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Minister resigns over Covid fraud ‘schoolboy errors’

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A Treasury minister sensationally resigned at the dispatch box yesterday after criticising the “nothing less than woeful” attempts to tackle the billions lost to rampant Covid fraud. 

25th Jan 2022
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Lord Agnew, who served as minister of state for efficiency and transformation, attacked the government’s “schoolboy errors” in allowing “thousands of companies to receive bounce back loans that were not even trading when Covid struck”. 

Agnew’s blistering attack at the government comes as he couldn’t defend the Treasury effectively writing off £4.3bn in stolen Covid support payments. 

Schoolboy errors 

Agnew made the announcement at the House of Lords this week, where he pinned the billions lost in fraud at the “arrogance, indolence and ignorance” within the Treasury that  “freezes the government machine”.

Agnew targeted his anger at the “school boy errors” made in the oversight of the Covid loans by the department of business, energy and industrial strategy and at the Treasury, who had “no knowledge or little interest in the consequences of fraud to our economy or society”. 

Agnew told the House of Lords that after two years of unsuccessfully arguing with Treasury and BEIS officials to lift their game. So, as the minister for counter-fraud, he concluded that  it would be dishonest to stay in his position “if I am incapable of doing it properly, let alone defending our track record”.

Before marching out of the Lords, Agnew said he hoped his departure would stimulate a coordinated action to tackle fraud. This, he said, would “give this government a sporting chance at cutting income tax before a likely May 2024 election”. 

Agnew signed off his statement with a “thank you and goodbye” and with that, he slammed shut his folder and left to a smatter of applause.

Angela Smith, the Labour leader in the Lords, stood up immediately and called Agnew’s mea culpa “one of the most dramatic moments” ever seen in the House of Lords “from a minister who felt his integrity could no longer ensure he remained a member of the government”.     

Candid resignation 

Agnew left his post and promptly handed in a candid resignation letter to the prime minister, where he accused the government machine of being “almost impregnable” to his endless exhortations. 

The former minister resigned as the prime minister continues to defend his position amidst the ongoing partygate accusations.   

However, the Conservative life peer spelled out to Boris Johnson that his resignation was not linked to what he called the “noisy debates” played out across Westminster, but rather the “administrative arm of government”. 

Agnew said he couldn’t remain in his role due to the estimated £29bn lost to fraud. Although Richard Murphy, professor of accounting at Sheffield university, believes the amount lost to fraud is greatly vaster than that. 

“I believe that it is much larger than that because HM revenue and customs persistently understate the UK, which is a process assisted by the Office for National Statistics refusing to recognise the scale of fraud within the economy when estimating our gross domestic product,” Murphy wrote in a blog post.

A chorus of criticism 

Agnew’s criticism is the latest in a series of damning verdicts on the government’s handling of the administration of Covid loans.

In December last year, the national audit office (NAO) laid blame at the government for acting too slowly to prevent fraud. It concluded that the government prioritised getting the loans out quickly over implementing adequate fraud prevention measures. The NAO has estimated that 11% of the £47bn issued in loans were fraudulent. 

Stories of Covid fraud have also hit mainstream news, with BBC Radio Four’s File on 4 documentary exposing three rogue employers exploiting the furlough scheme through faking national insurance numbers and using intimidation to silence employees.     

HMRC’s Jim Harra told the Public Accounts Committee last week that the tax department seeks to claw back £1.5bn of the £5.8bn last to Covid fraud.

Replies (15)

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By Paul Crowley
25th Jan 2022 19:04

If only Justin had been consulted on the Covid loans
Or indeed anyone who contibutes hereon
Or any low level accountant
Or anyone with half a brain

Trouble is I now feel obligated by AML rules to make a report on HM Gov

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By Hugo Fair
25th Jan 2022 21:23

An honourable man and an honourable resignation ... which has been ill-served by the poor quality of journalism out there (BBC should hang its head in shame) that failed to highlight his statement that it was the “administrative arm of government” which he was blaming for being "impregnable to his exhortations" to tackle the issue with vigour.
It was the Civil Service - not, for once, the politicians - that he branded as having “no knowledge or little interest in the consequences of fraud to our economy or society”.

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Replying to Hugo Fair:
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By RFL H
26th Jan 2022 09:55

Agreed Hugo - civil servants and journalists behaving badly again.
It is noticeable (and frustrating) that none of them ever accept responsibility or change though.

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By matthewleitch
26th Jan 2022 09:56

Just to be clear, this minister is saying that 'Sir Humphrey' has won. He is not resigning in disgust at fellow politicians. He was pushing for efficiency and transformation from the civil service and after a lot of effort has not made any progress. The Covid loans were the last straw.

By coincidence my wife and I enjoyed an episode of 'Yes Minister' much like this only last night. The BBC has been reshowing this and has now moved on to 'Yes Prime Minister'.

I see many mistakes blamed on 'the government' seem to be things I would not expect a politician to know or to have been personally involved in.

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By Justin Bryant
26th Jan 2022 11:06

Yes; amazing to think that if someone in HMG/Treasury had simply picked up the phone to little ol' me (or pretty much anyone else here who like me vociferously predicted the inevitability of such extensive fraud at the time) I could have saved multiple £10bns at the stroke of a pen!

Just ponder on that as you pay your annual IT bills this week.

Furthermore, anyone with half a brain cell knows the civil service are unaccountable clueless clowns re such matters, so someone in Government should have positively checked with someone like me in any event given so many £bns were at stake.

At least some of this fraudulently obtained BBL money appears to have been pumped back into the economy via taxable expensive car and property etc. purchases.

https://obr.uk/hero/budget-deficit-falling-sharply-thanks-to-strong-tax-...

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Replying to Justin Bryant:
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By Hugo Fair
26th Jan 2022 11:56

Whilst agreeing that, as in so many areas, a pre-legislative 'sanity check' with well-regarded practitioners would be more than just sensible ... I've been (occasionally successfully) pushing that concept in multiple depts over the years ... they possibly missed a first valid use of MDTP!

Inviting a bunch of them to a lock-in ("all the booze you can drink and we'll pay for the cab home"), you simply set them task of working out how to scr8w the proposed system ... and sit back to listen to what pours forth.

It's unlikely to be edifying or indeed intellectually stimulating, but is highly likely to foreshadow exactly what will happen if you don't change the rules.
[In technology, hackers are employed to probe security ... same principle here].

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By meadowsaw227
26th Jan 2022 10:26

As I mentioned before on a previous thread we as accountants bear some of the blame for the apparent shocking payback off the loans.
All my clients who hag BBL`s have either paid them back or are paying off huge chunks off them to get them cleared, only one was a bit reticent, but after a talking to by me he paid it back, if he hadn't he would have been an ex client
There should be a master list of all BBL defaulters published so that the public etc can see exactly who they are.

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Replying to meadowsaw227:
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By Justin Bryant
26th Jan 2022 10:45

That won't achieve much if they are defunct companies or otherwise phoney and in any event there are so many, who is going to care about being on that list i.e. safety in numbers?

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Replying to meadowsaw227:
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By Roland195
26th Jan 2022 12:08

I don't follow you here. If the client borrowed a bounce back loan and met the qualifying criteria to do so, why would you demand early repayment to the extent of ceasing to act otherwise (unless you have some other suspicion that it won't be repaid)?

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Replying to Roland195:
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By Mike Aldridge
26th Jan 2022 17:28

I agree with Roland 195. The situation is not cut and dried for all practitioners trying to do the best for their clients. I might even argue that early BBL repayment is not required at all by HMG and would not necessarily be in the client's best interest.
For instance, I have a single personal services client who borrowed £35k legitimately through his company and has now paid the first 3 months of regular repayments. However, unbeknown to me he also paid £12.5k of this back a couple of weeks ago, only because he doesn't like debt, and has now come cropper by contracting Covid and being forced into nil income for at least a week. His effective rate of interest under the BBL is 2% (2.5% - 19% CT) whereas he pays much more than this on his mortgage or, hopefully not, his overdraft. We can lead a horse to water .......
I certainly would not ditch such a client, as I believe to leave them without professional support would be unethical and an unduly emotional response.

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By North East Accountant
26th Jan 2022 13:27

Someone in Government with integrity that's a rarity.......pity he's left.

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By AndyC555
27th Jan 2022 12:47

"department of business, energy and industrial strategy and at the Treasury, who had “no knowledge or little interest in the consequences of fraud to our economy or society”".

This is what happens when governments are spending "other people's money".

But it's true of any government. No one loses out financially by making bad decisions.

I would. So would most on here.

A salutary lesson for those always calling for more to be taken from those who know how to make money and given to those who only seem to know how to waste it.

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By Justin Bryant
27th Jan 2022 19:50

This story of a bloke who basically stole £50k via a fraudulent BBL sets a fine example of the worst case scenario wrist slap that awaits such BBL fraudsters.

https://www.bbc.co.uk/news/uk-wales-60153095

It seems there's zero risk of any proper punishment for these people, whereas someone who evades £50k VAT (which is no more of a fraud) will likely get it in the neck with a prison sentence and confiscation action etc.

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Replying to Justin Bryant:
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By Hugo Fair
28th Jan 2022 11:08

It's not just the lack of proper punishment (a six-year bankruptcy order so he cannot borrow more than £500 without disclosing his bankrupt status) ... but the lack of any policing (anywhere/anytime) by the authorities.

He overstated his projected income for his company, Mr Tow Recovery Logistics, before spending the BBL on Class A drugs AND at the time was serving convictions for driving offences which meant he was not allowed to drive anyway!

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By JacquiMBurns
31st Jan 2022 13:33

Bounce back loans, Furlough payments, JRS payments. It was so easy to see how these could (& definitely would) be abused that I am astonished that anyone, even a minister, was surprised that it happened. Rishi Sunak clearly does not understand HOW the department works or he would have made sure that existing real-time filings were used to track some of the abuses before payments were made. One wonders if he was actually putting down a marker for a future leadership campaign which he hoped would take place before anyone caught on!

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