By Iain Withers and Sinead Cruise
LONDON (Reuters) - The value of suspected fraud flagged by lenders across emergency state-backed loans granted to struggling businesses in the COVID-19 pandemic has increased by 7% to 1.8 billion pounds ($2.3 billion), government figures showed on Tuesday.
Banks handed out a total of 77 billion pounds of state-backed funds to support companies hit by pandemic lockdowns, but the prevalence of scams has attracted criticism.
The fraud estimate as of Sept 30 this year compares with a previous estimate of 1.69 billion pounds at the end of June.
The government also published data on loans stripped of state guarantees for the first time, confirming a Reuters' exclusive earlier this month based on data obtained under a Freedom of Information request.
The removals put banks on the hook for any unpaid borrowings on those loans - which would otherwise be guaranteed to be between 80-100% of the value by the government - and shields taxpayers from some losses.
Guarantees had been removed from 10,786 loans worth a combined 979 million pounds as of Oct. 11, the government said, confirming the data reported by Reuters.
In total, the government has paid out 8.5 billion pounds to lenders under state guarantees so far, while 18.7 billion has been fully repaid by borrowers.
A further 27.5 billion pounds of outstanding balances are being repaid on schedule, while 2.2 billion pounds is in arrears, 670 million in default, and 730 million claimed by lenders under guarantees but not yet settled.
The government also disclosed for the first time that 18.8 billion pounds worth of the overall balance on the loan schemes had been reduced, mainly through partial repayments by borrowers.
($1 = 0.7912 pounds)