Much of the £10.9bn lost to fraud and error in Covid support schemes is now “beyond recovery”, a report has said.

The response to the pandemic had led to “enormous outlays of public money which exposed it to the risk of fraud and error” with many organisations unprepared, the Covid Counter Fraud Commissioner, Tom Hayhoe, said.

Employment support schemes, including furlough and help for self-employed workers, suffered estimated fraud of £5bn, the report found.

Many of the support measures were credited with propping up the economy throughout the Covid lockdowns. However, Mr Hayhoe said the “outrage” at fraud, abuse and error was “undiminished”.

Weak accountability, bad quality data and poor contracting were among the reasons for the losses.

The report said that most public bodies were unprepared for “a crisis that required spending on such a scale and with such urgency”.

“Consequently, some measures to protect against potential fraud were inadequate.”

This applied to the procurement of Personal Protective Equipment (PPE) where the volume of orders “overwhelmed the newly created supply chain and involved measures that invited mistrust, opportunism and profiteering”.

It found £13.6bn was spent on PPE procurement, with 38 billion items purchased – although 11 billion were unused by 2024. Losses were estimated at £10bn from over-ordering and £324m of fraud.

Anti-fraud measures were also criticised over the support for small businesses, where “lending relied on self-certification with inadequate checks to prevent abuse”.

It said the design of the Bounce Back Loan Scheme “created specific vulnerabilities to fraud and error”, with the programme estimated to have incurred fraud and error losses of up to £2.8bn.

Of the total estimated amount lost to fraud and error, the report said £1.8bn had been recovered. However, it added: “Much of the shortfall is now beyond recovery.”

The report noted that the need to design and implement support quickly for businesses led to a high risk of fraud.

“It was accepted in many schemes that the rapid design entailed accepting a high level of fraud risk, without plans for managing or mitigating this risk.”

Responding to the report, Chancellor Rachel Reeves said: “Leaving the front door wide open to fraud has cost the British taxpayer £10.9bn – money that should have been funding our public services, supporting families, and strengthening our economy.

“We have started returning this money to the British people and we will leave no stone unturned in rooting out the fraudsters who profited from pandemic negligence.”

In September the government launched a voluntary repayment scheme for people and businesses to return pandemic scheme money with no questions asked until the end of December.

A previous report from Mr Hayhoe had found that pandemic-era PPE contracts cost the British taxpayer £1.4bn on undelivered contracts and unusable gowns, masks and gloves. Only a small fraction of that – £400m – has been recovered.