Boris Johnson has been dealt another blow with the resignation of a Minister over the government’s “lamentable track record” in tackling fraud in the covid business bounceback loans
Lord Theodore Agnew, who has served as minister for Whitehall efficiency, quit in disgust at the despatch box the Upper chamber.
In response to an urgent question from Labour about Covid loan fraud, Agnew told peers he was unable to defend the government’s record.
Of the £47 billion awarded to more than 1.1 million small businesses under the government’s bounce back loan scheme (BBLS), an estimated £5 billion has been at risk from fraudsters exploiting the weak checks built into the loan scheme.
Agnew said oversight by both the Department for Business, Energy and Industrial Strategy (BEIS) and the British Business Bank been “nothing less than woeful.”
The UK government estimates that overall losses due to fraud and companies unable to repay loans across all Covid schemes would likely to amount to almost £20 billion, with about £17 billion of these losses relating to the loan scheme.
Agnew claimed that the government, which had agreed to fully guarantee loans, had so far reimbursed banks almost £1 billion for loans that had been defaulted on.
He added that more than a quarter of this was estimated for loans that were fraudulent.
Agnew alleged that “schoolboy errors” were made by officials and lenders, noting that over 1,000 companies who received bounce back loans (BBLS) were not trading before the pandemic began.
Agnew said. “They have been ably assisted by the Treasury who appear to have no knowledge or interest in the consequences of fraud to our economy or society.”
Agnew said that BEIS only employed two counter-fraud officials at the start of the pandemic, “neither of who were experienced in the subject”.
Massive fraud is alleged to have taken place on covid loans with officials and banks slow to tighten the rules to prevent obvious criminal activity, such as multiple applications or applications by companies set up after the start of the pandemic or dissolved before it began.
In his resignation letter to Boris Johnson, Agnew decried the “desperately inadequate” track record of dealing with fraud.
He wrote: “It has certainly not been through want of trying, but the government machine has been almost impregnable to my endless exhortations.”
Agnew insisted that his resignation was “no way linked” to the other scandals embroiling the Johnson government.
Rachel Reeves MP, Labour’s Shadow Chancellor said: “It should be a source of enduring shame to the Chancellor that he has so casually written off £4.3 billion of taxpayers’ money that is now in the hand of criminals and gangs
“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."
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