UK Taxpayers Face £10.9 Billion Loss from Covid Fraud and Error, Independent Report Reveals

Independent Report Uncovers Staggering Covid Fraud Costs

An independent report released today, December 9, 2025, has revealed that United Kingdom taxpayers incurred losses of £10.9 billion due to fraud and error within the previous government's pandemic response schemes. The final report by Covid Counter Fraud Commissioner, Tom Hayhoe, presented to Parliament, attributes these significant losses to 'inadequate controls' and a lack of early safeguards during the rapid rollout of financial support programmes.

Causes and Scope of the Financial Drain

The report identifies several key factors contributing to the substantial financial drain. Primary causes cited include 'weak accountability, bad quality data, and poor contracting'. Many schemes, such as the Bounce Back Loans, Eat Out to Help Out, and furlough wage subsidies, were implemented with 'huge fraud risks and no early safeguards' as speed was prioritised in the crisis response. Commissioner Hayhoe noted that counter-fraud controls were 'inadequate' initially and only saw improvement later in the pandemic.

The affected schemes include:

• Bounce Back Loans: Designed to support small businesses.
• Eat Out to Help Out: A hospitality sector stimulus.
• Furlough wage subsidies (Coronavirus Job Retention Scheme): Supporting employment.
• One-off business grants.

Government Response and Recovery Efforts

Chancellor Rachel Reeves commented on the findings, stating, 'Leaving the front door wide open to fraud has cost the British taxpayer £10.9 billion — money that should have been funding our public services, supporting families, and strengthening our economy.' The government has indicated that approximately £1.8 billion of the lost funds has been recovered to date, though 'much of the shortfall is now beyond recovery'. To address the ongoing issue, the government has already actioned several recommendations from the Commissioner's report. These include:

• A voluntary repayment scheme, launched in September, allowing claimants until December 31 to return funds.
• Tougher sanctions powers through the Public Authorities (Fraud, Error and Recovery) Bill, which became law on December 2.
• Specialist fraud recovery teams to track down suspected fraudsters and recover taxpayer cash, set to be deployed from 2026.

Cabinet Office Minister Josh Simons added that the government is 'taking more action to bring fraudsters to justice and make the state the hardest possible target'.

Impact on Taxpayers and Future Preparedness

The report underscores the significant impact of these losses on public finances. The £10.9 billion could have funded daily free school meals for the UK's 2.7 million eligible children for eight years. Commissioner Hayhoe's report also makes recommendations for future crises, emphasising the need for improved preparation and robust controls to ensure better value for taxpayers' money.