ORGANISED crime gangs may have pocketed £2billion through furlough scams, tax officials believe.
HM Revenue and Customs estimates between 5 and ten per cent of £39billion in payments made using the Treasury’s job retention scheme are thought to have been claimed fraudulently.
⚠️ Read our coronavirus live blog for the latest news & updates
Furlough fraudsters may have pocketed £2bn from Rishi Sunak’s schemeCredit: PA:Press Association
Tax officials told the National Audit Office (NAO) that of those fraudulent claims it was “almost certain” that more than half had been paid to organised gangs posing as legitimate businesses so they could make a claim under the scheme.
The NAO also said that other types of fraud included employers making furloughed employees work or inflating claims to get more money.
The report will likely raise questions about just how far Britain’s tax authorities can go to ensure the payments made are legitimate.
A total of £39billion was spent on the job retention scheme between March and September, of which the HMRC thinks between £2bn and £3.9bn may have been fraudulently paid out.
An internal survey by the NAO showed that on top of the organised fraud nearly one in ten workers whose wages were covered by the scheme said that their bosses had asked them to work during furlough, which is against the plan’s rules.
The auditors said that while the speed at which the scheme was rolled out meant that it was likely to be open to abuse, officials should have carried out more checks on where the money was going.
It added the HMRC should have made sure that employees knew their employer was taking the furlough money, so they could challenge any potential fraud.
It appears that the scale of fraud and error could be considerable, particularly for the furlough scheme
Head of the NAO Gareth Davies
The head of the NAO Gareth Davies said: “It appears that the scale of fraud and error could be considerable, particularly for the furlough scheme.”
Government sources defended the scheme and said HMRC’s figures were only and estimate, The Times reports.
They added that Chancellor Rishi Sunak had been under pressure when he opened the scheme to increase the eligibility of employers but had resisted to minimise the fraud risk.
The news comes after Mr Sunak announced a fresh bumper furlough package which will pay even more wages.
The Chancellor unveiled new support for businesses to help them keep on staff by paying a larger chunk of their wages – and more grants for restaurants and pubs which can stay open but are being hit hard by the curfew and household mixing bans.
In his fourth economic statement in a month, he told MPs he would make the new Job Support Scheme far more generous for firms that are able to stay open by increasing support from the state.
At the moment only businesses in Tier 3 which are ordered to shut – such as pubs which do not serve food – are allowed to claim up to two thirds of their staff’s unworked wages under a local furlough scheme.
But now the programme – which will come in on November 1 – will allow every business across the country which is still open to get similar help.
Employees only need to work 20 per cent of their hours rather than a third, which will be a huge relief for employers.
Firms will have to just pay 5 per cent of unworked hours – on top of the hours that their staff are working anyway.
It means that someone working just one day in five – or 20 per cent of their normal hours – can get up to 73.33 per cent of their total wages. If they work more hours, they will get more pay.
And he revealed huge new grants of up to £2,100 for hospitality businesses which remain open in Tier 2 and 3 which face the toughest restrictions – which can be backdated until August as many have been under fresh rules for months.
Firms can already claim up to £1,500 every two weeks if they are ordered to shut.
The PM and Chancellor will give a press conference later today to spell out the new support to the public.
It’s expected the total new package of measures – which will start from November and likely last at least six months – will total more than £13billion.
Around £8billion of new help was announced.
The Chancellor announced:
- The Job Support Scheme which replaces the furlough scheme at the end of the month is made more generous
- Workers must work a minimum of 20 per cent of hours to get help
- Businesses will pay just 5 per cent of wages – down from around 55 per cent
- Grants for self-employed people raised up to £3,750
- New grants for businesses in high-alert areas in Tier 2 and 3
The new grants scheme will cost £200million a month for England, and the self-employed scheme around £3.1billion.
The new Jobs Support Scheme – replacing furlough – will be between £1billion and £2billion per month.
But Mr Sunak warned that the nation must have “one eye on the future” and “be careful not to mortgage our children’s future” with endless support packages to deal with the virus.
The Chancellor told the huge swathes of the nation under Tier 3 rules that he understands their frustration and “this is not forever”.
The HMRC estimates that between £2bn and £3.9bn was claimed fraudulently under the furlough schemeCredit: PA:Press Association
“These are temporary restrictions to help control the spread of the virus,” he added.
However, there would be “difficult days and weeks ahead”, but “we will get through this together. People are not on their own”.
He stressed: “We have an economic plan that will protect the jobs and livelihoods of the British people wherever they live and whatever their situation.”
Defending the controversial and confusing tiers system, he said: “Just as we have throughout this crisis, we will listen and respond to people’s concerns as the situation demands.
“And I make no apology for responding to changing circumstances and so today we go further.”
Hospitality firms in Tier 2 areas have seen their trade fall off a cliff due to the ban on people meeting different households in all indoor venues – as well as the 10pm curfew.
They have been crying out for extra help and support from the Government to help them deal with the loss of income.
And with more and more areas falling in to the ‘High’ alert level such as London last week, the Chancellor has concluded more financial support is needed.
The Chancellor has announced new measures to protect workersCredit: PA:Press Association
The government has already pumped £39bn into the furlough schemeCredit: Crown Copyright
The Insidexpress is now on Telegram and Google News. Join us on Telegram and Google News, and stay updated.