Criminals Stole Billions From UK Government Wage Subsidy Program

At least £3 billion ($3.9 billion) in furlough funds issued by the U.K. government may have been stolen by employers, fraudsters and criminals.

The National Audit Office, or NAO, an independent parliamentary body which audits central government departments, also said up to £2 billion ($2.6 billion) of that amount may have gone to criminals using fake company names.

In addition, some companies claimed furlough funds for workers who did not qualify for such payments.

NAO also said it is “almost certain” that organized crime gangs claimed between 2.5% and 5% of the funds from the scheme. Criminal gangs likely stole the identities of lawful taxpayers or forced them into making fraudulent claims.

The furlough – or wage subsidy scheme – was initially introduced in March when the COVID-19 pandemic shut down businesses across the country. The funds were meant to help employers pay about 80% of their normal wages to employees who could not work. At its peak, the furlough scheme helped support more than 9.6 million British workers.

“There is evidence that significant levels of furlough fraud occurred, with limited controls over employers’ arrangements with employees,” the NAO said.

NAO said the program emerged so quickly that it was likely to lead to "considerable levels of fraud and error.”

Gareth Davies, comptroller and auditor general of the NAO, said: "In [the] future, the departments [of government] should do more while employment support schemes are running to protect employees and counter acts of fraud.”

In early October, MPs on the Public Accounts Committee had already warned that establishing the furlough schemes on such short notice left "unacceptable room for fraud.”

The government defended the rapid deployment of the furlough program as it was needed by millions of people.

"The government's priority from the start of the [virus] outbreak has been on protecting jobs and getting support to those who need it as quickly as possible, and our employment support schemes have provided a lifeline to millions of hardworking families across the U.K.,” said a government spokesman.

The spokesman also declared the government had made efforts to tackle fraud and criminality.

"Our schemes were designed to minimize fraud from the outset and we have rejected or blocked thousands of fraudulent claims,” the spokesman said.