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Agnew infront of the BEIS committee
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British Business Bank blasted for Covid ‘cock-ups’

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The British Business Bank has been accused of presiding over “one of the most colossal cock-ups in recent government management” in handling the Covid loan scheme. 

 

15th Mar 2022
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Lord Agnew has blasted the British Business Bank (BBB) in a one-off Business, Energy and Industrial Strategy Committee (BEIS) session today (15 March) that focused on the fraud and loss within BEIS Covid loan schemes. 

After labelling the Treasury’s approach to tackling fraud as a “Dad’s Army” operation, Agnew turned his attention to the BBB and how a lot of its Covid loan problems could be solved by better data management.

“What I want to try to do today is wind you up into the fury of frustration I have because the British Business Bank has presided over one of the most colossal cock-ups in recent government management,” he told the committee. 

However, representatives from the BBB dismissed Agnew’s points later in the session and claimed that there is a data dashboard and the bank did share information with ministers. 

A sliver of time to stop it

Agnew was the first witness called in front of the committee to discuss the estimated £17bn lost from various loan schemes, with representatives from the British Business Bank and several high-street lenders also featuring later on. 

Agnew recognised that the loan schemes were an “important response to protect the commercial part of our economy” but he told the committee that “it was the implementation that was so woeful”. 

The former minister aimed harsh criticism at BBB, saying that the only reason the government handed them the job to administer the loan scheme was because “they were the only kid on the block” and due to BEIS having no experience in the regulation of a bank, “no one was watching them properly”. 

The former counter fraud minister, who dramatically resigned at the dispatch box, urged the committee to instruct the BBB to take action against Covid loan fraud because “taxpayers are paying for this and there is still a sliver of time to stop it”.

“If you move fast today, you are the last line of defence. I have failed, but you have the power to get this information out of the BBB and if they cannot supply it to you today, you know there is a problem.”

Unanswered questions

One of the figures Agnew pressed for was how much money went from the business bank accounts of the recipients of the loans to the individuals who were directors and shareholders of businesses and in what time frame that money went across, but he claimed the BBB refused to give it to him. 

He wrote to the chairman of the BBB and to a senior official, which he handed over to the BEIS committee because “I hear they’re blocking the release of these on FOI because that is what they do, they become more and more defensive”.

Agnew said that by the time he had left his ministerial position they hadn’t answered his questions. The chairman of the BBB had a “ludicrous excuse that he hadn’t received a letter”, but Agnew checked and discovered that “he had the letter but he hadn’t bothered to look at it, presumably. It took him two months to reply and he didn’t answer any of the questions.”

When asked if there is a lack of leadership at the BBB, Agnew replied, “The fish rots from the head down.”

Lack of data

The lack of data was a key concern for Agnew. He explained that the counter fraud function managed to obtain some money to look into some of the fraud analytics and it flushed out some “alarming” data. 

“It showed that there were £1.4bn loans on the sample that had a high risk of fraud. These were things such as companies that were dormant in the two years before they received the loans, companies that were dissolved prior to Covid.”

The money to continue the analytics programme expires at the end of the month, but according to Agnew, the BBB and BEIS told the counter fraud team that it wasn’t going to continue the process due to a lack of money. 

Key questions

Agnew called on the committee to ask four key questions: 

  • How much money has been paid out by the Treausry on the 100% guarantee? 
  • How much of the original £47bn paid out on these loans went back to the banks? What protocols have been agreed with the BBB on the lending banks on the level of activity required to pursue fraud? 
  • When do we properly expect to see a proper public dashboard in the way the Swiss government does? Why have they refused to produce that?

Asked whether the Chancellor or BEIS should have done more, Agnew said, “The Chancellor came up with this intervention and he reasonably assumed the machine would be capable of implementing it in a reasonable way. Now he would have said, we want to have a light touch to get this money out quickly. 

“But the analogy I use there is if I picked you up from the side of the road and you’d had a heart attack and I got you into an ambulance and said to the ambulance driver, ‘Get to the hospital now’, I don’t expect the ambulance driver to drive through a bus stop and kill half the people on the way to the hospital. That is the way it seems to have been interpreted.”

As for what should happen next to the BBB, Agnew said the board should be sacked. “We are in a ridiculous position now where they are doubling down on their defensiveness and that is why you can’t get any information out of them. So they have to go. The sooner the better.” 

Next he suggested that the BBB “shouldn’t be regulated in this ad hoc way and it should be regulated by the PRA and the FSA – they know how to regulate banks”. 

BBB defends role in BBL

Following that frosty introduction from Agnew, representatives from the BBB had to then take their seats in front of the BEIS and defend their role. 

Patrick McGee, the chief commercial officer at the bank, could not answer why Agnew’s letter to the chairman vanished. All he could offer was that it “went through the screening process” and “it was a one-off mistake”. 

And while he acknowledged that after Lord Agnew’s statement, he was “going to struggle to defend the indefensible”, McGee pointed out that the BBB established the CBIL scheme and said it worked hard with the lenders to set up the Bounce Back Loan scheme with 11 days’ notice.  

“We sat down with those lenders over that first weekend and said you’ve got to get the AML, KYC and fraud checks in. Those fraud checks we agreed for them to put in helped save the taxpayer £2.2bn in fraud.”

As for Agnew’s lack of data accusation, Richard Bearman, the MD for small business lending at the BBB, said the bank has a “huge amount of data” which it shares “through a number of forums” and a “fraud dashboard”. 

This prompted questions over who was telling the truth over the dashboard. BBB’s McGee said, “This whole dashboard issue is a bigger issue than it is… We’ve been working on the dashboards since the start of the scheme.”

He said that there isn’t performance data in the first year because there aren’t arrears or defaults as the scheme was interest free. But from June 2021 the BBB was able to start looking into lender performance and it was then that it started to provide dashboards. 

“The governance within the BBB was much better than Lord Agnew would have you believe. There are many things I would agree with him about: fraud is a huge issue, we need to challenge the lenders, we need to track the data [but] we are doing that. We’ve been tracking that data, challenging the banks and are they following the scheme rules.”

He added, “To say there isn’t a plan, I disagree. We have been taking active steps with the lenders to minimise that risk.” 

 

Replies (18)

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By Hugo Fair
15th Mar 2022 14:15

“But the analogy I use there is if I picked you up on the side of the road and you’d had a heart attack and got you into an ambulance and I say to the ambulance driver, get to the hospital now. I don’t expect the ambulance driver to drive through a bus stop and kill half the people on the way to the hospital. That is the way it seems to have been interpreted."

I like Lord Agnew more with every utterance (and he outdoes me with analogies)!

BTW, Richard, I presume the fifth heading should read "BBB defends role in BBL" (not BBL defends role in BBL)?

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Replying to Hugo Fair:
Richard Hattersley
By Richard Hattersley
15th Mar 2022 14:56

Thanks for keeping me on track, Hugo.

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By Geoff56
15th Mar 2022 15:36

I hate to be a pedant, but shouldn't it be "A Sliver of Time"?
Slither carries a somewhat different meaning.

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By Justin Bryant
15th Mar 2022 16:32

I watched Lord Agnew in this committee hearing and he's absolutely great. A real breath of fresh air and all that.

What's telling is the shock & surprise of the MPs listening to his brutally honest damning evidence, whereas none of us here are in the least bit surprised by any of it of course (if anything things are likely to be far worse than he says), which shows how in the dark MPs are generally about Government & Civil Service gross incompetence.

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By lukeoliver
15th Mar 2022 17:18

I do agree with a lot of the criticism but hindsight is wonderful. Back then we were in a very chaotic spot.

CBILS loans were simply taking far too long to get in place.

BBL's were a crucial lifeline to a lot of businesses who used them sensibly, without which many would probably have gone.

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Replying to lukeoliver:
By ireallyshouldknowthisbut
15th Mar 2022 17:24

At the time everyone screamed "this is nuts" on here.

We were all amazed at the lack of any sorts of basic controls, its not really hindsight, its a complete lack of business acumen by Rishi and his gang

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Replying to ireallyshouldknowthisbut:
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By Hugo Fair
15th Mar 2022 18:56

As the smoke clears (a little) some of it is mind-blowing.

See last issue (#1568) of P Eye - article headed 'Kingdom of cheats':
The supposed retailer company is lodged as dormant at Co House. However, owner bought 21 off-the-shelf companies (mostly after start of Covid), but they have individually somehow got exactly £50k BBLs ... despite at least 7 of them having 'zero activity' (before or since)!

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Replying to lukeoliver:
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By Justin Bryant
15th Mar 2022 17:54

No, you are wrong (you've clearly not watched his evidence). Lord Agnew addresses that very counter-argument and comprehensively dismisses it as a smokescreen for the utter incompetence.

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Replying to Justin Bryant:
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By lukeoliver
16th Mar 2022 17:04

I am not allowed an opinion? Free speech and all that.

I said I agree with a lot of it but also at the time there was huge criticism that the CBILS loans were too slow and cumbersome and some businesses would not have got through without a quick source of finance in the form of a BBL.

The principle of the BBL's, at a time of huge uncertainty, was sensible but there are always those who take advantage and abuse the system.

The example of someone setting up 21 Co's, each would have had no trading record. 25% loan of £0 turnover is £0. This sort of abuse should have been easy for the banks to prevent.

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Replying to Justin Bryant:
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By lukeoliver
16th Mar 2022 17:04

I am not allowed an opinion? Free speech and all that.

I said I agree with a lot of it but also at the time there was huge criticism that the CBILS loans were too slow and cumbersome and some businesses would not have got through without a quick source of finance in the form of a BBL.

The principle of the BBL's, at a time of huge uncertainty, was sensible but there are always those who take advantage and abuse the system.

The example of someone setting up 21 Co's, each would have had no trading record. 25% loan of £0 turnover is £0. This sort of abuse should have been easy for the banks to prevent.

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Replying to lukeoliver:
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By Justin Bryant
17th Mar 2022 09:42

Did I say you were not allowed an opinion? I am also allowed an opinion, which is that you're wrong for the above reasons. If you disagree please tell us, with proper evidence (at least equal in weight to Lord Agnew's in his counter-argument rather than typical Aweb non-expert, hand waiving opinion/arguments) why Lord Agnew is wrong.

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Replying to Justin Bryant:
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By lukeoliver
17th Mar 2022 14:16

But I didn't say that you were wrong. Of course you are allowed an opinion, as am I, without you saying I am wrong.

I really don't disagree with the general content of the article itself.

I just made the point that there is also the context to consider, it was a very scary time, like no other I can recall.

You said that was "wrong".

It wasn't wrong.

The scheme was rushed out, which has caused problems. However on the flip side, it did mean that a lot of 'genuine' businesses survived that otherwise may have been forced to close, with all of the consequences that brings.

A lot of those genuine loans will get repaid. Those business owners will hopefully flourish, employ lots of people and pay lots of taxes.

The banks have processes in place to lend money in normal times, to avoid high levels of bad debt / fraud / etc. However, in Covid times, those processes were too slow.

I recall when the Government got involved in bank lending policy in @ 2008 - 2010 with EFG loans. A lot of money was lent then with a 'government guarantee' which was not repaid.

It is easy to just bash the banks again.

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Replying to lukeoliver:
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By Justin Bryant
03rd Apr 2022 09:13

You just don't get it do you.

"Lord Agnew, who gave evidence to the Treasury Committee last month, said: “Only a couple of extra days were needed for proper checks to be carried out.”"

https://www.express.co.uk/news/politics/1590383/fraudulent-coronavirus-l...

That's my very simple point here. What you say is totally irrelevant to that.

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Replying to lukeoliver:
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By sanjay100
15th Mar 2022 21:14

When you implement any system whatever the urgency you still need to introduce basic checks like AML and turnover. How on earth this can be missed is beyond me. If I was running an organisation and my employees developed such a system they all will get fired without hesitation as the errors were so elementary.

Whats hurts most so many people take advantage and got money for 50K free while others struggle e.g employees. What is even more utterly annoying and totally unacceptable is noone is even trying to recover the money. All I keep hear is that directors just get disqualified what kind of punishment is that.

Criminal charges should be brought in but who can be actually bothered when there are hundred of thousands of people who have exploited this loophole and they just want a easy life and bury their hand in the sand.

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By Paul Crowley
15th Mar 2022 23:59

Based on this incompetence by HM Gov
I would guess that sanctions against Russia will be a completely pointless excercise

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By Duggimon
16th Mar 2022 09:41

The BBB are a very convenient scapegoat, being as woefully unfit for purpose as they are, however let's not forget that when the scheme first started, businesses were being checked thoroughly and the pressure came direct from the Treasury and the government to stop doing so many checks and get the money out fast.

By all means lambast the BBB for their failures so that further massive [***] ups can be avoided, but let's not let the rest of them off the hook. It's our money they've taken and thrown away.

edit: strange how you can have c o c k ups in the headline but I'm not allowed to type it.

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By jayesh21
16th Mar 2022 10:00

It comes as no surprise to many, do they need a committee to look into this? They will now make an opportunity to waste more tax payer’s money on investigating and finger pointing.

Even a new born baby could tell them that this BBL handout does not sound right.

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Replying to jayesh21:
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By hfiddes
16th Mar 2022 10:19

As I understand it, this isn't a separate enquiry with all the costs that would involve; it is a side enquiry into a particular matter by a standing committee.

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