FRAUD and bankruptcy will cost Rishi Sunak’s flagship Covid business loan program £ 26bn, it is feared.
And five of Britain’s biggest banks will pocket £ 1 billion from the Bounce Back loan program, according to the National Audit Office report.
He said the high risk of fraud and default was due to the lenient criteria – designed to give businesses quick loans to keep them from going bankrupt during the Covid crisis.
NAO boss Gareth Davies called on the Chancellor to put in place urgent checks to protect against fraud abuse.
He warned: “Unfortunately, the cost to the taxpayer can be very high, if the estimated losses turn out to be correct.”
Over £ 38 billion in rebound loans of up to £ 50,000 each have been made to nearly 1.3 million businesses.
The government guaranteed the loans and promised to cover the interest payments for the first year.
The in-depth analysis of the £ 38bn loan scheme showed that ‘significantly more’ than £ 2bn could already have been paid to fraudsters.
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And the spending watchdog said taxpayers face a potential total loss of between £ 15bn and £ 26bn due to fraud and because borrowers will struggle to repay loans.
A government spokesperson said: “We have sought to minimize fraud – with lenders implementing a range of protections, including anti-money laundering and customer checks, as well as supervisory checks. transactions.
“Any fraudulent claim may be subject to criminal prosecution for which penalties include imprisonment or a fine or both.”