Lord Agnew says the government had made “schoolboy errors” when handing Covid loans to business.
Image source, HoL
A Conservative minister in the House of Lords has resigned attacking the government’s handling of fraudulent Covid business loans.
Lord Agnew accused the Treasury of having “no interest in the consequences of fraud to our society”.
But he said his departure was “not an attack on the prime minister”.
Last year, the National Audit Office criticised the government for failing to implement measures to prevent people exploiting Covid schemes.
Lord Agnew, a Treasury minister with responsibility for cross-government efficiency, said “a combination of arrogance, indolence and ignorance” was “freezing the government machine”.
He accused the government of making “schoolboy errors” by giving loans to over 1,000 companies who were not trading when Covid struck.
“I hope that as a virtually unknown minister beyond this place giving up my career might prompt others to get behind this and sort it out,” he said.
In a dramatic moment in the House of Lords, he read out his resignation speech in response to a question about loans, and concluded with a “thank you and goodbye”.
He left the chamber to a round of applause – a rare occurrence in the Lords.
HMRC has insisted that “robust measures were put in place to control error and fraud in the key coronavirus support schemes”.
A No 10 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, £500m recovered last year and the HMRC tax protection taskforce is expected to recover an additional £1bn of taxpayers’ money.”
The Bounce Bank Loan scheme was set up in April 2020 with the aim of keeping small businesses afloat during the coronavirus pandemic.
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A total of 1.5 million loans worth £47bn were issued through the initiative, after about a quarter of UK businesses applied.
In September, the state-owned British Business Bank, which oversees the scheme, said £2bn of loans had been repaid and £1.3bn had been defaulted on.
In December 2021, the public spending watchdog the National Audit Office said counter-fraud activity had been “implemented too slowly”.
It estimated that the business department had put the estimated cost of fraudulent loans at £4.9bn – 11% of the total given out.
Labour’s shadow chancellor Rachel Reeves described Lord Agnew’s departure as “a damning indictment” of the chancellor’s failures on fraud.
“It should be a source of enduring shame to [Rishi] Sunak that he has so casually written off £4.3bn of taxpayers’ money that is now in the hand of criminals and gangs.”
The Liberal Democrat’s Treasury spokesperson Christine Jardine said the government had “allowed fraudsters to steal billions of taxpayers’ money” and urged the chancellor to explain how he would get the money back.
Lord Agnew was appointed a Treasury minister in February 2020. He has also sat as a non-executive director for the Department for Education.