Background to the report

In October 2020, we published our first report on the role of HM Treasury and HM Revenue & Customs (HMRC) (collectively referred to as the Departments) in implementing the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS). HM Treasury and HMRC were responsible for advising ministers on the design of the schemes. HM Treasury led on policy design, and HMRC led on administrative design and then the implementation and administration of the schemes.

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In our first report we concluded that the Departments had met their objective to rapidly implement the schemes and had protected jobs in the short term, although some groups had been unable to access support. We reported that the Departments’ ability to manage the high risk of considerable amounts of error and fraud occurring on the schemes would be a key test of value for money. This report covers the remainder of the Departments’ COVID-19 pandemic response from October 2020 until the schemes closed at the end of September 2021.

Scope of the report

This report considers how the Departments managed risks in continuing to implement and refine the schemes during the remainder of their existence, what impact the schemes had, and how the Departments managed the risk of error and fraud. Specifically, the report looks at:

  • whether the schemes achieved their objectives to support incomes and the labour market and reached those previously excluded from the schemes (Part One);
  • how the Departments managed the delivery of the schemes through their later iterations, including attempts to improve the value for money of the schemes by making them more targeted while managing the risk of error and fraud (Part Two); and
  • how HMRC has estimated the level of error and fraud and undertaken compliance work to detect error and fraud (Part Three).

This report does not consider other COVID-19 interventions designed to support businesses, including Eat Out to Help Out, or business loans and benefits.

Report conclusions

The employment support schemes provided essential support to the economy during the COVID-19 pandemic, and they achieved their primary objective of preventing millions of job losses. They were introduced at commendable speed as part of the government’s emergency response. Designing schemes at speed, coupled with the inherent uncertainty over the course of the pandemic, meant that the schemes would inevitably have flaws. The government made some changes to the schemes as the pandemic progressed, notably extending the schemes to more taxpayers and improving their accessibility. Still, it could have done more in bearing down on deadweight loss and the cost of error and fraud.

The schemes have cost close to £100 billion. In part, this was down to the deliberately generous design of the schemes. The Departments sought to strike a balance between delivering support to those who needed it and guarding against the risk of fraud by limiting the schemes to proven taxpayers. The earlier use of clear financial impact tests could have helped the Departments target financial support to those whose incomes were genuinely affected by the pandemic and provided better value for money, even allowing for the risk of claimant error and fraud when applying such a test. It is likely that several billion pounds have been paid to claimants who saw their incomes increase during the period. While the figures are highly uncertain, large amounts of error and fraud are unlikely ever to be recovered. The Departments will need to ensure they continue to bear down on fraud, where it is cost-effective to do so, and pursue the most serious cases with the full force of the law where it serves the public interest.

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Press release

View press release (13 Oct 2022)

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