Official Report Reveals Most UK Businesses Would Have Survived Without Covid Grants

An official report has indicated that the majority of UK businesses that received £23 billion in government Covid grants during lockdown would likely have survived without the financial assistance. The analysis, conducted by the Department for Business and Trade, found that only about 25% of the 1.4 million businesses benefiting from state support would have faced collapse without it.

The comprehensive 100-page report, prepared by Ipsos, consultancy Steer, and economist George Barrett, raises serious questions regarding the government’s spending during the pandemic and highlights concerns over waste and potential fraud. The National Audit Office (NAO) has previously criticized the Bounce Back Loan scheme for its slow implementation of anti-fraud measures, estimating that fraudulent claims related to Covid support schemes could total approximately £7.3 billion.

The findings shed light on the broader economic impact of lockdowns, which include the £70 billion furlough scheme and an increase in the number of individuals reliant on benefits due to long-term health issues. Currently, the UK’s national debt is equivalent to the size of its economy, and rising mental health-related worklessness is projected to increase benefits spending.

While the report acknowledged that the grants played a role in protecting around 300,000 jobs and bolstering economic confidence, it also pointed out that many of the funds were misallocated. The rapid response by the government meant that businesses that did not require assistance still received funds, resulting in workers remaining in roles that were unsustainable in the long run.

Despite the critique, the report concluded that the grants had a lasting positive impact on employment and helped mitigate the economic “scarring” effects of the pandemic. However, it emphasized that only a quarter of the businesses receiving grants lacked sufficient financial reserves to endure short-term disruptions without the aid.

A spokesperson for the Department for Business and Trade reiterated the government’s commitment to recovering any wasted or fraudulent funds from pandemic spending. They also stated that the report would be thoroughly reviewed to extract valuable lessons for the future.

As the UK continues to grapple with the aftermath of the pandemic, the findings of this report serve as a reminder of the need for careful financial management and oversight in government assistance programs.