Lord Agnew blasts “Dad’s army” response to Covid loan fraud
Lord Agnew – the minister who resigned over Covid loan fraud – has attacked the government for its handling of the fraud, describing it as a “Dad’s army” operation.
Agnew told a Treasury select committee of MPs that the bounce back loan scheme (BBLS) was an “important intervention” to support businesses at the height of the pandemic. He added that the problem lies on the fraud side of things, rather than credit losses.
He said quick checks could and should have been implemented at the time that wouldn’t have delayed getting money out to legitimate people and said it was “happy days” if you were a crook during the first few months.
He criticised government departments’ silo approach, revealing that his counter fraud office was ignored in the establishment of the BBLS. Instead, the Cabinet Office sought recommendations from PwC, and HMRC sett up its own taskforce.
Read more: At least £16bn lost to Covid loan fraud and error
“I have no problem [with the fact that] we will probably see very substantial credit losses on that loan scheme, as we had to get the money out to our small businesses and give them the lifeline they needed,” Agnew said.
“But on the fraud side it was a Dad’s army operation.
“We have no idea how many duplicate loans were lent out. They were lending to companies that didn’t exist before Covid broke out because of total naivety in the system and not the proper checks.
“One of the biggest issues with government is this silo operating… It’s not how the government thinks. There was very little cross-department work.”
He added that Treasury staff were well educated but lacked life experience.
Read more: MPs call for HMRC to take action on Covid fraud
“I had to explain to one Treasury civil servant what working capital was,” he said.
“These are not people properly trained. I fought for a year for the counter fraud team to give educational seminars to Treasury officials on fraud and they just started doing that when I left.”
Agnew said there should be a minister of fraud that would work “across the landscape” to counter the current silo approach of government departments and should report to parliament every year on performance.
“That’s what I was pushing for when I left,” he said.
“If you accept the National Audit’s Office annual estimate of fraud being £28bn a year I think that warrants a minister.
“We have agencies scattering everywhere reporting to different ministers, there needs to be a much more coordinated response.”
A spokesperson from the Treasury said that last year it stopped or recovered almost £3bn in potential fraud and error and invested over £100m in a Taxpayer Protection Taskforce of nearly 1,300 staff, which is expected to recover an additional £1bn.
“Our Covid support schemes were implemented at unprecedented speed to protect millions of jobs and businesses at a time when families needed it the most,” the spokesperson said.
“As a result, our economy is back to pre-pandemic levels and growing at the fastest rate in the G7.
“Fraud is totally unacceptable, and we’re taking action on multiple fronts to crack down on anyone who has sought to exploit our schemes and bring them to justice.”