Britain’s safeguards on public money failed on a scale few would have thought possible.
According to a Cabinet Office dossier unearthed by The Telegraph, more than £28bn of taxpayers’ money found its way to terrorists, hostile states and organised crime between 2015 and 2021, and officials reportedly judged the findings so damaging that they kept the document under wraps.
Believed to be the first government assessment of its kind, the review paints an uncomfortable picture of how money intended to support businesses, fund overseas development and counter extremism was instead diverted to some of the very actors the state exists to guard against. For a country still counting the cost of the pandemic, it is a sobering reminder that the speed and scale of emergency spending came with a price that is only now being tallied.
The numbers are striking. Covid loans, the review found, reached Islamic State fighters in Syria. Grants were awarded to companies linked to the Russian state. Investment flowed into research that ultimately benefited firms tied to the Chinese military. Money earmarked to counter terrorism was, in some cases, handed to extremists espousing the very anti-Western ideology it was meant to challenge.
A significant share went to criminal gangs. The dossier points to human traffickers fraudulently claiming housing and disability benefits, and to an organised crime network with links to Eastern Europe and a hostile state that exploited British grant processes to actively encourage illegal immigration into the UK.
That such a breadth of abuse could occur across multiple departments and funding streams speaks to systemic weaknesses in how the state checks where its money goes, weaknesses that the rush to disburse pandemic support only widened. The vulnerabilities were hardly a secret at the time: spending watchdogs warned early in the crisis that Covid support schemes had been left an “open goal” to fraudsters, with lenders under pressure to pay out at speed rather than verify who was on the other end of the application.
Perhaps the most politically charged detail is not what the review found but what happened to it. According to the reports, the assessment was commissioned by security officials but then suppressed, with the previous government said to have kept it from public view to avoid the fallout from revealing the sheer scale of misdirected funds.
The misspending sits squarely with the former Conservative administration and successive Tory prime ministers, spanning a period that took in both the austerity years and the extraordinary fiscal response to Covid. Whatever the political motivation for keeping the document quiet, the decision to do so raises its own questions about transparency and accountability over how public money is monitored.
A Cabinet Office spokesperson told The Telegraph that the Labour government had recovered or saved more than £7.5bn of taxpayers’ money over the past year through what it described as “aggressive fraud prevention and recovery.”
“By using better data and hiring more expert investigators, we are now finding and stopping this fraud faster than ever before,” the spokesperson said.
That claim will be tested against a long record of enforcement struggling to keep pace with the losses. The Insolvency Service has been handed new powers to pursue those who abused Covid loan schemes, securing director disqualifications and bankruptcy restrictions, but recoveries have so far amounted to a fraction of the sums lost. An independent assessment published by the government put the direct cost of Covid fraud at £10.9bn, and Parliament’s Public Accounts Committee has repeatedly accused departments of complacency in preventing “eye-watering” levels of fraud in the Bounce Back Loan Scheme.
The dossier lands against a backdrop of pandemic spending that continues to grow. The government has estimated the total cost of Covid at some £385bn, a figure that includes the loans and grants rolled out to keep businesses afloat. With so much money moving so quickly, the absence of basic checks created openings that fraudsters and hostile actors were quick to exploit.
The questions for businesses and taxpayers alike are uncomfortable but unavoidable. Concerns about value for money were flagged long ago: one report found that the majority of firms receiving £23bn in Covid grants could have survived without them, underlining how loosely the taps were turned on. How much of the £28bn can realistically be recovered? What controls are now in place to stop a repeat the next time the state needs to spend at pace? And will the instinct to bury bad news give way to genuine transparency?
For an economy that depends on public confidence in how its money is managed, the answers matter. The £28bn dossier is not merely a record of past failure, it is a test of whether the lessons have finally been learned.
