Rishi Sunak under growing pressure to tackle Covid fraud

Rishi Sunak‘s political opponents have told the Chancellor he ‘must explain’ how he he is going to claw back billions of pounds of Covid business support lost to fraud amid a mounting backlash. 

Counter fraud minister Lord Agnew dramatically quit the Government yesterday while at the despatch box in the House of Lords as he criticised the Government’s ‘schoolboy’ handling of fraudulent Covid business loans.

Figures released by HM Revenue and Customs previously suggested some £5.8billion has been criminally siphoned off from furlough and other business relief schemes since coronavirus struck.

Reports have suggested that £4.3billion of that cash could be written off by the Treasury, prompting a furious response from Labour, the Liberal Democrats and the SNP. 

Labour’s shadow chancellor Rachel Reeves said the amount of Covid cash lost to fraud should be a ‘source of enduring shame to the Chancellor’.  

The Liberal Democrats said the scale of Covid fraud was ‘outrageous’ and Mr Sunak ‘must explain how he’s going to get back these billions he allowed to be stolen from our schools, hospitals and police forces’. 

The SNP claimed Mr Sunak had let ‘crooks and fraudsters… off the hook’.  

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Rishi Sunak’s political opponents have told the Chancellor he ‘must explain’ how he he is going to claw back billions of pounds of Covid business support lost to fraud amid a mounting backlash

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Business minister Lord Agnew dramatically quit the Government yesterday while at the despatch box in the House of Lords as he criticised the Government’s ‘schoolboy’ handling of fraudulent Covid business loans

The Treasury has set up a taskforce to get the lost money back and so far it has managed to get its hands on approximately £500million. 

The taskforce is projected to have clawed back a further £1billion by the end of 2023. 

However, that leaves some £4.3billion – almost three quarters of the total – with reports suggesting the cash could just be written off.    

Lord Agnew yesterday claimed that fraud is ‘rampant’ across Whitehall as he told peers that ‘total fraud loss across government is estimated at £29billion a year’.

He said: ‘Of course not all can be stopped but a combination of arrogance, indolence and ignorance freezes the Government machine.’ 

Lord Agnew had been the minister for efficiency and transformation before announcing his resignation at the despatch box and marching out of the chamber yesterday.  

In a subsequent op-ed in the Financial Times, Lord Agnew said that the Government had ‘failed spectacularly’ by allowing dysfunctionality to continue on such a colossal scale.

The resignation and the claims about fraud have prompted an angry political backlash, with MPs demanding Mr Sunak set out how he will recover the lost Covid cash. 

Ms Reeves said the resignation was a ‘damning indictment of the Chancellor and the Government’s failures on fraud’.

She said: ‘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.

‘It should be a source of enduring shame to the Chancellor that he has so casually written off £4.3bn of taxpayers’ money that is now in the hand of criminals and gangs.’ 

Liberal Democrat Treasury spokeswoman Christine Jardine said: ‘It is outrageous this Government has allowed fraudsters to steal billions of taxpayer’s money, especially when households are facing unfair tax hikes.

‘The combination of ‘arrogance, indolence, and ignorance’ which Lord Agnew referred to cannot be allowed to continue.  

‘The buck stops with Rishi Sunak. He must explain how he’s going to get back these billions he allowed to be stolen from our schools, hospitals and police forces, and if he can’t, he should resign.’

The SNP’s shadow chancellor Alison Thewliss said: ‘It is unacceptable that millions of people were excluded from Treasury support through this pandemic while the UK government is prepared to write off the billions of pounds of taxpayers’ money stolen by crooks and fraudsters.’ 

She added: ‘It speaks volumes of the Tory government’s priorities that while ordinary people are being pushed into hardship and poverty, it lets people who have stolen public funds off the hook.’ 

Downing Street insisted the Government had been clear fraud was ‘unacceptable’ following the resignation of Lord Agnew.

The Prime Minister’s Official Spokesman said: ‘We are grateful to Lord Agnew for the significant contribution he has made to Government.

‘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 12 million 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, £500million recovered last year and the HMRC tax protection taskforce is expected to recover an additional £1billion of taxpayers’ money.’

The Government rolled out a range of business support schemes during the pandemic, including Bounce Back Loans, the Coronavirus Job Retention Scheme (CJRS), the Self-Employment Income Support Scheme (SEISS) and Eat Out to Help Out. 

Lord Agnew told peers yesterday that ‘schoolboy errors’ were made which allowed ‘over a thousand companies to receive bounce back loans that were not even trading when Covid struck’.  

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Labour’s shadow chancellor Rachel Reeves said the amount of Covid cash lost to fraud should be a ‘source of enduring shame to the Chancellor’

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Mr Sunak is pictured placing an ‘Eat Out to Help Out’ sticker in the window of Number 11 Downing Street in July 2020

The bounce back scheme allowed small and medium-sized businesses to borrow between £2,000 and up to 25 per cent of their turnover, with a maximum loan of £50,000. Some 1.5million loans were issued at a total value of £47billion. 

The Government has estimated that £17billion of that total could be lost from loans that will not be repaid. 

The Department for Business, Energy and Industrial Strategy’s best guess, as of the end of March 2021, was that there were £4.9billion of fraudulent loans in the system.    

A total of £60billion was paid out through the CJRS furlough scheme in 2020 to 2021. 

HMRC has calculated that combined error and fraud relating to furlough payments was about 8.7 per cent – so just over £5billion.

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