A Treasury minister resigned today over the government’s “lamentable” record on Covid fraud, after billions were stolen from Covid support schemes.
Lord Theodore Agnew – previously responsible for government efficiency – said oversight of the Covid loan schemes by the Department of Business, Energy and Industrial Strategy (Beis) and the British Business Bank had been “nothing less than woeful”.
He said the two departments were “ably assisted by the Treasury who appear to have no knowledge or interest in the consequences of fraud to our economy or society”.
Just under £80bn was lent through the government’s Covid business loan schemes, which includes £47bn under the Bounce Back Loan Scheme.
The scheme, brought in to increase the speed of lending during the first lockdown, saw the government underwrite the entirety of every loan and therefore take on 100 per cent of the default risk.
Agnew told the House of Lords today that the government had already been forced to pay banks £1bn for loans that had been defaulted on, with around £250m of this considered as fraud.
This goes alongside the £5.8bn that was stolen from three other Covid support schemes – the furlough scheme, self employment income scheme and Eat Out to Help Out.
Agnew said the government had been guilty of “schoolboy errors” and that too few anti-fraud officers were hired by the civil service.
He also said that his decision had nothing to do with other scandals blighting Boris Johnson’s government.
“Total fraud loss across government is estimated at £29bn a year,” he said.
“Of course, not all can be stopped – but a combination of arrogance, indolence and ignorance freezes the government machine.
“Action taken today will give this government a sporting chance of cutting income tax before a likely May 2024 election. If my removal helps that to happen, it would have been worth it.”
Labour shadow chancellor Rachel Reeves said: “This is a damning indictment of the chancellor and the government’s failures on fraud.
“That the government’s own anti-fraud minister feels he is unable to defend the government’s record on billions of pounds of taxpayer cash gifted to criminals tells you all you need to know about the incompetence of this government.”
A Number 10 spokesperson said: “On the wider issues that he’s raised, we introduced our unprecedented COVID support schemes at speed to protect jobs and livelihoods, helping millions of people across the UK, including nearly £12m on the furlough scheme alone.
“We’ve always been clear fraud is unacceptable and are taking action against those abusing the system, with 150,000 ineligible claims blocked, £500m recovered last year and the HMRC tax protection taskforce is expected to recover an additional £1bnof taxpayers’ money.”
A Treasury spokesperson said: “Fraud is totally unacceptable, and we’re taking action on multiple fronts to crack down on anyone who has sought to exploit our schemes and bring them to justice.
“Our Covid support schemes were implemented at unprecedented speed to protect millions of jobs and businesses at a time when families needed it the most. As a result, our economy is back to pre-pandemic levels and growing at the fastest rate in the G7.”