An official report sheds light on the effectiveness of Covid grants provided to UK businesses.
- The Department for Business and Trade reveals only 25% of recipients required aid to survive.
- Concerns arise over government spending efficiency and potential fraudulent claims.
- The report acknowledges the role of grants in safeguarding jobs and economic confidence.
- The government commits to addressing waste and reviewing lessons for future crisis management.
The analysis from the Department for Business and Trade has uncovered that only 25% of the 1.4 million UK businesses that received state support during the Covid pandemic were in genuine need of the grants to avert collapse. This revelation, drawn from a comprehensive 100-page report by Ipsos, consultancy Steer, and economist George Barrett, has heightened scrutiny on the government’s allocation of funds during the crisis, amidst mounting concerns about wastefulness and fraud.
The report highlights that the Covid Business Grants, largely intended to keep businesses afloat, were superfluous for the majority of recipients. It has incited debate over the expenditure of the £23bn allocated for these grants, especially in the face of findings from the National Audit Office (NAO), which had earlier criticised the Bounce Back Loan scheme for its inadequate anti-fraud measures. The NAO estimated £7.3bn had been claimed fraudulently, pointing to systemic vulnerabilities in the crisis response.
The broader economic context during lockdowns included a massive £70bn furlough scheme and a noticeable rise in benefit claimants due to enduring health conditions. Currently, the UK’s debt mirrors the size of the entire economy, while mental health-related unemployment is anticipated to drive up benefits spending even further, underlining the complex ramifications of the pandemic beyond just fiscal support.
While the report recognised the positive impact of the grants in preserving around 300,000 jobs and bolstering economic confidence, it also noted significant misallocation of funds. The rapid deployment of these financial aids meant that several entities that were not in immediate need of support benefited, and employees were retained in roles that may not prove sustainable long-term. Despite these issues, the grants did contribute to mitigating the pandemic’s ‘scarring’ effects on the economy.
A Department for Business and Trade spokesperson reiterated the government’s focus on rectifying the inefficiencies and recovering misused funds from the pandemic spending. They affirmed that insights from the report would be thoroughly examined to enhance the management of future crises, emphasising a commitment to learning from past transgressions.
The report underscores the need for more targeted financial support strategies in crisis situations.
