COVID support schemes ‘lost billions to fraud and error’, report finds
Billions of pounds awarded as part of COVID-19 employment support schemes went to people whose incomes increased or “were not significantly impacted by the pandemic”, a public spending watchdog has warned.
The National Audit Office (NAO) has criticised the government for not doing more to prevent mistakes and fraudulent claims when rolling out the furlough scheme and the self-employment income support scheme (SEISS), warning that billions of pounds could remain unrecovered.
In total, according to the latest report into the financial packages by the NAO, £4.5bn was claimed in error or in fraud – nearly 4.6% of the total cost of the £96.9bn spent by the government on emergency COVID-19 support.
Even that estimate is subject to “considerable uncertainty”, with the fraud and error figures ranging from between £3.2bn and £6.3bn.
Gareth Davies, the National Audit Office head, said the government needs to ensure “sufficient resources” are available to tackle the issue.
He said while the furlough and self-employed schemes prevented millions of job losses, “billions went to people whose incomes increased during the pandemic, and billions more was lost in fraud and error”.
In the detailed report published on Thursday, auditors found that the schemes met their objectives of protecting workers and businesses after lockdowns were introduced, and that the cost of the schemes was also lower than estimated by the government.
However, officials had stern words for the Treasury over the design of the scheme, effectively suggesting that it could have done more to save money.
In particular, the government is criticised for not making use from the outset of clear financial impact tests.
Around £5,900 was the average paid for each furloughed job over the course of the scheme, while £9,700 was the average amount each self-employed claimant received.
The report reveals that on average an increase of more than £2,200 was recorded in the profits of self-employed people who received COVID-19 grants in 2020 and 2021.
According to the report, “it is likely that several billion pounds have been paid to claimants who saw their incomes increase during the period”.
The report added: “While the figures are highly uncertain, large amounts of error and fraud are unlikely ever to be recovered. The departments will need to ensure they continue to bear down on fraud, where it is cost-effective to do so, and pursue the most serious cases with the full force of the law where it serves the public interest.”
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There were 24 criminal investigations under way into fraudulent claims as of March, with the HMRC predicting it will recover around £1.1bn over the next two years.
Responding to the report, a government spokesman said: “We are not writing off any fraud from these schemes – our work to root out those who abused the system is ongoing.
“Meanwhile, we effectively minimised fraud from the start with compliance checks that did not unnecessarily delay payments when they were needed and further compliance activity undertaken by HMRC has secured and protected more than £1bn.
“The NAO found that the employment support schemes achieved their primary aim of protecting jobs and businesses, with unemployment peaking at just 5.2%.”
Ramesh lives in fear every day. A police siren is enough to alarm him.
He’s one of up to 400,000 visa overstayers in the UK, one lawyer we spoke to believes.
It’s only an estimate because the Home Office has stopped collecting figures – which were unreliable in the first place.
Britain is being laughed at, one man told us, “because they know it’s a soft country”.
‘Ramesh’ came to the UK from India
We meet Ramesh (not his real name) at a Gurdwara, a Sikh place of worship, where he goes for food and support.
He insists he can’t return to India where he claims he was involved in political activism.
Ramesh says he came to the UK on a student visa in 2023, but it was cancelled when he failed to continue his studies after being involved in a serious accident.
He tells us he is doing cash-in-hand work for people who he knows through the community where he is living and is currently working on a house extension where he gets paid as little as £50 for nine hours labouring.
“It’s very difficult for me to live in the UK without my Indian or Pakistani community – also because there are a lot of Pakistani people who give me work in their houses for cleaning and for household things,” he adds.
‘What will become of people like us?’
Anike has lived in limbo for 12 years.
Now living in Greater Manchester, she came to the UK from Nigeria when her sister Esther was diagnosed with a brain tumour – she had a multi-entry visa but was supposed to leave after three months.
Esther had serious complications from brain surgery and says she is reliant on her sister for care.
Immigration officials are in touch with her because she has to digitally sign in every month.
Anike has had seven failed applications for leave to remain on compassionate grounds refused but is now desperate to have her status settled – afraid of the shifting public mood over migration.
“Everybody is thinking ‘what will become of people like us?'” she adds.
‘It’s a shambles’
The government can’t say with any degree of accuracy how many visa overstayers there are in Britain – no data has been collated for five-and-a-half years.
But piecing together multiple accounts from community leaders and lawyers the picture we’ve built is stark.
Immigration lawyer Harjap Singh Bhangal told us he believed there could be several hundred thousand visa overstayers currently in Britain.
He says: “At this time, there’s definitely in excess of about 200,000 people overstaying in the UK. It might even be closer to 300,000, it could even be 400,000.”
Asked what evidence he has for this he replies: “Every day I see at least one overstayer, any immigration lawyers like me see overstayers and that is the bulk of the work for immigration lawyers.
“The Home Office doesn’t have any accurate data because we don’t have exit controls. It’s a shambles. It’s an institution where every wall in the building is cracked.”
The number of those who are overstaying visas and working cash in hand is also virtually impossible to measure.
‘They know Britain is a soft country’
“They’re laughing at us because they know Britain is a soft country, where you won’t be picked up easily,” says the local man we’ve arranged to meet as part of our investigation.
We’re in Kingsbury in northwest London – an area which people say has been transformed over the past five years as post-Brexit visa opportunities opened up for people coming from South Asia.
‘Mini-Mumbai’
The man we’re talking to lives in the community and helps with events here. He doesn’t want to be identified but raises serious questions about visa abuse.
“Since the last five years, a huge amount of people have come in this country on this visiting visa, and they come with one thing in mind – to overstay and work in cash,” he says.
“This area is easy to live in because they know they can survive. It looks like as if you are walking through mini-Mumbai.”
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‘The system is more than broken’
‘It’s taxpayers who are paying’
And he claims economic migrants are regularly arriving – who’ve paid strangers to pretend they’re a friend or relative in order to obtain a visitor visa to get to Britain.
He says: “I’ve come across so many people who have come this way into this country. It’s widespread. When I talk to these people, they literally tell me, ‘Oh, someone is coming tomorrow, day after tomorrow, someone is coming’.
“Because they’re hidden they may not be claiming benefits, but they can access emergency healthcare and their children can go to school.
“And who is paying for it? It’s the taxpayers who are paying for all this,” says the man we’ve met in north London.
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A Home Office spokesperson said: “We will not tolerate any abuse of our immigration system and anyone found to be breaking the rules will be liable to have enforcement action taken against them.
“In the first year of this government, we have returned 35,000 people with no right to be here – a 13% rise compared to the previous year.
“Arrests and raids for illegal working have soared to their highest levels since records began, up 63% and 51%.”
The government can’t say with accuracy how many visa overstayers there are in Britain – no data has been collated for five-and-a-half years.
Sky News has spoken to immigration lawyers about the numbers, and one believes there could be as many as 400,000 living across the country.
Harjap Singh Bhangal described the situation as a “shambles”.
“The Home Office doesn’t have any accurate data because we don’t have exit controls. It’s a shambles. It’s an institution where every wall in the building is cracked,” he told Sky’s Lisa Holland.
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The visa overstayers in ‘soft’ Britain
Why doesn’t the government know?
The Home Office used to gather data on visa overstayers by effectively checking a list of passport numbers associated with visas against a list of passport numbers of people leaving the UK, taken from airlines and other international travel providers.
If there was a passport number match in the arrivals and departures part of their database, that person was recorded to have left when they should have. If there wasn’t, they were a potential overstayer.
They stopped producing the figures because a combination of Brexit and COVID added complications that made the Home Office conclude they wouldn’t be able to get to a reliable number using the same method.
It’s now four and a half years since EU citizens had freedom of movement to the UK revoked, and more than three and a half years since pandemic-era travel restrictions ended.
And yet we are still waiting to see what a new method might look like.
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The old method wasn’t perfect. If someone changed their passport while in the UK, for example, or if the airline or individual entered the number wrong when they were leaving, there wouldn’t be a match.
The Home Office regarded the statistics as likely overestimating the true number of overstayers, and the Office for National Statistics designated the figures as “experimental” rather than “official” statistics, meaning the conclusions should be treated with caution. But they were a reasonable best guess.
With all that in mind, between April 2016 and March 2020 upwards of 250,000 people were flagged as potential overstayers, equivalent to 63,000 per year.
That’s more than the 190,000 people who are recorded to have arrived in the UK on small boats since 2018.
It represents 3.5% of the seven million visas that expired over that period, so at least 96.5% of people left when they should.
Other Home Office data reveals that more than 13 million visas were issued between 2020 and the end of June 2025, including a record 3.4 million in 2023.
But what we don’t know is how many have expired, which means it’s difficult for us to even guess how many people might have overstayed.
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