Bank bosses did not call in the anti-fraud squad until after almost all Covid loans had already been handed out, it can be revealed.
An estimated £1.1billion of taxpayer cash was lost to fraud and error from an emergency help scheme for small firms.
Now it has emerged that officials from the government-owned British Business Bank (BBB) did not hold any formal meetings with crime agencies until four months after the cash started to be handed out.
Government-backed loans of up to £50,000 were handed out from May 2020 as part of the bounce back loans scheme, which was announced by Rishi Sunak.
But the BBB, which was responsible for overseeing the scheme, admitted it only began holding formal meetings with the National Investigation Service (NATIS) and the National Crime Agency (NCA) on 16 September 2020.
By that time 80% of the £47billion handed out in loans had already gone out.
Shadow City Minister Tulip Siddiq says Labour will
Labour ’s Tulip Siddiq last night said it “should be a source of enduring shame” to Mr Sunak that so much taxpayers’ money had ended up “in the hands of criminals and gangs” during his time as chancellor.
An estimated £6.7billion was lost to fraud and error across all the Covid schemes for businesses and individuals.
The Shadow City Minister added: “The most basic standards we expect from those running the country were sorely lacking.
“Coming on top of billions spent on crony contracts and billions more on unusable PPE, any claim the Conservatives have to being careful stewards of the public finances is gone.
“Labour will treat public money with the care and respect it deserves.”
The British Business Bank last night said its officials had held discussions on fraud as part of roundtables with crime agencies before the formal meetings began in September 2020.
A spokesman said: “From early in the Bounce Back Loan Scheme, a representative of NATIS attended weekly counter-fraud forums, which were co-chaired by the British Business Bank and UK Finance, at which potential fraud in the Bounce Back Loan Scheme (BBLS) was discussed by attendees from across BBLS lenders, the Bank and the government.”
A National Audit Office report last year found the government had “failed to put adequate fraud prevention measures in place” on the bounce back loans scheme.
The waste watchdog said that when steps were eventually taken they “came too late”, adding: “It is better to prevent fraud than to seek to recover funds later.”
The government said it had not written off any of the money that had been claimed fraudulently.