An analysis by the Department for Business and Trade has unveiled that most businesses that received £23 billion in Covid grants could have survived without the aid.
- The report indicates that only a quarter of the 1.4 million businesses benefiting from the grants were at risk of collapse without the support.
- Concerns have been raised over waste and fraud in the government’s Covid spending, especially relating to the Bounce Back Loan scheme.
- The analysis suggests that the grants safeguarded 300,000 jobs and bolstered economic confidence, despite misallocation issues.
- Government representatives express their commitment to learning from these financial inefficiencies and addressing waste and fraud.
According to a comprehensive analysis by the Department for Business and Trade, only a minority of the 1.4 million businesses that received Covid grants would have collapsed without them. The detailed 100-page report prepared by Ipsos, consultancy Steer, and economist George Barrett reveals that the majority of these businesses could have endured the pandemic independently. This finding has intensified scrutiny over government spending during the crisis.
Concerns have been mounting regarding waste and fraud within the government’s Covid financial support schemes. Notably, the National Audit Office (NAO) has previously criticised the Bounce Back Loan scheme for its delayed implementation of anti-fraud measures, estimating that £7.3 billion may have been falsely claimed. This inefficiency highlights the broader economic impact of prolonged lockdowns and government spending.
The report underscores that while the £23 billion in grants played a key role in safeguarding approximately 300,000 jobs and enhancing economic confidence, the funds were often misallocated. The rapid response by the government resulted in numerous businesses, which were not in immediate need, benefiting from the grants; meanwhile, some workers remained in roles that might not be viable long-term.
Despite these criticisms, the report acknowledges the lasting impact of the grants on employment and the economy. The economic ‘scarring’ due to the pandemic was mitigated to some extent by this financial intervention. However, it is crucial to note that only a quarter of the businesses granted aid actually lacked the financial reserves to survive any short-term upheavals without the additional funding. This raises questions about the allocation of such significant financial resources.
A spokesperson for the Department for Business and Trade highlighted the government’s focus on rectifying waste and fraud linked to pandemic spending. They affirmed that the report’s findings would be carefully analysed to implement necessary improvements and learn valuable lessons for future crisis management.
The report emphasises the need for improved financial governance to prevent waste and inefficiencies in future crisis-related spending.
