Criminal gangs have stolen £2bn of furlough scheme funds

Organised crime gangs have stolen as much as £2bn ($2.6bn) of furlough cash from struggling companies, a new report has found.

Between 2.5% and 5% of the total money awarded to all firms was siphoned off by criminal fraudsters, the National Audit Office (NAO) revealed. It said that gangs had “almost certainly” pocketed anything from £1bn to £1.95bn.

The report said that the furlough scheme allowed agents working on behalf of businesses to make applications for grants. This then made it easier for criminals to pose as multiple firms and steal funds.

Businesses were not notified that their details had been used to make fraudulent claims until August, allowing criminals to claim payments for months, the NAO said.

The report revealed that up to £3.9bn of furlough funding was lost due to crime, fraud or error.

The auditors said: “Limiting applications to existing taxpayers should have reduced the fraud risk, but HMRC could have done more to make clear to employees whether their employer was part of the furlough scheme.”

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The NAO added that the furlough scheme was rushed through quickly at the start of the pandemic and was up and running within four weeks. In comparison, HMRC’s IT team usually requires around 18 months to deliver major projects.

HMRC believes it will take 500 members of staff to track down £275m from 10,000 of the most high-risk furlough grants. Earlier this month it recruited private contractors.

A government spokesperson said: “The government’s priority from the start of the outbreak has been on protecting jobs and getting support to those who need it as quickly as possible, and our employment support schemes have provided a lifeline to millions of hard-working families across the UK. We make no apology for the speed at which they were delivered.

“Our schemes were designed to minimise fraud from the outset and we have rejected or blocked thousands of fraudulent claims.

“We will not tolerate those who seek to defraud taxpayers and will take action against perpetrators, including criminal prosecution.”

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