Up to £500 million in Bounce Back loans were given to companies which then went bust.
Almost 10,000 businesses have stopped trading or gone into administration after taking taxpayer-funded cash to help them in the pandemic.
The staggering sum is on top of the £5.8billion extracted by fraudsters from the emergency Covid schemes like furlough and Eat Out To Help Out.
The new details emerged after the minister for counter-fraud, Lord Agnew, resigned in anger at the Government’s inability to tackle scams.
The Insolvency Service said it had identified 9,733 companies in England, Wales and Scotland that became insolvent between last May and October after getting a Bounce Back loan.
The bank loans, which were fully guaranteed by the Government, were intended to compensate firms for reduced trade during lockdowns.
Bosses could apply for up to £50,000 or 25% of annual turnover.
Banks were ordered to ease the usual checks. Many borrowers self-certified financial status.
The scheme provided £47.4billion in credit through 1.6 million loans. It is not clear how much the Government will recover. But as the banks will get the dud loans refunded by Government – in other words the taxpayer – it is likely other creditors will get priority.
A government source said the average loan was well below £50,000 and the Bounce Back scheme had been a lifeline to over 1,500,000 firms.
A spokesman added: “Businesses are expected to make every effort to repay loans. Most payments are being made as expected.”
The Treasury – blasted by Lord Agnew as “having no knowledge or little interest” in fraud – has written off £4.3billion in Covid scams.
