It has been estimated that £3.5 billion of furlough payments may have been claimed, either through fraud or by employers making mistakes.
This is according to HM Revenue and Customs (HMRC), who when speaking to the Public Accounts Committee, said it was looking in to 27,000 cases in which the tax body believes an employer has either made an error in claiming furlough or done so fraudulently.
The Policy Exchange think tank, in July, stated that between £1.3 billion and £7.9 billion may have been claimed either fraudulently or by mistake. HMRC is currently writing to 3,000 companies per week, who they think have claimed too much money based on the information they hold on said company.
Jim Harra, permanent secretary of the HMRC said:
We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between 5 per cent and 10 per cent. That will range from deliberate fraud through to error.
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 within a very difficult time.
Although we will expect employers to check their claims and repay any excess amount, what we will be focusing on is tackling abuse and fraud.
The Job Retention Scheme (JRS) has so far cost the Government £35.4 billion.
When the furlough scheme, was first launched, the Government would pay 80 per cent of an employees’ wages, from September the staff members company has to pay 10 per cent of that figure and from October 20 per cent.
Jacob Nell and Bruna Skarica, two Morgan Stanley economists have predicted that the Government will extend the scheme. However, it will be “less generous and more targeted”. Germany, France and Austria have either extended their support to the job market or created a new form of relief for employees during the pandemic.