Analysis of the government loan scheme to fight small businesses suggests that criminals may have stolen more than $ 1.9 billion from taxpayers.
The National Audit Office says the UK’s five largest banks will pocket nearly $ 1 billion between themselves from the scheme.
Under the Bounce Back scheme, small businesses can borrow up to 50,000.
The government has said it is trying to reduce fraud through credit card background checks.
Bounceback loans are 100% government-backed loans up to 50,000, and were introduced to alleviate the great pressure on small businesses after the economy went into the corona virus lock.
They do not have to pay for six years and are interest free for the first 12 months.
The B38 billion loan scheme is an extension of previous concessions, which some businesses complained they could not access because the criteria for lending were too strict.
The Public Accounts Committee said it was the government’s largest and most dangerous business support program.
It says it will not estimate the value of the project’s cash as the loans will not be repaid until May next year.
The NAO analysis said the project’s losses could reach “significantly higher” than normal estimates of 0.5% to 5% for public sector fraud.
This means criminals have lost more than $ 9.1.9 billion, which they hook up when taxpayers fail to repay.
McHillier, chairman of the Public Accounts Committee, said loans were an important lifeline for many businesses.
But “the government estimates that up to 60% of loans could turn out badly – which would really lose public money.”
“The bounce back loan scheme got the money quickly into the hands of small businesses and some would have stopped going under.
“But if the plan is an emergency release the perpetrators could have helped themselves with billions of pounds at the expense of taxpayers.
“Unfortunately, many companies are unable to repay their loans, and banks are quick to wash their hands of the problem.
Analysis: Angus Crawford, BBC News Reporter
Today’s report confirms what many suspected.
In May, before tens of thousands of people went to the bust, the government had to quickly get money for small businesses.
But to do that, they had to compromise on credit and fraud checks. This opened the door to a whole range of problems – including the fraud of organized crime.
We have found evidence of more than 100 fake companies set up by fraudsters to make fraudulent applications – we get a maximum of £ 50,000 each time.
They have used the stolen, personal details of innocent victims to set up fake companies – the victims will know nothing about it until the letters demanding their return begin to come through their doors next summer.
Taxpayers are in the same situation – waiting for us to finally figure out how much this plan will cost us. The National Audit Office’s warning is clear – it could be “too high”.
Sue and Dave Burton, from the south of England, were shocked to find that Sue’s identity had been stolen in order to set up a company and solicit a bounce back loan.
“I have gone from tears to anger,” he told the BBC. “Now I’m afraid to do anything.”
The report warns that the speed at which the plan was designed raised the risk of fraud. It took a month to make sure businesses could not get more than one loan.
Govt warned the government in May that its primary credit program to help affected small businesses was “highly vulnerable to fraud” from “organized crime”, the BBC reported last week.
The state-owned British Business Bank (PPP), which oversees the bounce back loan scheme, has twice raised concerns.
The BBC reports that the perpetrators are setting up bogus companies to obtain loans worth tens of thousands of pounds.
PPP expects to pay $ 7 1.07 billion in interest to high street lenders who disburse money.
Most of these will go to the UK’s five largest banks, Barclays, HSBC, Lloyds, Knotwest and Santander, which provided $ 31.3 billion in funding.
According to the latest treasury figures, 1.55 million applications for loans, 1.26 million approvals.
“We aim to help those in need as soon as possible and we will not apologize for this,” a government spokesman said.
“We looked to reduce fraud – lenders implement a number of security measures, including anti-fraud and customer checks and transaction monitoring controls.
“Any fraudulent application can be criminally prosecuted, including imprisonment or a fine or both.”