Taxpayers face losses of £400 million from Rishi Sunak's disastrous Covid scheme

TAXPAYERS face losses of £400 million from Rishi Sunak's disastrous Covid scheme.

Official data from the British Business Bank (BBB) shows that the Government’s pandemic-era Future Fund, launched under then-Chancellor Rishi Sunak, has left taxpayers facing losses of around £400 million.

The scheme invested £1.14 billion in 1,190 companies through convertible loans between 2020 and 2021.

As of March 2025, 334 companies had entered administration or been dissolved, wiping out taxpayers’ stakes in those firms.

BBB’s latest valuation put the fund’s portfolio as low as £609 million, compared with the £1.14 billion originally committed.

The eventual taxpayer loss remains uncertain and depends on the performance of the surviving portfolio.

Scott Gallacher, Director at Leicester-based Rowley Turton, said it is a huge waste of taxpayer money.

He added: “Yet another lesson in politicians reacting hastily to crises and, in the process, wasting taxpayers’ money. 

"Governments are generally good at running public services, but they should almost never be in the business of ‘investing’ public funds in start-ups — with the possible exception of defence or medical companies during an emergency, such as the vaccine programme.”

Riz Malik, Director at Southend-on-Sea-based R3 Wealth, called for an urgent investigation into where the money went.

He continued: "The government had to move quickly, so some checks were inevitably missed. But the rules around bounce-back loans were clear from the start. 

"Those who abused the scheme should absolutely be investigated. This isn’t a victimless crime, especially when public finances are already under severe pressure."

Samuel Mather-Holgate, Independent Financial Adviser at Swindon-based Mather and Murray Financial, said the scheme was abused.

He added: “The spirit of the policy was great, and some businesses really needed a cash injection at the time, but the ease of abuse was striking. 

"Loans of up to £50,000 were given to companies only incorporated the day before, and several companies with the same directors were allowed to receive funds, creating a train of cash departing from the taxpayers station, with a one way ticket. Simple fraud checks at the onset would have alleviated this.”

Rob Mansfield, Independent Financial Advisor at Tonbridge-based Rootes Wealth Management, said the scheme was needed.

He continued: “At around 28% the failure rate is pretty low against an average rate of 45% failing within the first five years. Funding new and developing businesses is always risky but there is multiple benefits that could come from this though.

"Ultimately, it could enable a new generation of entrepreneurs who go onto employ people and generate tax revenue for the country. In that context, a billion pounds might become a drop in the ocean.”

Harry Mills, Director at London-based Oku Markets, agreed that the money was needed at the time.

He said: “Considering the total cost of the Covid pandemic was somewhere between £350-400 billion, £400million is a miniscule number barely worth talking about. 

"These loans were designed to support British businesses, and they were made quickly at a time of great need. 

"The government should be chasing fraudulent claims, but loans made to businesses that ultimately went bust much later through the normal course of business is par for the course. We have bigger things to worry about than this.”

Kundan Bhaduri, Entrepreneur and Landlord at London-based The Kushman Group, also agreed, adding: “In April 2020, Sunak faced genuine economic armageddon with businesses collapsing like dominoes and death projections in the millions. Doing nothing would have meant watching Britain's innovation sector disappear permanently while competitors like Germany and France backed their startups through the crisis. 

"A 28% failure rate during history's worst peacetime economic collapse actually beats normal venture capital performance, where 70% of investments typically fail during sunny economic weather. The Conservative government achieved venture capital returns while preventing total ecosystem collapse, preserving intellectual property, skilled jobs, and tax generating capacity that private investors had abandoned entirely. 

"At the time Sunak was right to choose strategic preservation over ideological purity. The alternative was permanent competitive disadvantage as many other nations supported entire business ecosystems while Britain only protected established firms.”

Eamonn Prendergast, Chartered Financial Adviser at Bromley-based Palantir Financial Planning Ltd, said the public needs transparency.

He continued: “The Future Fund was always going to be high risk, the clue was in backing early-stage businesses at the height of a pandemic. In that context, supporting innovation and keeping companies afloat had merit, but a £400m hole for taxpayers shows just how exposed the scheme was. 

"The problem is less about the losses themselves and more about whether there was a clear framework for value. Was the aim to preserve jobs, stimulate innovation, or deliver long-term returns? Without clarity, it risks looking like money sprayed around without accountability. 

"The lesson is simple: emergency schemes need transparency, defined outcomes, and a way of measuring success beyond headline investment numbers. Otherwise, taxpayers are left footing the bill without knowing what they truly got in return.”

Ritesh Sood, CEO & Founder at London-based Soul Mortgages, said the scheme was a necessary risk in tough times.

He added: “The reported £400m loss from the Future Fund warrants scrutiny, but judging it solely on financials is a mistake. Designed as a high-risk venture capital fund, not a grant, its goal was to prevent innovative startups from collapsing during the pandemic – a goal it largely achieved, with 72% of companies still operating. 

"This was strategic economic insurance. The cost of widespread failure – jobs lost, research abandoned, and future taxes gone – would have far exceeded this loss. The fund preserved the UK's tech ecosystem, leveraged private investment, and kept the nation competitive. 

"The lesson for policymakers is to set clearer goals: was the aim to make money or save the economy? Managing public expectations about high failure rates and planning exit strategies from the start are crucial for next time. Ultimately, this was a necessary, bold move for an unprecedented crisis.”