Up to £3.5bn of furlough cash may have been paid out in wrong or fraudulent claims

Up to £3.5 billion of furlough cash may have been paid out in wrong or fraudulent claims, according to official Government estimates. 

HMRC has calculated that between five per cent and 10 per cent of payments may have been either stolen or paid out in error.   

The total bill for the state subsidy scheme currently stands at more than £35 billion. 

The job retention programme is now being wound down and will be scrapped entirely by Chancellor Rishi Sunak at the end of October. 

Jim Harra, the top civil servant at HMRC, told the Public Accounts Committee this afternoon that his staff believe between five per cent and 10 per cent of furlough cash might have gone to the wrong places.

‘We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between five per cent and 10 per cent,’ the permanent secretary said.  

The Government has so far paid out £35.4 billion in furlough cash, according to the latest official figures. 

If HMRC’s working assumption proves to be accurate it will mean that somewhere between £1.75 billion and £3.5 billion could have been paid out by mistake or as a result of fraud. 

‘That will range from deliberate fraud through to error,’ Mr Harra said. 

‘What we have said in our risk assessment is we are not going to set out to try to find employers who have made legitimate mistakes in compiling their claims, because this is obviously something new that everybody had to get to grips with in a very difficult time.

‘Although we will expect employers to check their claims and repay any excess amount, but what we will be focusing on is tackling abuse and fraud.’

Former Conservative leader Sir Iain Duncan Smith hit out at the news last night.

He said: ‘This is a huge amount of money and demonstrates exactly why the scheme needs to be brought to a close.

‘It’s rapidly being defrauded more and more because employers are making furloughed people work and telling them they can’t say anything or they’ll lose their jobs. The scheme is open to fraud and abuse and it’s hard to check where the money is actually going.

‘The sooner we bring this scheme to an end, the sooner we can stop haemorrhaging money and get the country back to work.’

Fellow Tory MP Andrew Bridgen said: ‘This was always a clear and present danger when this generous support scheme was put in place. 

‘I would just urge HMRC to be relentless in its pursuit of fraudulent claims made by those who have perpetrated this crime against the taxpayer at a time of national emergency.’

It is the first time HMRC has spoken publicly about the level of potential fraud that could have been committed as part of the job retention scheme, which covered up to 80 per cent of an employee’s salary, up to £2,500 a month, while they were on furlough.

The Government rolled out the massive scheme at breakneck speed, causing many experts to warn that a certain amount of fraud was inevitable.

Furlough is now winding down and will end for good next month. 

However, businesses who bring staff back from furlough will receive another £1,000 if the employee is still in work by the end of January.

By August 16 this year, 9.6 million people had been put on Government-supported furlough, with 1.2 million employers claiming the support.

Meanwhile, around 2.7 million self-employed people have claimed around £7.8 billion in support from the Government.

Mr Harra said that an academic study has estimated that the level of fraud and error might be even higher than 10 per cent.