27% of Covid grant claims were unjustified

More than a quarter of UK small businesses accessed the Covid support fund, helping to prevent the closure of up to 21,000 companies by the end of 2022. The scheme also played a vital role in safeguarding up to 400,000 jobs, according to the latest report from the Department for Business and Trade (DBT).

However, Government analysis suggests that many businesses would have survived without the grants. The rushed rollout meant no thorough applicant checks were carried out, and three key issues were identified: businesses’ financial stability wasn’t considered, the impact of other support schemes, such as furlough, was ignored, and there was no assessment of the commercial viability of companies receiving funds.

The DBT estimates that under 5% of grants, totalling £1.1 billion, were issued fraudulently or due to errors, with 83% of the cases involving mistakes in claims. By May 2023, only £20.9 million of this had been recovered.

Speaking at the Labour Party conference, Chancellor Rachel Reeves confirmed the appointment of a Covid Corruption Commissioner to tackle misuse of funds.

Despite these concerns, the scheme provided significant short-term benefits. Most of the £22.6bn in grants went to small businesses, particularly in the retail and hospitality sectors, with companies able to claim up to £51,000. This support helped businesses cover non-wage costs such as rent and supplier invoices, contributing to a faster post-pandemic recovery.

Talk to us about your business.

Testimonial

“The service received is of the highest order – thorough, professional, timely, appropriate, clear, concise – and together with their personal service, makes CDJ excellent to work with and I would not hesitate in recommending them.”

Jason Sorrel – Network Intellect