More consideration for preventing misuse of the NOW furlough scheme
Investigation by the Netherlands Court of Audit
To prevent misuse of the new round of the NOW furlough scheme, more applications should be checked in advance. The NOW scheme, provides financial support to employers who lose more than 20% of their turnover on account of the corona crisis. It was launched in exceptional circumstances in March. To expedite its implementation, checks are currently being carried out after applications have been honoured.
In a letter to the House of Representatives, the Court of Audit notes that applications can be checked more frequently now that experience has been gained with the scheme. The letter also presents the findings of an investigation of the policy to prevent misuse and improper use of the scheme. The investigation has enabled the Court to make recommendation regarding the development of policy to combat misuse of the NOW scheme.
As the scheme works with advance payments that are settled at a later date, the Court draws attention to the recovery of undue payments. Referencing the Tax Administration’s benefits system, the Court writes, ‘Paying first and only later checking whether the rules have been observed creates a huge challenge to recover undue payments and a risk that those acting in good faith will suffer financial problems.’ The letter also draws the minister’s attention to the additional work created for the Employee Insurance Agency, which administers the scheme.
By the beginning of July, the scheme had been drawn upon 139,000 times at a cost of €18.8 billion. The Minister of Social Affairs and Employment estimated that two-thirds of this amount had been paid to large employers (10% of the applicants), who have to submit an audit report. A quarter had been paid to medium-sized employers (30% of the applicants), who requested advance payments in excess of €20,000. These applicants have to submit a statement of their lost turnover prepared by a third party, such as a financial service provider. Most applicants (60%) had requested less than €20,000. This accounted for a relatively small proportion of the overall cost but nevertheless amounted to €650 million. The Court of Audit thinks these applications, too, should be checked.
The letter is only in Dutch available