According to a new report from Audit Scotland, it is not possible to analyze how funding for Covid-19 business support has been distributed during the pandemic due to data gaps.

The Scottish Government provided around £4.4bn in grants and non-domestic rate relief between March 2020 and October 2021, mostly paid to businesses by councils. It then announced additional support of £375 million in December 2021, following the emergence of the Omicron variant.

Steps have been taken to improve the management of funding during the pandemic, but insufficient emphasis has been placed on collecting detailed data on how the money has been distributed and how quickly applicants have received funding.

Scotland’s Auditor General and Board of Auditors report said this means:

• The Scottish Government does not have an analysis of the total amounts paid by the more general schemes to the different economic sectors.
• For sector funding administered by national organizations such as Scottish Enterprise, approximately 20% of payments cannot currently be allocated to communal areas.
• Likewise, information allowing for broader analysis of how funding has supported specific groups, such as women-owned businesses disproportionately affected by Covid-19, is not available from centralized data.

At the end of 2021, the government carried out retrospective impact evaluations to examine how business support funding has addressed inequalities.

A retrospective review of board-administered funding fraud was also completed. The government is currently undertaking an extensive data cleaning exercise to ensure that datasets for individual funds, including those administered by councils, are complete.

The Scottish Government’s retrospective fraud review at the end of 2021 concluded that around £2billion of funding administered by councils was at high risk of fraud. He then estimated that of the £1.6billion distributed from these programs in 2020/21, between £16million and £32million was at risk of fraud or error.

Stephen Boyle, Scotland’s Auditor General, found the estimate to be 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 programs have been delivered at pace in exceptional circumstances – but it’s important to know where the money went.

“For future policy development and implementation to be correct, it will be important for the Scottish Government to fully understand how funding has been used to support specific businesses and groups over the last two years of the pandemic. “

William Moyes, chairman of the Board of Accounts, said: “Council fraud schemes are generally robust, but have been relied upon heavily 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 the way the money has been distributed.”

Scottish Labor spokesman for economy and finance, Daniel Johnson, replied: “The SNP’s disregard for economic transparency has 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 them and delivered good value to taxpayers.

“The SNP must provide the clarity and openness we need about how it has spent public money and helped businesses through the pandemic.”

Scottish Liberal Democrat economics spokesman Willie Rennie added: “At the height of the Covid crisis, there was a need to get money quickly into the hands of businesses to prevent good businesses to go to the wall.

“Now the government must account for the money it has spent and, where appropriate, ensure it is recovered – these data gaps will complicate analysis of the effectiveness of spending.

“Ministers will be required to keep the public informed of any fraudulent claims they uncover and the amount of money they have managed to recover.”

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