Analysis of how Covid-19 business support funding was distributed during the pandemic is not possible due to gaps in data, according to a new report from Audit Scotland.
The Scottish Government provided about £4.4bn of grants and non-domestic rate reliefs between March 2020 and October 2021, mostly paid out to businesses by councils. It then announced a further £375m of support in December 2021, following the emergence of the Omicron variant.
Steps were taken to improve the management of funding during the pandemic, but there was not enough focus on gathering detailed data on how money was distributed and how quickly applicants received funding.
The Auditor General for Scotland and the Accounts Commission report stated that this means:
- The Scottish Government does not have an analysis of the total amounts paid out from the more general schemes to different economic sectors.
- For sector specific funding administered by national organisations such as Scottish Enterprise, around 20% of payments cannot currently be matched to council areas.
- Similarly, information to enable wider analysis of how funding supported specific groups, such as the female owned businesses disproportionately hit by Covid-19, is not available from centrally held data.
In late 2021, the government completed retrospective impact assessments to consider how business support funding addressed inequalities.
A retrospective fraud review of funding that councils administered was also carried out. The government is currently undertaking a large data cleansing exercise to ensure that the datasets for individual funds, including those administered by councils, are complete.
The Scottish Government's retrospective fraud review in late 2021 concluded that around £2bn of funding administered by councils was at high risk of fraud. It subsequently estimated that of the £1.6bn distributed from these schemes in 2020/21, between £16m and £32m was at risk of fraud or error.
Stephen Boyle, the auditor general for Scotland, concluded that this estimate was reasonable in his review of the government's consolidated accounts, but recommended continued monitoring and reporting.
In the latest report, Boyle said: "These business support schemes were administered at pace in exceptional circumstances - but knowing where the money went matters.
"To get future policy development and delivery right, it will be important for the Scottish Government to fully understand how funding was used to support specific businesses and groups over the last two years of the pandemic."
William Moyes, chair of the Accounts Commission, said: "Councils' fraud arrangements are generally robust, but they were heavily relied upon to ensure businesses were eligible for funding during the pandemic.
"Councils will need to continue to work closely with the Scottish Government to ensure a better picture emerges of how money was distributed."
Scottish Labour's economy and finance spokesperson Daniel Johnson responded: "The SNP’s disdain for economic transparency reached new heights during the pandemic.
"The lack of data highlighted in this report makes it impossible to determine whether these huge sums reached those who really needed it and delivered good value for taxpayers.
"The SNP must deliver the clarity and openness we need on how they spent public money and helped businesses through the pandemic."
Scottish Liberal Democrat economy spokesperson Willie Rennie added: "At the height of the Covid crisis, there was a case for getting money quickly into the hands of businesses in order to prevent good firms from going to the wall.
"Now the government needs to account for the money it spent and where appropriate make sure that it is reclaimed - these data gaps will make analysing whether spending was effective more complicated.
"Ministers will need to keep the public updated on any fraudulent claims it uncovers and how much money it has successfully recovered."
Economy Secretary Kate Forbes said: "I am pleased that both Audit Scotland and the Accounts Commission have recognised how quickly the Scottish Government was able to establish a wide ranging business support package in order to help safeguard thousands of businesses and jobs.
"I am equally pleased this report reflects the unique and challenging context in which new support packages had to be established, and that despite the speed and scale of our response, we were able to work closely with industry, our enterprise agencies and local authorities.
"We will now carefully consider the findings of this report and of course any lessons will be learned, but fundamentally this report shows the decisions we took ensured lifeline support reached key businesses promptly and our economy continued to grow by 7.1% despite the necessary public health restrictions."
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