Organised criminals stole from under the Treasury’s nose. How was it so easy?

Below is the full text of the opposition day debate speech delivered by Rachel Reeves today on fraud and government waste.

Millions across our country are facing a cost of living crisis. But while many are worried about soaring energy and food bills, the government are preparing to hike taxes for working people and businesses. It will be the biggest tax burden in 70 years.

And while delving into people’s pockets for their hard-earned cash with one hand, the Conservatives are throwing it away with the other. Endemic waste and fraud are pouring taxpayers’ money down the drain.

Billions of pounds of waste on vanity projects, crony contracts and poor procurement. Basic checks and measures on who was handed Covid support – completely ignored. £4.3bn in fraud written off by the Chancellor himself.

That’s a third of the tax hike the Conservatives are about to impose on working people and businesses. And it’s only the tip of the iceberg.

That is why Labour is bringing the motion to the house today, for the government to come back by 31 March this year with a clear answer on the true extent of fraud in the government’s covid support scheme and to report back on how much of taxpayers’ money has been clawed back from the criminals.

And because the Chancellor has lost a grip – and Mr Speaker, appears to have fled the scene – to now allow the National Crime Agency full access to investigate all aspects of fraud within covid support.

Missing checks and measures

The truth is that it didn’t need to be like this. The government could have avoided these enormous levels of waste. They set up their Covid support scheme without proper checks and balances. 11% of bounce back loans were fraudulent – that’s another £4.9bn of taxpayer money.

It isn’t beyond the wit of government to direct money where it’s needed, without giving it to organised criminals and fraudsters. It is incredible that the government was dishing out lump sums of £50,000 to businesses that weren’t even trading at the start of the pandemic. It just doesn’t make common sense.

The Treasury didn’t require checks with HMRC to see that self-certifying businesses had made a tax return as proof they were genuine. These are checks that take a matter of minutes. And the result of these failures was that criminals created fake companies to receive public money.

Disturbing reports of court cases are now emerging. They reveal how an organised crime leader, with no less than 48 previous criminal convictions, was handed £50,000 of taxpayers’ money. If only this was a one-off case.

The same judge had seen two months prior that a drug gang had been given a £25,000 Treasury bounceback loan. A lack of Treasury checks means the hard-earned taxes of Britain’s workers and businesses has been funding crime gangs, instead of helping those who really needed support. This is damning.

The Chancellor and other ministers were warned repeatedly about the risk of fraud. In June 2020 the Chancellor was advised by the Fraud Advisory Panel, Transparency International, Spotlight on Corruption and the former director of the Serious Fraud Office that there were “serious weaknesses that enable fraudsters and corrupt insiders to exploit the bounceback loan scheme and the Covid business interruption loan scheme” and that this would create a “risk to the taxpayer”.

They offered to provide the Chancellor with information, advice and support to improve the control of the funds. Yet it seems the government had no interest in that advice.

Labour’s motion

Now we’re in the position where billions of pounds of taxpayer money has been written off. But this money wasn’t the Chancellor’s to write off. It’s the public’s money.

The government have clearly lost a grip of this. We must restore faith and confidence in how taxpayers’ money is spent. We have a National Crime Agency in our country to tackle serious and organised crime. This should be who the government rings first. But instead, there are reports they don’t even want them looking into this.

It would be shocking in the extreme if the Chancellor allowed ambition or embarrassment to get in the way of understanding what has happened, how it has been allowed, and how we can get our money back. That is why today, Labour have brought this motion to the house.

Not only to call on the government to come back by 31 March with a clear answer on how much of their money they have clawed back from criminals. But also for the government to allow the National Crime Agency full access to investigate all aspects of fraud within Covid support.

The government should not be resisting any effort whatsoever for taxpayers’ money being retrieved, and people being held responsible. We need to know how it was so easy for organised criminals to steal from under the Treasury’s nose.

Lord Agnew

It isn’t just Labour making this argument. Last week, Treasury minister Lord Agnew resigned at the despatch box in clear frustration at the Chancellor’s fraud failures, describing them as “schoolboy errors”. He said: “The Treasury… appear to have no knowledge or little interest in the consequences of fraud to our economy or our society.” Mr Speaker, that is unforgivable.

And Lord Agnew did not stop there, he also said that the Chancellor allowed “over a thousand companies to receive bounceback loans that were not even trading when Covid struck”. It’s got to be bad for even this Prime Minister to try and distance himself from the Chancellor’s failures, as he did in PMQs last week.

This is a scandal and the Chancellor needs to come clean. When I raised the levels of fraud with him in December, there was complacency. But leaving the till open and unattended for thieves to clear out would be a sackable offence for a shop worker, so why is it okay for the Chancellor to avoid giving the country answers about what he’s allowed to happen with their money?

Incredibly, the Chancellor hasn’t even apologised, and when Labour secured an urgent question on this in parliament in January he hid away. As he hides away today. It’s just not good enough.

Catalogue of waste

Mr Speaker, even if this was a one-off example of waste, it would be appalling. But the truth is that it has become the hallmark of this government that they waste money and treat taxpayer cash with a lack of respect.

£13bn wasted on failed defence procurement – including £4.8bn of taxpayers’ money being handed out for cancelled contracts. If this wasted public money had been avoided, there would surely have been more money available for our Armed Forces, whose budget was cut by the Chancellor in October.

And that only scratches the surface. £3.5bn in crony contracts. £300,000 from the levelling up fund to pave a Tory peer’s driveway. £500,000 for the Foreign Secretary’s flights to Australia, ignoring her own advice from 2009 where she outlined how:

“Every public sector worker should feel personal responsibility for the money they spend and the money they save. They should spend taxpayers’ money with at least the care they would give to their own.” She clearly forgot that advice when she boarded her private jet.

£900,000 working out whether a bridge between Scotland and Northern Ireland was remotely viable and cost effective. I could have told him that for nothing. This all adds up to a total disrespect for taxpayer money.

Why does this matter? This all matters because if you’re a government wasting money or letting it slip away into the hand of fraudsters, and if you’re wasting such huge sums on vanity projects, you have to raise taxes to find the money.

The fact that taxes are at a 70-year high are the other side of the coin to the waste we are talking about today. With one hand government raises taxes. With the other, they throw that taxpayer money away.

Labour would treat taxpayer money with respect. We care about value for money, because we respect taxpayers and because we respect our public services that have been starved of funds by 12 years of Conservative government.

We want to break our economy out of this cycle of low growth and high taxes. We will build a stronger economy where prosperity and security are enjoyed all across our country. That’s why we will tax fairly, spend wisely and get our economy firing on all cylinders.

People are facing a cost of living crisis. Labour’s answer isn’t to dip into their pockets even more, or waste their money on vanity projects or fraud. But as the Conservatives ask families and businesses to pay even more, the very least the government can do is try and get their stolen money back. That’s why I urge all MPs to back our motion today.