The government has estimated that £31bn of its Covid-19 support schemes will have to be written off.
In an update of its Covid-19 Cost Tracker, the National Audit Office predicted that the total cost of the government’s coronavirus response will reach £271bn, of which £116bn has been spent to date.
This £116bn includes more than £89bn which has been issued in government-backed loans since the start of the pandemic. £31bn of these loans will have to be written off, according to the spending watchdog.
It was recently revealed that banks have started to freeze business accounts suspected of bounce back loan fraud, and the National Crime Agency (NCA) has already arrested three men as part of an investigation into fraudulent bounce back loan claims totalling £6m.
Earlier this week, Graeme Biggar, director-general of the NCA’s national economic crime centre, which co-ordinates efforts to prevent fraud, warned MPs about the “substantial amount” of fraud in the emergency loan schemes.
The Office for Budget Responsibility has previously estimated that taxpayers could be left with a £29.5bn bill from bad debts caused by defaults in the schemes.
According to the latest figures from the Treasury, the government loan schemes have supported more than 1.5 million businesses.
1.47 million firms have accessed the bounce back loan scheme, over 87,000 companies have been supported through the coronavirus business interruption loan scheme and almost 700 businesses have received funds through the coronavirus large business interruption loan scheme.
More than £1bn has been earmarked for 1,055 companies under the government’s future fund scheme.