Covid Pandemic Finance Schemes Exposed the UK to Massive Fraud and Losses

The long awaited report from Tom Hayhoe, the United Kingdom’s Covid counter fraud commissioner, delivers a damning conclusion on the handling of pandemic finance schemes. According to findings, more than £10.9 billion was lost to fraud and error across various support programmes introduced to aid businesses and individuals during the pandemic. Despite the urgency with which these schemes, including the bounce back loan, Future Fund, and Eat Out to Help Out, were launched, systemic weaknesses and lack of accountability left public finances dangerously exposed.

Hayhoe’s report draws particular attention to weak procurement practices, poor quality data, and inconsistent risk management within government departments. Schemes such as the £47 billion bounce back loan programme for small businesses allowed self certification of eligibility, resulting in widespread abuse. Recipients overstated turnover or invented figures entirely, securing funds for uses as varied as luxury purchases, home renovations, and even illicit activity. Suitcases packed with cash stemming from fraudulent claims were reportedly seized at UK borders.

Official warnings regarding the vulnerability of these emergency programmes were apparent from the outset, but records show inadequate and slow responses once criminal exploitation began. Data sharing failures enabled companies to inappropriately access funds from multiple sources, while controls to identify inactive companies and prevent multiple applications came far too late. In the case of the bounce back loans, nearly 27 percent by value are now categorised as in default, arrears, or have triggered government guarantees for bank losses, costing the taxpayer billions.

Efforts to recover lost funds have been limited in their success. Of the original £10.9 billion lost to fraud and error, only around £1.8 billion has been reclaimed, with the remainder deemed largely unrecoverable due to degraded evidence and dispersed or offshore funds. The report notes that the justice system has struggled to prioritise complex Covid fraud cases alongside ongoing caseloads, further reducing recovery prospects.

Issues with pandemic support did not end with loans. Government procurement errors in personal protective equipment escalated costs, with over £1.4 billion spent on contracts that delivered unusable or undelivered goods. At its peak, the government’s surplus PPE stocks equalled more than 100 months’ supply of surgical gowns, inviting mistrust and profiteering across the supplier sector.

The report concludes that fraud prevention must become central to programme design in future crisis response. Hayhoe recommends embedding risk assessment in government decision making, improving data sharing, and introducing clear lines of responsibility for anti fraud practices. Failure to address these structural issues, he warns, leaves the public sector perpetually vulnerable to fraud and error, with costly consequences for the nation’s finances and public trust.