Ex-minister: Billions lost in Covid fraud ‘one of biggest cock-ups’ in recent history

Billions of taxpayer money lost through Covid loan fraud is “one of the most colossal cock-ups in recent government management”, the ex-fraud minister has said.

Lord Theodore Agnew told MPs on Westminster’s business committee that he was told to “butt out” by Treasury officials when he tried to crack down on fraudsters taking out Covid loans during the early parts of the pandemic.

Agnew quit his post as efficiency minister in January over claims the government and the British Business Bank, who oversaw the Covid emergency loan scheme, refused to act on fraud.

“When I was asked to stand up publicly and defend the record of the British Business Bank in this area, I simply couldn’t do it,” he told MPs today.

“Not because I’m some wonderful sanctimonious hero – but I’m not a crook and I could not defend it publicly. It is indefensible.”

A Treasury minister hit back and told City A.M. that Agnew’s assessment “isn’t serious analysis”.

Rishi Sunak’s Bounce Back Loan scheme saw £47bn in loans given to businesses during Covid-19, with the government taking on 100 per cent of the default risk.

There have been widespread reports of fraudsters preying on the scheme, which required few checks to get approved for a loan, with Agnew saying many businesses who had not traded for years or were dissolved were effectively given taxpayer money.

It has been speculated that the Department for Business, Energy and Industrial Strategy (Beis) is expecting billions of pounds to be lost to fraudsters taking advantage of the Covid Bounce Back Loan Scheme.

This goes alongside the £5.8bn that was stolen from three other Covid support schemes – the furlough scheme, self employment income scheme and Eat Out to Help Out.

HM Revenue and Customs estimates suggest the government will recover up to £1.5bn lost through these three schemes.

Agnew said the British Business Bank had refused to give him data, while he was a minister, over how much the government had paid banks to cover fraudulent loans through the Bounce Back scheme.

He said: “What I want to try and do is to wind you up to the sort of fury and frustration I have, because the British Business Bank have presided over one of the most colossal cock-ups in recent government management and taxpayers are paying for this.

“There’s still a slither of time to stop it. That’s why I go on about it. It isn’t something that happened and you have a long-winded inquiry. If you move fast today, you are the last line of defence.”