Government can build resilience against future national
emergencies by applying lessons from its experience of paying
£22.6bn in grants to businesses amid the COVID-19 pandemic, a new
National Audit Office (NAO) report says.
The report, COVID-19 business grant
schemes, records the pace at which 4.5 million
payments were issued to firms via eight schemes from March 2020
to March 2022. Working under significant pressure, the former
Department for Business, Energy and Industrial Strategy (BEIS)
and councils successfully established the schemes and quickly
distributed grants to businesses in England to soften the impact
of restrictions.
HM Treasury (HMT) asked BEIS in late February 2020 to consider
how a grant scheme might be delivered. The first scheme was
announced at the Budget on 11 March with a second announced on 17
March. No contingency plans existed between central and
local government for supporting firms during a national
emergency. Local authorities were not notified of the new schemes
until they were publicly announced by HMT. This created
significant practical challenges as councils scrambled to
understand scheme requirements and answer questions from
businesses.
The initial grant schemes, where BEIS did not require pre-payment
checks, contributed the overwhelming majority of the estimated
£1.1bn losses from error and fraud across all of the schemes.
These losses amounted to just under 5% of the value of grants
paid to businesses. BEIS estimated that error and fraud under
later schemes was significantly lower. By mid-February 2023, the
new Department for Business and Trade (DBT) reported £11.4m of
these losses had been recovered.
BEIS learned lessons from the initial response in 2020. It
established strengthened governance arrangements and also
mandated pre-payment checks which helped to greatly reduce the
level of losses in later schemes.
Ipsos is currently carrying out a BEIS-commissioned evaluation of
the grant schemes to assess their economic impact and value for
money. This work is more challenging than it would have been had
evaluation been built in from the start. DBT, which is now
responsible for these schemes, expects a draft final report in
late spring 2023 and is also examining the impact of its other
COVID-19 interventions, including business loans. HMT has no
parallel plans to evaluate the overall impact of government
support to businesses.
, head of the NAO, said:
“BEIS and local government deserve credit for working quickly to
set up and distribute grants to businesses. Early schemes lost
significant sums to error and fraud, but BEIS addressed this in
later iterations. The government does not yet know the impact of
these grants - in terms of maintaining jobs or how much support
might have been given to businesses which did not need it.
Without such an assessment, an overall judgement about the value
for money of the schemes remains open.
“The government’s experience of working at speed with local
authorities to channel financial support during the pandemic
offers important lessons should similar crises occur. The new
Department for Business and Trade can now use these lessons to
improve contingency planning and to build government resilience
for responding to future national emergencies.”
