE was available. However, the evidence of a consequent
overreaction is compelling. There were clear flaws in the modelling
of demand and costly errors in response, with an additional 20%
uplift applied (twice according to some sources) to the “Reasonable
Worst Case Scenario” assumptions and a suggestion that Downing
Street instructed the addition of a further four months stock on top.
At the end of April 2020 (see exhibit at paragraph 30), DHSC
appears to have been buying at least twelve months ahead against
forecast demand of 2.15 billion pieces per month (more than twice
the level demanded in any single month during the pandemic) plus
the 20% contingencies and building a four month additional stock
cushion.
27. By March 2023, once the pandemic was past, the DHSC Annual
Reported disclosed as that the forward stock of eye protection,
FFP3 face masks and gowns was around 9 years.
94
28. The over-ordering resulted in DHSC paying spot prices at the top of
the market, but for long term supply. The slide below, from a DHSC
procurement leadership team meeting on 30th April 2020 shows the
prices assumed going forward (under the black boxes on the right)
compared with the historic SCCL prices (under the amber box near
the middle).
29. The scale of the DHSC intervention in the PPE market over such a
short period may well on its own have increased prices. Factories
95
responded by selling their capacity to highest bidder, and exploited
the opportunity to make profits while they could. A more evenly
paced approach to ordering would have resulted in DHSC taking
advantage of prices falling after their early peak (which one person
interviewed suggested was happening by the end May 2020) and
making a more realistic assessment of demand before committing
to long term supply arrangements. Further, a more even – and less
rushed – pace to ordering might have resulted in fewer contracting
errors contributing to disputed contracts with limited scope for
recovery, such as those described at paragraphs 20.c and 20.d.
30. The over-ordering also resulted in such a flood of PPE supply that
the DHSC’s warehouse and inbound goods handling capacity was
rapidly exceeded with the result that PPE remained in shipping
containers and goods were not inspected for as long as two years
before being inspected, with the consequent problems for contract
dispute resolution (as described at paragraph 20.e). – see photo
below:
31. The error in the over-ordering was recognised as early as August
2020 when DHSC initiated the “Turn the tap” programme to curtail
contracts, paying penalties where necessary, to cancel orders. By
December 2020, £466 million had been recovered and a further
£270 million was under negotiation.
96
Next Steps
32. The focus of my work as CCFC has already moved to its second
phase, addressing fraud and seeking recoveries in relation to the
wider programmes of public spending during the pandemic.
However, I will continue to monitor the DHSC Contract Dissolution
Team’s work on Covid Recoveries in its management of the
remaining live cases and work with liquidators. In addition, there
are a number of remaining tasks to be undertaken before
incorporating the material in this report into the final report due for
publication later in the year:
a. Outstanding interviews with a few interested parties not
seen so far, including a retired director of a major Covid 19
PPE supplier and representatives of two NGOs who had
commented critically on PPE procurement;
b. Review of material from the final weeks of the Covid
Inquiry’s Module 5 (PPE) hearings which have only just
finished;
c. Follow-up meetings with officials and commentators
whose inputs are reflected in this preliminary report, to
test my conclusions;
d. Confirming and updating data included in this report;
e. Developing and sharing lessons learned for inclusion in
the final report.
[i]
See Appendix 1 - Removed
This figure includes (Removed) worth £9 million for which CCFC has
[ii]
approved the recommendation for a relatively small settlement but with the
bulk of the claim against the supplier written off. This represents the
difference between the total in this report and the £753 million write-off figure
in the paper submitted by DHSC for HMT ministerial approval on 2 April 2025.
[iii]
See Appendix 2 - Removed
This figure does not include the contract worth £9 million mentioned above,
[iv]
nor the recent settlement of a claim and counter-claim on a contract
(Removed) originally worth £28milion.
[v]
See note i above
[vi]
See note ii above
[vii]
DHCS Annual Report 2023-2024, page 204
97
Annex E
Evidence Base
E.1 I have compiled this review following rigorous examination of
extensive evidence and detailed interviews with key officials. The
commission's unique position grants me access to material that would
not ordinarily be available for public scrutiny, including evidence from
active investigations, commercially sensitive data, and confidential
operational details. This privileged access enables me to draw upon a
broader range of information than would otherwise be possible, though
the evidential base remains necessarily partial. The report may
reference estimates and unpublished data that, while not sufficiently
rigorous for publication, has been considered in full regard to its
limitations and contributes to my overall assessment. While the
confidential nature of much of this material necessarily limits what can
be disclosed publicly, it ensures my conclusions and recommendations
are informed by the fullest possible understanding of the
circumstances under review. The broad groups of evidence on which
the review relies include.
E.2 Background and Context: This encompasses relevant official
records, policy documents, legislation, and guidance that have formed
the background of my work.
Policy documents
• The Green Book
• Manging Public Money
• The Orange Book
• Consolidated budgeting guidance 2021-22
• Consolidated budgeting guidance 2022-23
Standards
• Commercial operating standards for government
• Government functional standard 13: Counter fraud
standard
Other relevant government documents
• Bank of England: Financial stability report 2023
98
• British Business Bank: Future Fund – FAQ's for companies
• British Business Bank: Reservation notice for the Bounce Back
Loan Scheme
• Public Sector Fraud Authority: UK Counter Fraud and Anti-
Corruption Strategy 2024 to 2027
• Companies House: Striking off or dissolving a limited
company
• Home Office: Fraud Strategy: Stopping Scams and Protecting
the Public 2023
Legislation
• Coronavirus Act (2020)
• Economic Crime and Corporate Transparency Act (2023)
• Public Authorities (Fraud, Error and Recovery) Act (2025)
Annual reports and accounts of government
bodies and associated governance document
• Department for Business, Energy and Industrial Strategy
(BEIS) annual report and accounts
• Department for Business and Trade (DBT) annual reports
and accounts
• Department of Health and Social Care (DHSC) annual
reports and accounts of activity and services
• HM Revenue and Customs Annual report and accounts
• Department for Work and Pensions annual report and
accounts
• Department for Transport annual report and accounts
• Insolvency Service annual report and accounts 2024-25
• Ministry of Housing and Local Government annual report
and accounts 2021-22
• Ministry of Housing and Local Government: Accounting
Officer System Statement (November 2020)
• Government Internal Audit Agency annual report and
accounts
99
Scrutiny, Audit, and Oversight Reports
• The Bounce Back Loan Scheme: an update (December 2021)
• Investigation into governments contracting for supplies of
PPE during the Covid-19 pandemic (Nov 2020)
• Implementing employment support schemes in response to
the COVID-19 pandemic (October 2020)
• COVID-19 business grant schemes (March 2023)
• Tackling fraud and error in government (July 2025)
• The housing of rough sleepers during the COVID-19
pandemic (January 2021)
• Employment support: The Kickstart Scheme (November 2021)
• Restart Scheme for long term unemployed people (December
2022)
• NAO Covid Cost Tracker
• Lessons learned: Tackling fraud and protecting propriety in
government spending during an emergency (February 2024)
Reports from third sector Organisations
• Behind the Masks: Corruption red flags in COVID-19 public
procurement, Transparency International
• Spotlight on Corruption briefing for the COVID-19 Inquiry
Commissioned and Public Data Analysis
• COVID-19 loan guarantee schemes repayment data:
September 2025
• Kickstart Scheme: A Quantitative Impact Assessment
• HMRC: Error and fraud in the COVID-19 schemes -
methodology and approach (an update for 2023)
• The Coronavirus Job Retention Scheme final evaluation
• RLS (iterations 1 & 2) Performance Data as at 30 September
2025
100
Other:
• Accounting Officers Assessments of their own COVID-19
spending schemes that were subject to review by the PSFA of
which responses can be seen in Annex B.
This information was supplied to the Commissioner on a confidential
basis with an expectation of confidentiality:
• Archived and Current Correspondence: A review of electronic
and physical communications, such as emails, letters, and other
forms of official correspondence.
• Witness Interviews and Submissions (including international
engagement): Detailed accounts gathered from relevant staff,
stakeholders, and other individuals, including leading figures in
healthcare management, the insurance industry, and academia.
101
Annex F
Stakeholder
Engagement Summary
Overview
F.1 Throughout the course of my review, extensive engagement was
undertaken with stakeholders across the public, private and third
sectors. These engagements were designed to gather evidence,
understand operational experiences, validate findings, and ensure the
recommendations reflect real-world challenges and opportunities for
strengthening the UK’s counter-fraud response during and beyond the
COVID-19 pandemic.
F.2 This appendix provides a consolidated record of the
organisations and groups consulted, the formats of engagement.
Public Sector Stakeholders
Central Government Departments and Agencies
• Cabinet Office Government Counter Fraud Function
• City of London Police
• Companies House
• Crown Commercial Service (CCS)
• Department for Business, Energy & Industrial Strategy (BEIS) and
its successor departments
• Department of Health and Social Care (DHSC)
• Department Work and Pensions (DWP)
• Government Internal Audit Agency (GIAA)
• HM Treasury
• HM Revenue & Customs (HMRC)
• Home Office
• The Insolvency Service
102
• Local Government Association (LGA)
• National Crime Agency (NCA) - including National Economic
Crime Centre
• NHS England and NHS Counter Fraud Authority
• Serious Fraud Office
• Supply Chain Coordination Limited
• UK Health Security Agency (UKHSA)
Devolved Governments
• Scottish Government
• Welsh Government
• Northern Ireland Executive departments
• Local authority counter fraud leads across all four nations
Public Bodies, Regulators and Audit Institutions
• National Audit Office (NAO)
• Public Accounts Committee (PAC)
• Local authority audit and assurance teams
Private Sector Stakeholders
• UK Finance
• Major High Street Banks
• Challenger banks and digital only institutions
• FinTech companies and fraud analytics providers
Professional Services and Industry specialists
• Forensic accounting and audit firms
• Risk analytics and data intelligence provides
Business Sector Representatives
• Federation of Small Businesses
• British Chambers of Commerce
103
• Industry associations representing hospitality, retail, construction
and transport
• Large employers utilising the Coronavirus Job Retention Scheme
or business support grants
Third Sector and Civil Society Stakeholders
Charities and Non-profits
• Step Change
• Money Advice Trust
• Transparency International
• Spotlight on Corruption
• Good Law Project
• Cifas
Academic and Research Institutions
• University research centres specialising in fraud, cyber security
and public administration
• Independent economic crime researchers contributing data and
policy analysis
• Think tanks with expertise in public spending and government
efficiency
Consumer and Citizen Representatives
• Consumer rights organisations
• Representatives from advice services (e.g., Citizens Advice)
104
Acknowledgements
I have been supported in my work over the past year by a small team
from HM Treasury and the PSFA. I have benefited from the co-operation
of civil servants working in the departments and ALBs whose work I
have been charged with assessing, particularly from DHSC, especially its
Contract Dissolution Team, DBT and the Insolvency Service. The
National Audit Office provided valuable briefings on its reviews of
COVID-19 spending and seconded a staff member to the PSFA team
working with me. I am particularly grateful for the candour and
openness of current and former officials who were at the heart of
decision-taking about PPE procurement and the COVID-19 economic
stimulus programmes. I have had valuable input from local authority
finance officers and the Local Government Association, officials from
the devolved governments, business lobby groups, professional bodies
and regulators, BBLS lenders, anti-corruption campaigners, providers of
advice to businesses, academics working on COVID-19 responses, and
individuals who have come forward to offer their expertise and
experience of the areas in the scope of my work. I am also grateful to
colleagues from the International Public Sector Fraud Forum for the
opportunity to share their experience combatting COVID-19 fraud
105
ISBN: 978-1-5286-6125-6
E-number: E03505750
HM Treasury contacts
This document can be downloaded from www.gov.uk
If you require this information in an alternative format or have general
enquiries about HM Treasury and its work, contact:
Correspondence Team
HM Treasury
1 Horse Guards Road
London
SW1A 2HQ
Tel: 020 7270 5000
Email: public.enquiries@hmtreasury.gov.uk
File and source
- File
- HMT_CP1462_Covid-Counter-Fraud-Commissioner-final-report_2025-12.pdf
- Size
- 2,640,623 bytes
- SHA-256
- 90baba7ab8b3c10655ca0cf6c33d1992f8c831e43321a051d3347e9fd281769b
- Original
- assets.publishing.service.gov.uk