ACE investigating further allegations of Covid fraud

There has been a rise in the number of cases of Covid-era fraud being investigated by Arts Council England, Arts Professional has learned.

Figures released by the funding body show that it is currently investigating six cases of fraud related to the Culture Recovery Fund, an increase of two since 30 May 2024.

Announced by the Department of Culture, Media, and Sport in July 2020, the £1.6bn support package was designed to help the cultural sector survive the economic impact of the pandemic and, when possible, reopen. The scheme offered three rounds of funding, administered by ACE, with final grant offers in March 2022.

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ACE said that across the whole CRF programme, it made over 6,000 separate funding awards of between £50,000 and £3m. As of 12 September 2024, it has received 350 third-party objections and 87 allegations of fraud relating to the fund.

One fraud case has been confirmed, and six cases continue to be investigated.

The latest figures also show an increase in allegations since 30 May, up from 84, and third-party objections, up from 343.

ACE said it cannot comment on live investigations, but on 22 May announced it was carrying out "additional checks" on a Manchester-based company after receiving "new information". ACE confirmed to AP that "additional checks" constitute an investigation.

That investigation arose amid concerns over a £480,000 CRF grant application made in January 2021 by Manchester-based Primary Event Solutions —called Primary Security until October 2020—following a series of reports in The Mill questioning the scope of the company’s activities within the creative sector.

Last week, ACE's assessment of Primary Event Solutions' application to the CRF was published after being obtained by The Mill through a Freedom of Information request. In it, ACE notes "inconsistencies in the expenditure budgets and delivery plan" and "some inconsistencies with the narrative and the supporting financial statements provided".

After deeming some operational costs, including £10,500 for a website redesign, as unessential, ACE deducted £36,150 from the requested grant, awarding the company £443,922.

Primary Event Solutions' co-owner, Sacha Lord, previously said he was confident ACE’s investigation will exonerate him. He noted that two separate audits of the use of ACE’s grant to Primary Event Solutions had previously concluded there had been no misuse of public money.

Counter Fraud Commissioner

ACE’s continuing probe into CRF awards comes as the government seeks to appoint a COVID-19 Counter Fraud Commissioner, a role Labour promised to introduce in its election manifesto.

Working three days a week on a one-year fixed-term contract, the commissioner will be tasked with “ensuring that everything possible is being done to recover public money lost to pandemic-related fraud and underperforming contracts".

Initially focused on PPE contracts, the job description says the commissioner will also receive assessments of fraud recovery work to date in other major Covid schemes – specifically, but not exhaustively – citing Furlough, Bounce Back Loans, Business Support Grants, Eat Out to Help Out and Covid-era Universal Credit fraud.

"Where necessary", they will lead additional assessments into these schemes and produce a report that will be presented to parliament.

The role's job description does not mention the Culture Recovery Fund or DCMS.

The Treasury declined to clarify if CRF would specifically be part of the commissioners' remit but said that their work would include reviewing activity in other schemes in which Covid-19 fraud and error have been identified to recoup as much as possible.

'Luckless individual'

There has been criticism that Labour has watered down its pre-election promise to thoroughly investigate Covid-era fraud by placing too many demands on whoever is hired as Commissioner.

Speaking at an All Party Parliamentary Group on 9 September, Byline Times reports that former Head of the Serious Fraud Office, David Green, was concerned the new Commissioner will not have the time or resources to fulfil their remit after a recent Transparency International report identified 135 “high risk” Covid-era contracts – worth £15.3bn.

“The talk on the street, before the advert came out, was that this would be at [Senior Civil Service] 3 level," said Green, "Which is one below Permanent Secretary, giving such a person real authority within the civil service and dealing with other agencies. It was to be around £180,000 a year with a staff of around 30.

"We now find out…that this individual is required to work three days a week and would be paid £84,000 a year on a one-year contract with what’s called a ‘small staff.’ In my experience, ‘small’ is civil-service speak for about four people. Good luck with that.”

“Such an individual will have to rely, in their three days a week, on the cooperation of various agencies: the Serious Fraud Office, the Public Sector Fraud Authority, the commercial arms of government, the Treasury, and HMRC. How much clout will such a person have in galvanising those agencies?”

“Speaking for myself, I’m rather depressed about this luckless individual and their possibilities.”