More than £1 billion in Covid support loans paid to fraudsters or in error is to be written off.
An estimated £2.2 billion is thought to have “gone astray”.
Recovering the money is proving slow and costly, reports MPs on the Public Accounts Committee (PAC).
So far, only £11 million is back in Government coffers.
Since March 2020 – the start of the Covid-19 pandemic in Britain – the Business Department provided councils with £25 billion of pandemic business-support grants to help eligible firms.
However, errors led to millions being paid out erroneously.
The total is estimated to be as much as £985m.
The PAC report said:
“The department believes it will not recoup the majority of this, given there was not deliberate fraud and the businesses were generally struggling due to Covid.
“The payments were not paid in line with Parliament’s intention therefore it is unclear why the department is not attempting to recover grants paid in error.”
The committee’s MPs said they have yet to see the defence from officials that most of the missing money was paid in error rather than fraud.