The Treasury has revealed that it expects its anti-fraud taskforce to write off £4.3bn ($5.9bn) in COVID-19 payments lost to fraud during the pandemic.
A total of £5.8bn is believed to have been unlawfully taken. The treasury said it will recover just £1 for every £4 stolen by scammers.
This includes money taken from emergency schemes such as the furlough programme, the Self Employment Income Support Scheme (SEISS), and eat out to help out, which was set up to help reopened restaurants in the summer of 2020.
The figures, which show that a maximum of only 26% will be recovered, were contained in documents quietly published on the HMRC website last week.
The department said it had recovered £500m of overpayments in the 2020-21 tax year, and that it expected its taskforce to get back between £800m and £1bn more by 2023, a total of £1.5bn at the most.
Some 8.7% of furlough payments were made either to fraudsters or by mistake as well as 8.5% of payments to its eat out to help out scheme, and 2.5% of cash handed to freelancers and entrepreneurs as part of its self-employed income support payments.
On Monday, shadow chancellor of the exchequer Rachel Reeves said the news was “shameful”.
Taking to Twitter she said: “Outrageous. While prices soar, billions in hard-earned taxpayer cash has been frittered away by fraud — and the chancellor is happy to shrug his shoulders and lose it forever.
“Labour will treat every pound of taxpayers' money with the respect it deserves.”
She added: “As I've said before, the government should be able to get money to the right places, without losing billions in taxpayers' cash.”
While prices soar, billions in hard-earned taxpayer cash has been frittered away by fraud - and the Chancellor is happy to shrug his shoulders and lose it forever.
Labour will treat every £ of taxpayers' money with the respect it deserves.https://t.co/uEprdEuakA
— Rachel Reeves (@RachelReevesMP) January 17, 2022
It comes after Rishi Sunak unveiled his 1,265-member anti-fraud taskforce during the Spring Budget last year to crack down on criminals exploiting UK government support schemes. The team cost £100m to assemble.
HMRC previously had a system in place to counteract fraud which worked through payment data, PAYE records, other information, and reports from the public to identify potential wrongdoing.
In November Jim Harra, chief executive at HMRC, said the department would struggle to recoup more than half of the money lost. At that point it had 23,000 investigations open into suspected fraudulent activity, and had in some instances begun criminal investigations.
Arrests secured by HMRC so far include the arrest of a West Midlands man on suspicion of £495,000 furlough fraud.
“HMRC could have either put in place a robust checking process that would have slowed the payment of these support payments to a trickle or allow a straightforward claim process and accept that fraudulent and incorrect claims would run into billions,” Tim Stovold, a partner at the accountancy firm Moore Kingston Smith, said.
“It will be very difficult for HMRC to recover these amounts now. Fraudsters have thoroughly covered their tracks.”