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Rishi Sunak has said he would make exactly the same choice again in setting up a Covid-19 business loan scheme which has since been criticized for fraud risks.
The Tory MP, who served as Chancellor during the pandemic, defended the rollout of the Bounce Back Loan scheme when he appeared at a UK Covid-19 inquiry for a second day, as the inquiry focused on the government’s economic response to the crisis.
conservative The former Prime Minister also told during interrogation that Britain He faced “widespread business Armageddon” if the government had not intervened, as he was asked about the Coronavirus Business Interruption Loan Scheme (CBILS), another fund that helped small businesses avoid closure in the early days of lockdown.
Taxpayers lost £10.9 billion to fraud and error linked to financial aid programs during the coronavirus pandemic, a report covid Counter Fraud Commissioner met recently.
Commissioner Tom Hayhoe also warned in the report that the Bounce Back Loan was one of the schemes launched with significant fraud risks.
Speaking at the inquiry, Mr Sunak defended his approach during the pandemic.
“I would make the same choices again in the same situation, I would do the same things again,” he said.
Mr Sunak previously said the government “kept an eye open” about the risk of fraud in the scheme, which was backed by a 100% guarantee from the government, “and decided the risks were greater than necessary”.
He said: “Over time, we built in more protections. So if something like this happens in the future those protections will be there, but at the time we launched it, it wasn’t like we were sitting there and just forgot to do something, two weeks, four weeks, six weeks later we were scratching our heads and saying we wish we had done that.”
“That was absolutely not the case. It was a straightforward choice – we can launch this thing now and get on with it so the money can get to businesses, or we can wait, and I think that’s the misunderstanding of it.
“Certainly by waiting and making some of these checks you could have reduced the ultimate level of fraud, but then you would have had to be confident that you were going to accept the loss of business that would result from it.”
Mr Sunak has previously stressed that the risk of businesses not paying back CBILS loans is “clearly” worth it when balanced against the risks of inaction.
He told the inquiry that the first few weeks of the pandemic felt “survival”, adding: “We were faced with a situation where businesses, I think it really came to British Chambers of CommerceI think half of all small and medium-sized businesses had less than a month’s cash in the bank.
“You were facing extensive business armageddon And that is why it was imperative to act at scale and speed to prevent catastrophic loss of businesses and jobs.
“Independent evaluation has suggested that three million jobs and half a million businesses have been saved as a result of these interventions.”
Mr Sunak cited evidence given at the inquiry which suggested 4% of Covid loans were estimated to be fraudulent, comparing this with similar levels of fraud in different areas of the welfare system.
He added: “None of this is acceptable, everyone wants to see those numbers go down.
“But in the context of a plan that was devised in a matter of days and then implemented over the course of weeks in a crisis, and necessarily had a different approach to these investigations, which ended up with the estimated fraud level where it is at the moment, at 4%, which is broadly in line with peacetime plans elsewhere in the government, I think it should be seen as a sign that it is much better than was expected at the time.”