Resignation of minister a “damning indictment” of Sunak, Reeves says

Rachel Reeves has declared that the resignation of Lord Agnew, over what the anti-fraud minister described as the “lamentable track record” of the government in tackling fraudulent Covid loans, is a “damning indictment” of Rishi Sunak.

Addressing the House of Lords this afternoon, the minister of state for efficiency and transformation told peers that the Treasury appears to have “no knowledge or little interest in the consequences of fraud to our economy or our society”.

Before leaving the chamber to applause, Agnew announced his departure from the government. He said his resignation was not “an attack on the Prime Minister” and was in “no way linked” to other scandals currently engulfing the government.

“The oversight by both Department for Business, Energy and Industrial Strategy and the British Business Bank of the panel lenders of [bounce-back loan scheme] has been nothing less than woeful,” the Conservative peer told parliament.

The peer said that the Department for Business, Energy and Industrial Strategy had just “two counter-fraud staff” at the start of the pandemic who would not “engage constructively” with his counter-fraud team in the Cabinet Office.

“Schoolboy errors were made, for example allowing over a thousand companies to receive bounceback loans that were not even trading when Covid struck,” he added.

During the pandemic, the government handed out more than £47bn to small businesses under its bounce-back loan scheme. More than 1.1 million businesses received money through the scheme. But Agnew said today that the government had reimbursed banks for £1bn in defaulted-on loans so far.

Agnew told the Lords that three out of the seven main lenders were responsible for 87% of the loans paid out to firms now dissolved, and two of the seven lenders were responsible for 81% of loans to firms set up after the pandemic started.

He described a failure by Treasury and BEIS officials to understand the “complete disjunction” between the amount of criminal activity in this area and the capacity of the enforcement authorities trying to stop it. He offered the National Investigation Service as one example, which he said can handle just 200 cases a year.

“Given that I am the minister for counter fraud, it feels somewhat dishonest to stay on in that role if I am incapable of doing it properly, let alone defending our track record,” he said, bringing his comments to a close.

“Total fraud loss across government is estimated at £29bn a year. Of course, not all can be stopped. But a combination of arrogance, indolence and ignorance freezes the government machine.”

Reacting to the news this afternoon, Reeves 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.”

The Shadow Chancellor added: “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.

“Coming on top of billions spent on crony contracts and billions more lost in loan fraud schemes, these levels of waste destroy any claim the Conservatives have to careful stewardship of the public finances. Labour would treat every pound of taxpayer money with the respect it deserves.”

Following the resignation, Boris Johnson’s spokesperson said: “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.”