A joint report from Audit Scotland and the Accounts Commission has said that a detailed analysis of how almost £5 billion of Covid-19 business support funding was distributed in Scotland during the pandemic “is not possible due to gaps in data.”

The report said that Scottish Government provided about £4.4 billion of grants and non-domestic rate reliefs between March 2020 and October 2021, mostly paid out to businesses by councils.

The government announced a further £375 million of support in December 2021 following the emergence of the Omicron variant.

“Steps were taken to improve the management of funding during the pandemic,” said the report.

“But there was not enough focus on gathering detailed data on how money was distributed and how quickly applicants received funding.”

The report said 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
• 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 Scottish Government centrally held data.

“In late 2021, the Scottish Government completed retrospective impact assessments to consider how business support funding addressed inequalities,” added the report.

“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.”

Auditor General for Scotland Stephen 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.”

Accounts Commission chair William Moyes 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.”

The Scottish Government’s 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.

“This includes providing direct support to over 4,000 businesses and over 5,000 self-employed people who were facing hardship but ineligible for UK Government funding support.

“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.

“This helped to ensure the delivery of the business support funding was a shared endeavour and minimised risk and fraud.

“Without the efforts of our partners, we wouldn’t have been able to deliver this lifeline support at the scale and pace necessary and I thank them for working so closely with us.

“Every decision the Scottish Government has taken has centred around ensuring businesses got the support they needed when they needed it – resulting in over £4.5 billion being allocated to businesses across the country, including around £1.6 billion in rates relief – which is more generous than the other UK administrations so far.

“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.”