Covid support scheme: report shows millions of pounds may have been paid out to 'ineligible' businesses
Last updated 8th Dec 2021
A total of £13.5 million may have been paid out to businesses in Northern Ireland accidentally as part the emergency covid support grant scheme, it emerged today (Wednesday)
A NI Audit Office report found some recipients were not eligible for the grants.
Auditor General Kieran Donnelly said that while £1.76 million of these payments under the Small Business Support Grant Scheme have been recovered, it is "not clear" how much of the money wrongly paid out will ever be recouped.
Mr Donnelly's report said that payments are likely to have been made to businesses which did not suffer Covid-19 related hardship because no assessment of need had been undertaken.
Responding to the findings, the Department for the Economy insisted the scheme was an "emergency response to a crisis" and introduced at "extreme pace". The department said that without the support many businesses may not have survived.
The audit office report said it was "simply assumed that all small businesses eligible for small business rates relief needed the support regardless of their situation".
The scheme was launched on March 26 2020 and provided one-off emergency grants of £10,000 to small businesses to help mitigate the potential threat of closures at the start of the Covid-19 pandemic.
It was designed and delivered jointly by Stormont's Department for the Economy (DfE) and Land & Property Services (LPS).
In total the scheme made payments of £244.76 million, with £109.6 million of this given out through "push payments" directly into the bank accounts of businesses which had not applied for the grant.
The report said that the decision to implement push payments to all businesses in receipt of small business rates relief (SBBR) was "inherently risky".
It continued: "It was likely that some public money would be issued to businesses which did not suffer hardship as a result of the Covid-19 crisis.
"No evaluation was undertaken to quantify the potential level of funding likely to be issued to those who did not require it."
The report added: "On the same day that the online portal for applications went live, £67.7 million was paid via push payments, directly into the bank accounts of those businesses identified on the LPS database as eligible for SBRR and which paid their rates via direct debit.
"These payments were made without State Aid approval from the European Commission."
Following his audit, Mr Donnelly estimated that £13.5 million could have been paid to recipients who were not eligible under the scheme rules.
He said that to date, the Department for Economy and LPS have identified £5.68 million of potentially ineligible payments.
This includes £2 million in duplicate payments, £700,000 paid to landlords rather than tenants, and £500,000 paid to wind turbine owners, an industry which was not impacted by the pandemic.
The report said that communication and collaborative working between the organisations involved in scheme delivery could have been better.
Mr Donnelly added: "It is important to recognise that this scheme was designed and launched under exceptionally challenging circumstances and at an extreme pace, from the initial announcement on March 18 2020 to first payment on March 26 2020.
"The departments and agencies involved were clearly focused on getting urgent support to businesses, and great efforts were made to deliver this.
"Nonetheless, it is important that the lessons identified in my report are learnt and taken on board
"In particular, I want to highlight the importance of a collaborative approach in developing similar schemes in the future.
"Better early engagement across departmental boundaries and with business representatives would have helped the department target support to those most in need.
"A small amount of additional time at the design stage may have provided more protection to public funds and helped reduce the need for changes to the eligibility criteria after the scheme had launched.
"It could also have reduced the administrative effort needed to undertake further checks after the payments had been made."
A Department for the Economy spokesman said: "The Small Business Support Scheme was not a routine support scheme delivered in normal times.
"It was an emergency response to a crisis and, without it, many Northern Ireland businesses may not have survived and many more jobs could have been lost.
"As the NIAO report stated, the scheme was designed and launched under exceptionally challenging circumstances and at an extreme pace.
"The report also accepted that the department clearly made great efforts to provide support to business at a time when it identified urgent need.
"While it is important to place the scheme in the context of the unprecedented crisis brought about by the devastating impact of the Covid-19 pandemic at that time, the department will consider the recommendations made in the NIAO report."