24th February 2022
Bite-sized business news from the UK and beyond
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Taxpayers lose £15bn from Covid loan fraud
Petrol prices continue to reach new highs
ECONOMYTaxpayers lose £15bn from Covid loan fraud
What’s going on?British taxpayers have lost an estimated £15bn due to fraud and error from the government’s Covid support schemes, that’s according to the Public Accounts Committee, parliament’s spending watchdog.
Why is this important?
The PAC examines the value for money from public spending and it didn’t pull any punches when it delivered its verdict on the government’s response to the pandemic.It said the mistakes, waste, and openings for fraudsters “will all end up robbing current and future taxpayers of billions of pounds”.Since the onset of Covid in March 2020 the government guaranteed or gave out loans worth £129bn to financially support people and business during lockdown restrictions. The actual loss due to fraud and error across all support measures is unknown but is expected to be at least £15bn across initiatives by HMRC, the Department for Work & Pensions and the Department for Business, Energy & Industrial Strategy.There have been reports that some loans were used to fund gambling and home improvements.The true total cost across government remains uncertain and could be higher, because of the long loan repayment terms. For example, loans to businesses under the Bounce Back Loan Scheme last up to 10 years and the typical loan period under the Cultural Recovery Fund is 20 years.The government will also have to write off £21bn in loans to people or companies who won’t be able to pay them back.
The total cost of all the government's pandemic measures is close to £370bn, funded by borrowing which will ultimately be paid back by future generations.The quick implementation of the Covid loan schemes meant that fraud was flagged early on as a risk. Other areas of the pandemic response, such as the awarding of personal protective equipment contracts, have also faced accusations of mismanagement.The government has rejected claims of the PAC report and says its taxpayer protection taskforce is expected to recover up to £1bn from fraudulent or incorrect payments.
ECONOMYPetrol prices continue to reach new highs
A trip to the forecourt is getting even more expensive, that’s according to the RAC who say the average cost of a litre of petrol this week is 149.30p and could go even higher amid escalating tensions in Eastern Europe.The ongoing threat of a war between Russia and Ukraine is pushing up the price of oil. Russia produces over 10% of global oil supplies making it the third largest producer. The potential tightening of supply from Western sanctions on Russia has driven crude oil to past $100 a barrel for the first time since 2014.Wholesale gas prices are also soaring as Russia is the world’s top natural gas producer.Although the UK only gets around 5% of its crude oil and its gas from Russia, any squeeze in supply from sanctions would drive up prices worldwide. The energy price cap on average household bills is due to rise by 54% to £1,971 in April, another record high. Analysts estimate that if wholesale prices continue to rise then the cap could increase by another £700 when its next updated in October. Motorists have been warned to expect petrol prices to rise above £1.50 per litre and even as high as £1.60 if oil reaches $120 per barrel. Pricier energy prices have been one of the main drivers of the 30-year-high UK inflation rate of 5.5% and could take it to 8% by the spring.
Stat of the day
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