Furlough fraud issues have been an ongoing problem since the Job Retention Scheme was introduced by the government in March 2020. The Treasury Committee recently highlighted this problem as part of a review of the economic impact of the coronavirus pandemic. The hasty roll out of the scheme and general miss management could prove to be very costly as the Treasury estimated billions have been misapropriated.
During a meeting held to discuss possible methods of fraud Gareth Davies, the Controller & Auditor General and Head of the National Audit Office (NAO), explained the main fraudulent issues saying “One obvious area here is employers overstating the furlough claim. The way the scheme works is that employers are paid by the Government through a furlough grant. The employers are then expected to pay 80% of their usual wages to their employees. In this way the scheme has kept millions of employees afloat during the pandemic.”
However he added “The scheme is vulnerable to employers overstating the amount that they pay to their employees. Either by inflating their employees salary or the number of staff they employ.”
“Another fraudulent method is claiming the furloughed wage but then asking their staff to work. There have been many examples of that which have been reported on the whistleblowing hotline that was set up”.
“A third one that I would pick out is actual organised crime. Where legitimate employers are forcibly coerced into making fraudulent claims. Or agents such as tax agents who deal with HMRC are induced or bribed into making false claims”
The furlough scheme has been very successful in keeping unemployment from rising in the UK. The hope is that as lockdown lifts and people return to employment a surge in unemployment will be avoided when the scheme comes to an end on September 30 2021.
The Government released furlough data for March 2021 which showed the number of people on furlough fell from 4.9m in January to 4.2m in March, a drop of half a million. This reduction was due to the reopening of many businesses. Employees are very grateful to have jobs to return to, as across the country shops, beauty salons, gyms, restaurant patios and beer gardens all reopened.
Unfortunately it may not all be good news in the future as while many employees coming off the furlough scheme are returning to work, however others will be taken off the scheme and made redundant. As yet March’s redundancy figures have not been released but early payroll data shows 56,000 fewer employees compared to those in February. That along with the number of company voluntary dissolutions reaching 6,000 a week on average in March does not bode well.
The furlough scheme continues to offer 80% pay until the end of June and then the payments will taper. This change is expected to coincide with the UK economy reopening. Recent data by Adzuna for the ONS showed job adverts in April rose to levels above pre-pandemic levels. So while it’s only an early indication there is hope that if you don’t retain your original job there will be another opportunity for you