Lord Agnew resigns over government failure to tackle Covid loan fraud
A Treasury and Cabinet Office minister has stepped down after criticising the government for how it has handled fraud in its state-backed coronavirus loan schemes.
Conservative minister Lord Agnew of Oulton said that he was resigning because in his position as minister for counter fraud, he could not defend the Treasury over the levels of Covid loan fraud.
Before he announced his resignation, Lord Agnew was updating the House about the £4.3bn of Covid loans that have been written off by the Treasury.
He said government oversight of the schemes had been “desperately inadequate”.
“My Lords, you can see is my deeply held conviction that the current state of affairs is not acceptable,” he told the House of Lords, as reported by Sky News.
“Given that I’m the minister for counter fraud, it feels somewhat dishonest to stay on in that role if I’m incapable of doing it properly, let alone defending our track record.”
He went on to say that his resignation is not related to “far more dramatic political events being played out across Westminster”, assumedly referring to the furore over lockdown parties at Downing Street.
“Total fraud loss across government is estimated at £29bn a year,” he continued.
“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.”
The Treasury said that last year it recovered nearly £2.2bn in potential fraud from the bounce back loan scheme (BBLS).
“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,” a spokesperson from the Treasury said.
“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.
“Absolutely no fraudulent claims have been written off – last year we stopped or recovered nearly £2.2bn in potential fraud from the bounce back loan scheme and £743m of overclaimed furlough grants.
“We’ve also invested over £100m in a Taxpayer Protection Taskforce made up of nearly 1,300 staff – which is expected to recover an additional £1bn of taxpayers money.”
The first government-backed Covid loan schemes delivered £80.4bn of finance between May 2020 and the end of March 2021. Then from April 2021 to 31 October the recovery loan scheme deployed over £1bn to smaller businesses, according to the British Business Bank.
In December, a report by the National Audit Office said the government was too slow to put effective measures in place to stop fraudsters from stealing billions of pounds through BBLS.
And in November, a review by Bloomberg News found that over £130m was given to zombie companies or companies with no track record under the coronavirus business interruption loan scheme.
During the same month, advisory firm Mazars revealed that fraud from government loan schemes has led to a 205 per cent year-on-year rise in company directors convicted of criminal activity during the pandemic.
