Billions in UK foreign aid and Covid loans 'handed to terrorists': Britain handed more than £28bn in taxpayer cash to its enemies over six years, leaked dossier reveals

By SOPHIE CHURCH - POLITICAL REPORTER Published: 22:57, 8 June 2026 | Updated: 23:10, 8 June 2026 Britain gave more than £28billion in taxpayer cash to its enemies over six years, a leaked government dossier revealed last night. Terrorists such as the Islamic State in Syria group, hostile states including Russia and criminal gangs received the vast sum from foreign aid, Covid relief loans and the benefits system, which an expert said was an 'ATM for terrorists'. Cabinet Office security officials commissioned the report in 2023 after it emerged that Covid loan schemes had been subject to widespread fraud. But it highlighted problems with government grants and due diligence processes more broadly, and officials decided not to disclose it. The report, which has been leaked to The Telegraph, revealed that Britain helped companies linked to the Chinese military pursue their own research between 2015 and 2021. In another instance, a Kremlin-linked organisation bought a significant share in a UK tech firm servicing sensitive British defence systems less than a year after getting a grant from UK Research and Innovation, a funding arm of the Department for Science, Innovation and Technology. A source familiar with the incident said: 'It meant that as well as [Russia] having access to our intellectual property, we were directly paying millions to the Russian state.' Much of the misappropriated funds went to criminal gangs, including human traffickers claiming housing benefits and disability allowances. £28billion of UK taxpayer money has gone to enemies of the country. Vast sums have ended up in the hands of the Islamic State in Syria (IS fighters pitured) after it emerged Covid loans, foreign aid and benefits schemes were subjecte to widespread fraud The dossier revealed a Kremlin-linked organisation bought a significant share in a UK tech firm servicing sensitive British defence systems, while a source said 'as well as [Russia] having access to our intellectual property, we were directly paying millions to the Russian state.' Tom Keatinge, of the Royal United Services Institute think-tank, cited 'lots of examples' of Britain's welfare system becoming an 'ATM for terrorists'. He also labelled the management of the Covid loan scheme, which offered loans of up to £50,000 to small firms during the pandemic, 'pretty disastrous'. He said: 'If there's a loophole, anyone can use that – criminals, terrorists.' Rebecca Harding, of the Centre for Economic Security, said the dossier revealed 'threats from adversaries, state actors and non-state actors that go through the business system'. She added: 'It is economic warfare, and we have been naive about all of this.' The report was compiled by reviewing government grants between 2015 and 2021, consulting academics and think-tanks, and using open-source reporting on foreign aid fraud. Professor Nicholas Ryder, a former adviser to the Commons home affairs committee and an expert on terrorism funding, said the findings were 'staggering', adding: 'The link between fraud and terrorist financing is very clear.' The Cabinet Office said: 'This Government is taking unprecedented action to tackle public-sector fraud, having saved over £7.5billion of taxpayer money in the past year.' The comments below have not been moderated. The views expressed in the contents above are those of our users and do not necessarily reflect the views of MailOnline. By posting your comment you agree to our house rules. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual. Do you want to automatically post your MailOnline comments to your Facebook Timeline? Your comment will be posted to MailOnline as usual We will automatically post your comment and a link to the news story to your Facebook timeline at the same time it is posted on MailOnline. To do this we will link your MailOnline account with your Facebook account. We’ll ask you to confirm this for your first post to Facebook. You can choose on each post whether you would like it to be posted to Facebook. Your details from Facebook will be used to provide you with tailored content, marketing and ads in line with our Privacy Policy.