An emergency support scheme for small businesses affected by Covid-19 in Northern Ireland may have paid out £13.5m to recipients who were ineligible, according to a report published on Wednesday by the North's Audit Office NIAO.
The Auditor General, Kieran Donnelly, said £1.76m had been recovered so far and efforts were continuing to recover the remainder, but it was “not clear” how much would be recouped.
The Small Business Support Grant Scheme, which was launched in March 2020, paid out one-off emergency grants of £10,000 to small businesses to help mitigate the potential threat of closures at the start of the Covid-19 pandemic.
Almost £245 million was issued to businesses in Northern Ireland under the scheme, which was designed and delivered jointly by the Department for the Economy and Land and Property Services.
According to the report, £5.68 million of potentially ineligible payments have been identified, which includes £2 million in duplicate payments, £700,000 paid to landlords rather than tenants, and £500,000 paid to wind farm owners.
The Auditor General concluded that payments that were “likely to have been made to businesses not suffering Covid-19 related hardship”, such as wind turbines, were made “because no assessment of need had been undertaken.
“In fact, wind turbines appear to be the only business type to which a retrospective assessment was applied, and following which they were deemed ineligible.
“Similar assessments were not carried out on any business type. It was simply assumed that all small businesses eligible for Small Business Rates Relief needed the support regardless of their situation.”
Failure to quickly repay grants paid in error led to the resignation of Sinn Féin Senator Elisha McCallion, Assembly member Catherine Kelly, and two party officials last year.
Constituency offices belonging to MPs and MLAs were ineligible, but it emerged that payments had been made to three Sinn Féin offices – in West Tyrone and in Lurgan, Co Armagh, as well as that of the then Senator, Ms McCallion, for her former office as MP for Foyle.
In the report Mr Donnelly said attention had been drawn in the local media to these payments, which were “part of the initial payments issued automatically, without an application being received.
“These offices should have been excluded from the payment list but were overlooked,” the report said.
However, the Auditor General “commended” the businesses that returned a total of over £800,000 voluntarily.
Risk of fraud
The report also noted that at the outset of the scheme the department’s permanent secretary had highlighted “serious concerns” over value for money and the risk of fraud and error inherent in it, stemming primarily from the timescale in which the scheme was to be delivered, which allowed insufficient time for normal planning processes.
However, in light of the perceived need to get support to businesses quickly, then minister for the economy Diane Dodds issued a ministerial direction for the scheme to go ahead.
“Many of the concerns raised by the permanent secretary in advance of the rollout of the Scheme came to fruition,” Mr Donnelly said.
Commenting on the report’s findings, Mr Donnelly said it was “important to recognise” that the scheme was “designed and launched under exceptionally challenging circumstances and at an extreme pace.
“The departments and agencies involved were clearly focused on getting urgent support to businesses, and great efforts were made to deliver this.”
However, he said it was important that the “lessons identified in my report are learnt and taken on board” and in particular, the importance of a “collaborative approach in developing similar schemes in the future”.
“Better early engagement across departmental boundaries and with business representatives would have helped the department target support to those most in need.”
He said a “small amount of additional time at the design stage” may also have provided benefits including better protection for public funds.
A spokesman for the department said the scheme “was not a routine support scheme delivered in normal times” but an “emergency response to a crisis and, without it, many Northern Ireland businesses may not have survived and many more jobs could have been lost”.
“While it is important to place the scheme in the context of the unprecedented crisis brought about by the devastating impact of the Covid-19 pandemic at that time, the department will consider the recommendations made in the NIAO report,” the spokesman said.
