More than £215m of furlough funds repaid by employers

Tens of thousands of organisations have returned money they did not need or claimed in error

Thousands of UK businesses have repaid more than £215m in furlough scheme payments to the government because they either did not need the money or claimed it in error. 

As of 15 September, £215,756,121 in job retention scheme cash had been voluntarily repaid to HMRC, according to data obtained by the PA news agency through a freedom of information request. The figures revealed 80,433 employers across the UK had returned the funds they were given to subsidise workers’ salaries during the pandemic.

However, the repayments constitute just a small part of the £35.4bn employers claimed under the scheme up to 16 August.

Ikea, housebuilder Redrow, Games Workshop, the Spectator magazine and distribution giant Bunzi all returned the furlough payments they had claimed. 

Other employers, including Primark and John Lewis, have said they will not claim money under the government’s job retention bonus scheme, which promises firms £1,000 for every worker brought back from furlough and kept in employment until the end of January 2021.

HMRC said it welcomed those employers that had voluntarily returned furlough money “because they no longer need the grant, or have realised they've made errors and followed our guidance on putting things right”.

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Iskander Fernandez, partner at law firm BLM and specialist in white collar crime investigations, said the voluntary repayment of furlough cash is significant given that businesses have been alerted to, and have responded to, HMRC’s call to “put things right” where claims have been made in error or when businesses no longer needed it.

He said the amount that has been returned is unlikely to be from someone who claimed the funding fraudulently because it could “open that individual up to a criminal investigation and possible proceedings in a criminal court". 

“Given that the aim of fraud is to deceive the victim, it is unlikely that any fraudster would come forward for the simple reason they could incriminate themselves by doing so," Fernandez said. "It is more likely the payments that have been returned are from businesses that have made an error when claiming under the scheme or failed to adopt changes when the scheme was slightly tweaked post lockdown."

Earlier this month, HMRC estimated that as much as 10 per cent of the funds paid through the scheme – equivalent to £3.5bn – could have been wrongly awarded or fraudulently claimed. 

Jim Harra, HMRC’s first permanent secretary, told the Public Accounts Committee – which examines and holds the government to account for the delivery of public services – that his team had “made an assumption for the purposes of our planning” that the “error and fraud” rate for the furlough scheme would be between 5 and 10 per cent.

“This will range from deliberate fraud through to error,” Harra said. “What we have said in our risk assessment is we are not going to set out to try to find employers that have made legitimate mistakes in compiling their claims, because this is obviously something new that everybody had to get to grips with in a very difficult time.”

During his testimony to the committee, Harra said HMRC would be focusing on tackling abuse of the scheme, and the tax body expected employers to check for errors in their claims and “repay any excess amount”.

Separately, shadow chancellor Anneliese Dodds is expected to call for the furlough scheme to be extended beyond its planned end date of 31 October.

Addressing delegates today (21 September) at Connected, a virtual event replacing Labour’s annual conference, Dodds is expected to call for the creation of a job recovery scheme that would enable employers to bring back workers on reduced hours, with the government subsidising part of their wages.

Dodds will also provide more details of what a Labour government would do to protect jobs in the coming months, including a “national retraining strategy” to help people prepare for employment in different sectors, and support for businesses struggling to repay emergency loans.

In calling for a job recovery scheme, Dodds will add her voice to a number of groups calling for the furlough scheme to be extended or replaced with something similar. Manufacturing body Make UK said the scheme should last beyond October for hard-hit sectors that had already started cutting jobs, while the TUC has also urged the government to extend the scheme to prevent a “tsunami of job losses”. 

The Treasury Select Committee also called for an extension of the scheme, saying the government should strongly consider sector-specific extensions focusing on the challenges hard-hit industries would face as the UK entered its economic recovery phase. 

The government has previously rejected calls to extend the job retention scheme.