Northern Ireland’s Covid support scheme may have paid out £13.5m to ineligible businesses

Northern Ireland’s Auditor General Kieran Donnelly said that while £1.76 million of these payments under the Small Business Support Grant Scheme have been recovered, it is “not clear” how much of the money wrongly paid out will ever be recouped.

Mr Donnelly’s report said that payments are likely to have been made to businesses which did not suffer Covid-19 related hardship because no assessment of need had been undertaken.

Responding to the findings, the Department for the Economy insisted the scheme was an “emergency response to a crisis” and introduced at “extreme pace”. The department said that without the support many businesses may not have survived.

The audit office report said it was “simply assumed that all small businesses eligible for small business rates relief needed the support regardless of their situation”.

The scheme was launched on March 26 2020 and provided 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.

It was designed and delivered jointly by Stormont’s Department for the Economy (DfE) and Land & Property Services (LPS). In total the scheme made payments of £244.76 million, with £109.6 million of this given out through “push payments” directly into the bank accounts of businesses which had not applied for the grant.

The report said that the decision to implement push payments to all businesses in receipt of small business rates relief (SBBR) was “inherently risky”.

It continued: “It was likely that some public money would be issued to businesses which did not suffer hardship as a result of the Covid-19 crisis.

“No evaluation was undertaken to quantify the potential level of funding likely to be issued to those who did not require it.”

The report added: “On the same day that the online portal for applications went live, £67.7 million was paid via push payments, directly into the bank accounts of those businesses identified on the LPS database as eligible for SBRR and which paid their rates via direct debit.

“These payments were made without State Aid approval from the European Commission.”

Following his audit, Mr Donnelly estimated that £13.5 million could have been paid to recipients who were not eligible under the scheme rules.

He said that to date, the Department for Economy and LPS have identified £5.68 million of potentially ineligible payments.

This includes £2 million in duplicate payments, £700,000 paid to landlords rather than tenants, and £500,000 paid to wind turbine owners, an industry which was not impacted by the pandemic.

The report said that communication and collaborative working between the organisations involved in scheme delivery could have been better.

It said that important LPS queries on eligibility were “not being answered by the Department for Economy for weeks after they were received”.

It also said that staff involved in the scheme’s design and implementation had been instructed to work from home during the pandemic but initially did not have key resources such as video conferencing facilities.

Among those who wrongly received the payments included three Sinn Fein offices. The money was repaid after seven months.

Several Sinn Fein representatives, including former Foyle MP Elisha McCallion and West Tyrone MLA Catherine Kelly, resigned over the matter.

The report said: “These payments 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.”

At the outset of the scheme, the Department for Economy Permanent Secretary raised serious concerns over the value for money and the risk of fraud and error, the report states.

However, in light of the perceived urgent need to get support to businesses quickly, then Economy Minister Diane Dodds issued a ministerial direction for the scheme to go ahead.

The report said that “many of the concerns raised by the DfE Permanent Secretary came to pass”.