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Lord Agnew
Lord Agnew

How do we recover billions lost to Covid fraud?


As Lord Agnew condemns his colleagues after billions of pounds go missing on Covid loans, we ask whether HMRC has the right priorities.

3rd Feb 2022
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Many readers will have been as shocked as I was to read not only of the high-profile resignation of Lord Agnew but the underlying reasons that he gave.

Indeed, most will never have heard of this worthy gentleman, nor been aware that the government had a minister responsible for counter-fraud.

An honourable man

At a time when the honesty and integrity of politicians, even those in the highest office, are open to public scrutiny nothing should surprise us.

By the time that Sue Gray (a hot tip for Woman of the Year even though we are still in January) and the Metropolitan Police have finished their investigations into shenanigans at Downing Street and in Whitehall it seems heavy odds-on that the country will have lost all respect for anybody in high office.

It therefore almost comes as a surprise to discover a politician willing to accept responsibility for the failings of others, when so many others seem intent on blaming junior colleagues for their own bad decision-making and even misdemeanours that border on criminality.

We should therefore hail Lord Agnew, who stood up in the House of Lords last week and resigned his office effectively stating that he was too embarrassed to carry on having discovered a black hole that even the combined wealth of the Queen, Richard Branson and half a dozen top Premier league footballers could not fill.

Coronavirus support schemes

Lord Agnew’s particular focus was on the Bounce Back Loan debacle, which has already allegedly seen the government write-off £4.3bn relating to fraud with more to come.

Media pundits have suggested that the final fraud figure could reach £10bn and that is without even taking into consideration loans made to businesses that were always going to fail and will therefore also have to be written off.

Remember, that the maximum amount available on each loan was only £50,000. If I have my decimal place right, this means that the have been between and 86,000 and 200,000 separate fraudulent claims with very little chance that more than a handful will ever be recovered.

For the avoidance of doubt, these numbers do not include what is likely to be substantial fraud in connection with furlough claims and also other government-sponsored loan schemes.

NIC increase

There is every chance that had these arrangements been managed without the “schoolboy errors” resulting from “a combination of arrogance, indolence and ignorance” that his Lordship identified, there would have been no need for the controversial NIC increase, which both Prime Minister and Chancellor of the Exchequer are adamant will go forward this spring, regardless of the harm that it might do to the finances of voters lining up to express their views in local elections.

I leave readers to decide for themselves how a few billion pounds could have been spent but I doubt that very many will decide that the best use of this money was to enrich fraudsters.

HMRC’s priorities

I imagine that anyone reading this article will have bitter recollections of HMRC investigations into sole traders where the amount at stake was piffling. I can remember fighting the tax authorities on behalf of a client who was alleged to have understated taxes by a few hundred pounds. These allegations were wholly unwarranted and insupportable but, even if they had been, HMRC’s opportunity cost of recovering a negligible amount was substantial.

Frankly, both HMRC and the police could reasonably put all of their investigative resources into this project on the basis that they are almost certain to recover far more than could ever be the case on current projects unless they get serious about pursuing the billionaires who hide their ill-gotten gains in sunny British dependencies.


There is always a chance that one or two of Lord Agnew’s ministerial colleagues will admire the example of a man who still holds old-fashioned Tory values of decency and honesty and follow his example by admitting their unsuitability for high office.

Okay, given the current state of affairs in Westminster, that bold ambition may be viewed as little more than a joke.

In reality, nobody in government is prioritising recovery. Instead, you and I will spend the next 10 years paying for losses due to government inadequacy, which will be blamed on the pandemic rather than ministers’ failure to think at speed and do what they were appointed to do, ie, support the community without wasting resources of the state.

Regrettably, given the arrogance of so many in positions of political power today, it is far more likely that this scandal will soon be forgotten as it is overtaken by another which proves to be almost equally disastrous.

Replies (7)

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By Justin Bryant
03rd Feb 2022 09:55

How about a 100% (retrospective) tax on irrecoverable BBLs (with recourse to directors) where it was not a bona fide application (i.e. made with false information such as turnover etc.)? After all, they did this with the loan charge where there was not even any fraud.

Also, the banks should be on the hook for such loans to the extent the tax isn't paid within say 5 years.

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Replying to Justin Bryant:
By wilcoskip
03rd Feb 2022 18:13

I like your idea about attacking the fraudulent applications. It seems a very straightforward way to approach things.

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Replying to Justin Bryant:
By stepurhan
04th Feb 2022 08:50

If an application was made with false information, aren't the directors already in the frame for repaying the loan without additional legislation? Seems a pretty straightforward case for lifting the veil of incorporation.

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By RickyRoark
03rd Feb 2022 12:00

"We" won't recover much as there is little incentive structure to do so (in my opinion).

So that things like this do not happen in the future - participants need "skin in the game", i.e. personal accountability for when decisions go wrong. It has to be a case by case basis. Who specifically lent the money to whom?

When the government agrees to cover loans/losses without accountability there is no downside for banks/lenders. This was true in the 2008 financial crisis, this was true for the Covid BBL schemes/furlough and this will be true for the next large economic event.

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the sea otter
By memyself-eye
03rd Feb 2022 13:57

Banks on the hook?
Dream on.
Banks to HMG:
"you want us to give this money to anyone that applies - no questions asked, no due diligence?
"OK" on your head be it.
Put the blame where it belongs - on the government.

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By Paul Crowley
03rd Feb 2022 23:21

This really should be mostly Bounce back as I thought that the CBILS was a bit more controlled.
4 Billion
assuming all at £50K

About 80,000
Banks inv0lved? guess 20

4,000 per bank
Does not seem quite so much, provided that we are using USA billions and I have not missed a zero somewhere

£80Billion lent

About 5.4% were fraudulent

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By jeremy28
05th Feb 2022 20:29

I had a call on Friday from HMRC. In May 2020 I had had a webchat with them in which I said I had overclaimed furlough. The advisor at the time had asked me to adjust the next claim. HMRC on Friday asked me if I had done so, which I confirmed, giving figures.
I've got mixed feelings.
1 - it's good that they are checking... But it's almost 2 years on.
2 - how thorough are the checks? It seems like they were relying on my confirmation. Why didn't they write to me and ask me to send in the calculations?
3 - my claim was for £5k which was an overclaim of £3k. (It really was a genuine error at the time on my first claim!) Was it really worth the time following it up? As the OP claims, there are 00'000s of £50k loans to chase!
It all seems a bit half hearted.

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