Lord Agnew, a House of Lords minister in that chamber ‘to defend the Government’s record in the deployment of counter-fraud measures over the last two years’, yesterday afternoon instead resigned, rather than defend the Treasury’s handling of coronavirus grants since spring 2020.
He was appointed Minister of State at the Cabinet Office and Her Majesty’s Treasury in February 2020. He told the Lords that oversight of giving out of Bounce Back Loan Scheme (BBLS) money, by BEIS (the Department for Business, Energy & Industrial Strategy) and the British Business Bank of the panel lenders of the BBLS ‘has been nothing less than woeful’; while the Treasury ‘appears to have no knowledge of, or little interest in, the consequences of fraud to our economy or society’.
He complained of ‘schoolboy errors’; ‘for example, allowing more than 1,000 companies to receive bounce-back loans which were not even trading when covid struck’.
As for counter-fraud resources, Lord Agnew stated that BEIS had ‘the grand total of two counter-fraud officials’, who ‘refused to engage constructively with the counter-fraud function that sits in the Cabinet Office, has considerable expertise and reports directly to me’. He complained also that Government still had ‘no single dashboard of management data to scrutinise lender performance. It is inexcusable. We have already paid out nearly £1 billion to banks claiming the state guarantee. The percentage of losses estimated to be from fraud rather than credit failure is 26 per cent; I accept this is only an early approximation, but it is a very worrying one. I will place in Hansard a copy of my letter to the chairman of the British Business Bank, sent on 16 December, addressing some of these points. I have still not received an answer.’
he went on: “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 of defending our track record. It is for this reason that I have, sadly, decided to tender my resignation as a Minister across the Treasury and Cabinet Office with immediate effect,” and asked that his letter of resignation be passed to Prime Minister Boris Johnson.
On the wider point of fraud against central government departments, he admitted that he was a ‘virtually unknown’ minister, but hoped that giving up his political career might prompt others more important ‘to get behind this and sort it out. It matters for all the obvious reasons, but there is a penny of income tax waiting to be claimed here if we just woke up. Total fraud loss across government is estimated at £29 billion a year. Of course, not all can be stopped, but a combination of arrogance, indolence and ignorance freezes the government machine.’
He disclaimed that his resignation was an attack on the PM or was connected to the ‘Partygate’ scandal, which he described as ‘far more dramatic political events being played out across Westminster’. For the full speech visit Hansard.
As the watchdog the National Audit Office found most recently in December, the UK government prioritised payment speed of the covid loans over almost all other aspects of value for money. The NAO said that compared with the scale of BEIS’ ‘most likely’ estimate of £4.9 billion of fraudulent loans, both the £32m additional budget for counter-fraud operations, and its target to recover at least £6m of fraudulent loans from organised crime, are inadequate. BEIS has given low priority to tackling ‘bottom-tier’ fraud, including those loans where borrowers misstated turnover by less than 25 per cent, owing to resource constraints. BEIS expects lenders to focus on this fraud tier, but the banks have limited commercial incentives to do so.
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At the anti-corruption campaign group Transparency International UK, Duncan Hames, Director of Policy, said: “To lose in Lord Agnew, a counter-fraud minister, may be a misfortune; to also lose your legislation to fight economic crime would look like carelessness. Ministers need to get their priorities right and put fighting economic crime firmly back on their parliamentary agenda before it is too late.” That referred to a suggestion after his resignation by Lord Agnew in the FT that an Economic Crime Bill – such as adding to the powers of Companies House against shell companies – might not be given the necessary parliamentary time to become law.
For Labour, Shadow Chancellor of the Exchequer Rachel Reeves described the resignation as ‘a damning indictment of the Chancellor and the Government’s failures on fraud’.
