Background to the report
Over the course of the COVID-19 pandemic the government put in place a series of restrictions on daily life. While the restrictions varied over time and between different parts of the country, all had an impact on businesses, many of which were forced to temporarily close or curtail their operations. The government announced in early March 2020 that it would provide grants to support smaller businesses in England. The grants were to be administered by local authorities.Jump to downloads
Between March 2020 and December 2021 the government launched eight separate grant schemes in three cohorts. By the end of March 2022 the government had provided £26.9 billion of funding across the schemes to local authorities, of which local authorities had distributed £22.6 billion to businesses.
HM Treasury (HMT) decided the key features of each scheme, including the high-level eligibility criteria. In doing so, HMT worked with the Department for Business, Energy & Industrial Strategy (BEIS) and the Department for Levelling Up, Housing & Communities (DLUHC). BEIS was responsible for the implementation of the schemes, working through local authorities, and was accountable for the use of public money. On receipt of funding from BEIS, over 300 local authorities across England were responsible for making grant payments to businesses in their areas that met the eligibility criteria. In February 2023 the newly created Department for Business and Trade (DBT) took over responsibility from BEIS.
In November 2021, the Comptroller and Auditor General (C&AG) qualified his opinion on BEIS’s 2020-21 financial statements because, in part, of concerns over the levels of error and fraud estimated in these schemes. In May 2022 the Committee of Public Accounts reported its concerns regarding the estimated levels of error and fraud associated with the schemes. It questioned whether BEIS had made a robust enough assessment of the overall levels of error and fraud.
Scope of the report
This report examines how effectively the government set up and delivered the grant schemes. Early in the pandemic ministers made decisions to accept additional risks. We have recognised in our other work on the COVID-19 response that the government needed to make urgent decisions with limited information to respond to an unprecedented public health emergency. However, even in emergency situations we expect officials to:
- consider risks at the start, and put in place basic controls
- improve their understanding of risks and the effectiveness of controls over time, refining the programme accordingly
- when possible carry out proportionate evaluation of the programme, including identifying lessons that can be applied in the future
This report assesses how BEIS and HMT performed against these expectations. It places particular emphasis on identifying lessons and steps the government can take to enhance its preparedness for future emergencies.
The government achieved its primary objective to deliver financial support to businesses quickly during the COVID-19 pandemic. Working through local authorities, BEIS distributed £22.6 billion via 4.5 million payments to businesses in two years. It did this at a time when local authorities and BEIS were also having to deliver on other pandemic-related priorities. BEIS prioritised speed over conducting pre-payment checks for the schemes launched at the start of the pandemic, but did not then act quickly to conduct follow-up checks.
The delay in following-up has made the recovery of amounts wrongly paid more difficult to achieve. DBT, which is now responsible for these schemes, has still to report on the impact of these grants, for example in terms of maintaining jobs and how much support might have been given to businesses that did not need it. Without such an assessment an overall judgement about the value for money of the schemes remains open.
BEIS’s experience of working at speed with local authorities to channel financial support during the COVID-19 pandemic offers important lessons should central government ever find itself in a similar crisis situation. HMT and DBT should ensure they use the lessons identified in this report and their own reviews when updating the government contingency plans to respond to future national emergencies.
- Report - COVID-19 business grant schemes (.pdf — 507 KB)
- Summary - COVID-19 business grant schemes (.pdf — 111 KB)
- ePub - COVID-19 business grant schemes (.epub — 1 MB)
- ISBN: 978-1-78604-480-8 [Buy a hard copy of this report]
- HC: 1200 2022-23
View press release (23 Mar 2023)