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‘Unclear’ how much of £13.5m wrongly paid out in Covid support in Northern Ireland will be recouped

Auditor General’s warning ahead of report into business grant scheme


Many businesses had to close their doors at the beginning of the Covid pandemic (Michael McHugh/PA)

Many businesses had to close their doors at the beginning of the Covid pandemic (Michael McHugh/PA)

Many businesses had to close their doors at the beginning of the Covid pandemic (Michael McHugh/PA)

The Auditor General has said it is unclear how many millions of pounds wrongly paid out to businesses in Covid support grants will ever be recovered.

Kieran Donnelly was speaking ahead of the publication of an NI Audit Office (NIAO) report into the Department for the Economy's (DfE) Small Business Support Grant scheme.

Designed and delivered by DfE and Land and Property Services (LPS), the scheme was launched in March 2020 to provide one-off emergency £10,000 grants to small businesses to help mitigate the threat of closures at the start of the pandemic. But the Audit Office report found that £13.5m in support grants may have been paid out to firms not eligible for the scheme.

Coronavirus Data Graphs

Mr Donnelly said £1.7m has been recouped, but admitted it is "not clear" how much of the total wrongly paid out will be recovered. Funds may have been incorrectly paid out to businesses that did not suffer Covid-related hardship, as no assessment of this need was carried, the NIAO found.

The report said it was "simply assumed that all small businesses eligible for small business rates relief needed the support regardless of their situation".

In response, DfE said the scheme was delivered as part of an "emergency response" to a crisis, and many businesses would not have survived without the support.

The scheme made payments totalling of £244.7m, with £109.6m of this handed out through "push payments" directly into the bank accounts of firms which had not applied for the grant – a move the audit reported branded "inherently risky".

"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," the report said.

"No evaluation was undertaken to quantify the potential level of funding likely to be issued to those who did not require it.

"On the same day that the online portal for applications went live, £67.7m 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."

Mr Donnelly said an estimated £13.5m may have been wrongly paid to those who were not eligible and, to date, DfE and LPS have identified £5.68m of potentially ineligible payments, including £2m in duplicate payments, £700,000 paid to landlords rather than tenants, and £500,000 paid to wind turbine owners – an industry not affected by the pandemic.

Among those who wrongly received payments were three Sinn Fein offices, with the funds being repaid after seven months. Former Foyle MP Elisha McCallion and West Tyrone MLA Catherine Kelly resigned over the issue.

The report also found DfE's Permanent Secretary had serious concerns over the scheme's value for money and openness to fraud and error from the outset. However former Economy Minister Diane Dodds issued a direction for the scheme to go ahead.

"Many of the concerns raised by the DfE Permanent Secretary came to pass," the report said.

DfE said: "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."

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