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Government overpaid $3.5 million in unemployment benefits during the Covid-19 lockdowns, the finance minister admitted yesterday.

Curtis Dickinson said about 2,500 people – or one in four of those who received the benefit – were overpaid an average of $1,300 because they did not inform government when they returned to work and continued to receive the money.

Of that total, just 300 people have repaid $500,000, and in answers to questions from Opposition MP Scott Pearman, Mr Dickinson said government will pursue the other 2,200 people to get the $3 million back.

Mr Dickinson also revealed that an undisclosed number of payments were made without being properly authorised by senior civil servants and he will now ask the House of Assembly to retroactively approve those payments.

Mr Dickinson made the admissions while tabling the Public Treasury (Administration and Payments) Amendment and Validation Act 2021 (the Act) in the House of Assembly.

He said the amendments would enable government to get the funds back by deducting them from future payments rather than going to court.

Defending the “alarming” overpayments and authorisation failures, he said they occurred during “arguably the worst pandemic in history”.

The island’s lack of an unemployment insurance programme mean that when Bermuda began to go into the Shelter in Place programme and closed its borders last year, unemployed people struggled to “even take care of their basic needs”.

Government was forced to create the unemployment benefit, or UEB scheme, from scratch and it was designed to pay people who were unemployed as a result of the Covid-19 crisis up to $500 a week, he said.

More than 10,000 people applied for support, he said, adding: “Because of the critical nature of ensuring that funding was provided to these vulnerable persons on a timely basis, there were instances in which there was insufficient time for UEB applications to be completed within the full review and approval process, prior to making payments (in accordance with the UEB Regulations).

“Thus, there were occasions where payments were expeditiously made without prior approval by the Director of the Department of Workforce Development and by the Permanent Secretary of Labour. There is therefore a need to validate any such payment made, under any of the UEB Regulations, to an eligible person without prior approval, as required by the relevant UEB Regulations.

“There were also limited instances, due to extenuating circumstances, where a regulation was not appropriately extended or replaced on a timely basis. Thus a few payments were made before the new or amended regulation was brought into force.”

Mr Dickinson told MPs that despite these failures, there were still checks and balances and an effective audit trail in the system which was used later to review the payouts.

But Mr Dickinson admitted that some people continued to be paid because they failed to inform government that they had returned to work.

He added: “It is the government’s intention to pursue, in a methodical and fair manner, the recovery of all outstanding overpaid amounts directly from respective recipients.”

The legislation will allow government to “set-off” owed amounts from any payments due to be made to the individuals, rather than pursuing them through the courts, he said.

He said: “Once the provision is in place, the Government will be reaching out to individuals to recover funds that have not yet been returned.”

Answering questions from Opposition MPs, Mr Dickinson said to date government had worked “with people who have voluntarily refunded the Government funds for which they were overpaid”.

He added: “What we don’t want to do is get into the business of going to court recovering these amounts of money because in the first instance the cost of the court process is a burden for the individual and we have had good reactions from the individuals who have in most instances have acknowledged that they were overpaid.”

Mr Dickinson admitted that the overpayments and authorisation failures “may on the face of the matter seem somewhat alarming”.

But he said: “This crisis required the wellbeing of Bermuda residents to be given the highest priority. We made the necessary decisions to ensure that the most vulnerable in our society had funding for the basic necessities of life and to keep them and their families out of extreme poverty during a time of unprecedented hardship.

“It was a time when saving lives had to take precedence over rigid adherence to rules for the greater good.

“Notwithstanding the fact that we now need to take these steps, it is our strong belief that this was the right and humane thing to do for our people, given the devastating circumstances.”

Under questioning by Cole Simons, the Opposition Leader and shadow finance minister, Mr Dickinson was unable to quantify the number and value of payments made without prior approval but said he would provide them at the next House of Assembly session.

He also said $50 million had been paid in unemployment benefits in 2020 and a further $17 million was paid during the Stay at Home Order earlier this year.

Mr Dickinson told Mr Simons that accounting firm PwC was engaged in the middle of 2020 to audit the scheme’s processes and controls in place and in the second phase of the programme, recipients were required to advise government on a weekly basis that they were still unemployed.

“Previously, they were expected to inform government “on an honour system” when they returned to work.

Mr Dickinson told One Bermuda Alliance MP Michael Dunkley that the cost of the PwC audit was about $20,000.