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Lord Agnew speaking infront of the Treasury committee

Agnew blames ‘Dad’s Army’ Treasury for fraud failures


The Treasury civil servants’ approach to tackling Covid fraud has been described as a “Dad’s Army operation” by former counter fraud minister Lord Agnew during his appearance in front of the Treasury Committee today.

9th Mar 2022
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Lord Agnew didn’t pull any punches when he described to the Treasury Committee this afternoon the complacency of the Treasury civil service when dealing with Bounce Back Loan fraud (BBL), the siloed working across government departments and how the same mistakes are still getting made. 

Counter-fraud team ‘closed out’

As the minister for overseeing the counter fraud function (or the “minister for everything else no one wanted to do”), Agnew explained to the committee how his team was “closed out of the room and never consulted in the establishment of BBL scheme for reasons I never got to the bottom of”. 

Instead, Treasury permanent secretary Sir Thomas Scholar went to PwC to get advice. “But why didn’t he go to the people on his doorstep who understand fraud in all its manifestations?” 

Agnew added that in his letter describing the Treasury’s counter fraud efforts Scholar didn’t reveal PwC’s recommendations. 


Agnew dramatically resigned at the dispatch box in January over the Covid loan “schoolboy errors”. He told the committee that he couldn’t remain in his post because he “hates mammoth inefficiency”.

“You try to bring about change from inside the tent and you get to the point where that doesn’t happen,” he said. So when a question was asked in the House of Lords about Bounce Back Loan (BBL) fraud he said, “I could not stand up with any integrity and say we did a good job.” 

The Department for Business, Energy and Industrial Strategy (BEIS) estimated in March 2021 that 11% of BBLs worth £4.9bn were fraudulent.

Implementation of BBL scheme 

The implementation of the BBL scheme has faced a lot of scrutiny, but any criticism of the inadequate set up has always been brushed aside by the need to get money to small businesses quickly.

But Agnew disagreed. “They’re sheltering behind this excuse that had they done their job better it would have taken too long,”  he said. “But I can assure you that is not the way it works.” 

Responding to the “endless excuses”, he said: “Yes, you do have to get the money out quickly, but if you’re in the commercial lending world – and I can tell you because I’ve been in it – if you don’t respond quickly and efficiently to your customer you lose the business and they go down the road to someone else.”

A Dad’s Army operation

Agnew pointed to other examples of how poor implementation exposed the schemes to fraud. “You can do a Cifas check for fraud in moments and it wouldn’t have delayed getting the money going out to legitimate people. It took them six weeks to build a duplicate system. By the time they finished building it, 60% of the money had already gone out of the door.” 

Agnew said that HSBC didn’t even implement the duplicate system until November 2020 – four months after the system was built. “So we have no idea how many duplicate loans were lent out.” 

An example of the Treasury being  a “Dad’s Army operation”, and one that was highlighted in his resignation statement, Agnew said: “They were lending out money to companies that didn’t even exist before Covid broke out because of a total naivety in the system and not putting in proper checks.” 

The Treasury committee was left with the impression that the Treasury and BEIS took a lackadaisical approach to fraud. Agnew replied: “It’s the sewer of the government. As long as the deodorant is strong enough and the lid is kept on the sewer, life carries on.” 

Collaboration between departments

Agnew was especially critical of the siloing culture within government and a lack of expertise in some departments. 

As an example, he said the BEIS had only two officials with counter fraud experience when the Covid fraud intensified and they were not deeply trained in the counter fraud profession. “They were just two civil servants in the wrong place at the wrong time.” 

He added, “They certainly didn’t throw open their arms and say come and help us, we have a huge problem here. You can only push so far.” 

The lack of expertise was felt elsewhere within the government departments. “[The British Business bank] didn’t even hire a counter fraud specialist until after the event and she has just left out of frustration.” 

Agnew said this siloed thinking is “one of the crucial weaknesses of government”.  

“It’s slightly propagated by the treasury because of their obsession with the accounting officer regime. So, they like to act as the puppeteer with their 20 or so accounting officers and they all dance to the Treasury’s tune.

“But they don’t collaborate with each other. When they put all that extra money into HMRC for the… they call it some gimmicky name like the taxpayer recovery taskforce or something… but what should have happened is they should have lent 50 people to the BEIS and BBB. But they didn’t do that. That’s not the way government thinks. There was very little cross-departmental thinking.” 

Agnew’s complaints of some of the Treasury officials illustrated the resource and expertise criticisms levied against the department. “The average age of a Treasury official is 29 and the turnover of staff is 25% a year. They’re very bright in a sort of standard, went to a good university but have no life experience way. I had to explain to one treasury civil servant what working capital was, I had to explain to another what dilapidation claims were on property. These are people not properly trained in the plumbing of government.”

Finger of blame

A lot of Agnew’s frustration was aimed at the Treasury’s permanent secretary, Thomas Scholar. His letter explaining the Treasury’s approach to counter fraud focused on the “marvellous job” the department did instead of “stepping back and saying we got a lot stuff wrong”.

“We all make mistakes,” said Agnew. “My mistake is I should have tackled Scholar earlier.”

As a way to get a better handle on the scale of the BBL fraud, Agnew said he was pushing the Treasury for a data dashboard “because all the waffle disappears when you see the data”. But despite hearing the government speech of “it’s being attended to”, he’s not not sure it even exists. 

Scholar had previously said that it’s a new loan and it’s too early to have the data. However, Agnew pointed to a similar Swiss scheme that has a dashboard with all the real-time data, which has allowed them to estimate the level of fraud at about 1%. 

“This lot are saying [the level of fraud is] 4%,” said Agnew. “I think it will be a lot more than 4%. But I don’t know, I might be wrong because I am not seeing anything. I am completely blind. Why don’t we have this data?” 

Agnew said there are anecdotes of people buying sports cars in those early months of BBL and this would be an easy piece of data to get since banks are essentially “massive data machines”.

Instead, Agnew was writing letters of congratulations to border force staff for picking up suitcases of cash leaving the country. “It was happy days if you were a crook in those first few months. Rather than just admitting it, [Scholar’s response] was ‘this is a price worth paying’.” 

Upcoming crunch point coming up

What has made today’s session even more urgent is the crunch point in the next few weeks of the claim of the state guarantee. 

“[Banks] are sitting with 100% state guarantee, which they can claim two years after the loan was issued,” said Agnew. “I asked [the Treasury] what criteria a bank needs to show they have done before they are allowed to claim the guarantee… just give me the list of the five things… they wouldn’t give me the list.”

Agnew said he has to be “very English” and says he “hopes” there’s a list but he doesn’t think there is one. “This is why I am pushing it now because in the next few weeks there will be an avalanche of claims on that state guarantee in the next few weeks and months.”

Nothing’s changed

But while all these criticisms have been voiced before, and Scholar’s writings on lessons learned, Agnew is not convinced that anything has changed at all. 

In December last year the government launched another grant scheme for local authorities. “That was announced without any consultation with the counter fraud team,” he added. “We only heard about this on the television.” 

Replies (10)

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By Justin Bryant
09th Mar 2022 18:01

Well done to Aweb for this story, which I find entirely unsurprising. We need a public enquiry into this total farce and seemingly attempted cover-up. As a minimum I'd like to see PwC's advice, which perhaps can be obtained under freedom of information laws. Perhaps that busy body public-spirited tax barrister's good law project can take up the cause here.

The crunch point thing in the next few weeks re the lender banks will obviously be interesting, to put it mildly, and I doubt there's any meaningful "list" as he describes it (as presumably that would have gone a long way to preventing the problem in the 1st place).

Thanks (4)
Replying to Justin Bryant:
By Hugo Fair
09th Mar 2022 18:23

And well done to Lord Agnew for showing that integrity is not yet wholly missing in the corridors of power (albeit the life-support facilities are working overtime).

I suspect the "list" is deliberately missing - in order to enable conversations like:
"So have you done everything possible before making this claim?"
"Well you haven't defined 'everything possible' have you?"
"Ah, so you admit there are more things you could still do?"
"Well possibly, but will doing them trigger the guarantee payment?"
"Come back and ask me again when you think you've done everything possible ..."

And so the circle continues ad infinitum (or at least until it's "someone else's problem").

Thanks (7)
By Tornado
09th Mar 2022 18:27

"A lot of Agnew’s frustration was aimed at the Treasury’s permanent secretary, Thomas Scholar. His letter explaining the Treasury’s approach to counter fraud focused on the “marvellous job” the department did instead of “stepping back and saying we got a lot stuff wrong.”

Dad's Army indeed and a more than a touch of Yes Minister.

Thanks (3)
By Open all hours
10th Mar 2022 09:06

Don’t panic.

Thanks (1)
Replying to Open all hours:
By Geoff56
10th Mar 2022 14:58

We're doomed.

Thanks (1)
By ireallyshouldknowthisbut
10th Mar 2022 09:15

"The average age of a Treasury official is 29 and the turnover of staff is 25% a year. They’re very bright in a sort of standard, went to a good university but have no life experience."

This explains the obsession with MTD and other digital solutions which don't stand up in the real world, the lack of any basic acumen or institutional memory.

That is an incredibly young team.

Thanks (6)
By Geoff56
10th Mar 2022 10:20

Personally, I think the comparison is unfair to Dad's Army.

Thanks (4)
Replying to Geoff56:
By Paul Crowley
12th Mar 2022 18:59

They put their lives at risk, some died, for zero financial benefit

Thanks (3)
By Paul Crowley
12th Mar 2022 19:14

There was no urgency
Loans could have been spread over a 12 months pay period leaving so much time for fraud checks

BBLs should only have been available to businesses that had an established business bank account, from that same bank with bank required to confirm bankings during the qualification period
30 Minutes of work even if done on a calculator?

Add another 30 minutes and the bank could have looked at the last accounts, and checked companies house filings. After all it is the company loans that are completely unsecured.
A trader needs to accept personal bankrupcy to walk away

Public finance is and never has been in good hands, with zero chance of improvement if they lose this kind of expert

Good news for me though. I criticised the government, scot free.
Chances of being beaten by sticks and thown into prison is unlikely.

Thanks (2)
By hfiddes
14th Mar 2022 14:49

Its a stark contrast with the hoops I had to go through to get a few thousand via the local authority grants - months of bank statements, previous accounts, current results, chasing emails as deadlines neared and that was despite being a registered charity and owning a building registered for rates that supposedly qualified...

Thanks (2)