As published by the Daily Express:
CLAWING back the billions lost to fraudulent Covid loans would be a “pain free” way of reducing the cost-of-living burden, says a former minister who quit in anger over the waste.
Lord Agnew, who resigned as the Government’s anti-fraud minister earlier this year, said it was vital lessons were learned from the estimated £37billion that has been stolen. He wants Chancellor Rishi Sunak, to use recovered funds to help the vulnerable cope with the current crisis.
Former Brexit Secretary David Davis, a previous chairman of the Commons Public Accounts Committee, said: “Since Lord Agnew’s resignation it has been clear the Government has not got a proper grip on fraud losses during Covid. If these frauds had been eliminated the Government would not have had to put up any taxes this year, so people quite properly expect them to deal with it as a matter of urgency.”
Lord Agnew said a proposed Public Sector Fraud Authority will help address the losses. But he also wants league tables published showing how banks are recovering the taxpayer-funded emergency loans paid to fraudulent claims.
Lord Agnew added that those banks failing to claw back the vast sums should be named and shamed in monthly blacklists.
His comments came as a report by Oxford University revealed up to £37billion had been lost due to the “Government’s appetite for hasty risk taking”.
Around £370billion was loaned through at least 374 financial interventions since March 2020, the data revealed. Co-author Professor Tom Jefferson said: “We estimate up to £37billion may have been lost in fraud. This is 10 percent of the £370billion paid so far in economic interventions to aid society during the pandemic.”
The largest loss of taxpayers’ money has been attributed to the Bounce Back Loan Scheme (BBLS), with £18.4billion of the total £47billion paid out, or 38.8 percent, stolen by fraudsters.
The Eat Out to Help Out scheme suffered losses of £72million to fraud – 8.5 percent of the total £849million invested.
This works out as one “ghost” meal in every 12 claimed.
Another £2.2billion was stolen by abuse of the Coronavirus Business Interruption Loan Scheme (CBILS), 8.4 percent of the total £26.4billion paid out.
And dishonest claims for Universal Credit accounted for £5.5billion of losses, says the study. The report, published today, makes it clear it can be hard to distinguish between waste and fraud when examining the losses.
But Dr Jefferson said the £37billion fraud figure is seen as an accurate reflection of the scale of the issue.
The study, carried out by the study led by Oxford University scientists, concludes a panicked Government, “fed by flawed predictions of modellers and general media frenzy”, left the door open to 10 per cent of the money awarded being lost to brazen claims.
It concludes these circumstances “created a greenhouse effect for criminals to fleece the public purse”.
Dr Jefferson said: “The level of theft is monstrous. The Government’s blind panic saw basic checks ditched on a fraud-ready population. It was like a theme park for fraudsters.
“This is not about bad accountancy. This is about people acting with criminal intent to defraud the Exchequer.”
The report states although “activity to recover stolen funds is underway” the funds “recovered up to now are a small part of those stolen”.
The study also found some of the lost money could be explained by the speed at which cash was loaned at the beginning of the pandemic, but not all.
For example, it states when the Department for Business Energy and Industrial Strategy published the BBLS in April 2020 it did so with “no pre-existing experience or pandemic plans,” adding, “schemes that would typically take years to devise were put together in a month”. 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.”
The Tory peer, who recently slammed the Treasury’s anti-fraud efforts as a “Dad’s Army” operation, said last night: “If there is one pain free area where [Government] can take pressure off public finances in the next 18 months it is this one.
“Billions of pounds can be recovered if the will to do so exists.”
He added: “The money belongs to you and I, too often civil servants say through gritted teeth ‘lessons must be learnt’, while hoping the problem will quietly be forgotten. But in this case lessons must be properly learnt.
“There is still time to insist that banks energetically pursue these loans.
“A public league table bank by bank, published monthly, of their performance would provide impetus.”
The Government guaranteed or gave out loans worth £129billion to people and companies to support them financially through lockdowns. Ministers were warned from the start the speed of the schemes would open them up to fraud. Since March 2020 at least 374 financial interventions costing £370billion have been issued, of which at least £251billion was spent, the report states.
Government agencies found large-scale frauds across the system – from the coronavirus job retention scheme (CJRS) for furloughed workers, the BBLS for small companies, and CBILS for mid-sized businesses.
Reports from crime and bankruptcy agencies have shown some loans were used to fund gambling, luxuries and even home improvements.
The Government has financed a “taxpayer protection taskforce” to chase fraud in the schemes, including the furlough run by HM Revenue and Customs, but anti-corruption experts say current funding is inadequate to fight fraud in bounce back loans.
Dame Meg Hillier, the Labour MP who chairs the Public Accounts Committee, said: “This problem is immense and although the Government moved at great speed during the pandemic, speed is no excuse for overriding basic checks on those being given loans which would have taken 48 hours.
“We need a more ambitious plan for reining in this money.
“The longer it is left the colder the trail goes for finding the money.”
She added: “Lack of preparedness and planning, combined with weaknesses in existing systems across Government, have led to an unacceptable level of mistakes, waste, loss and openings for fraudsters which will all end up robbing current and future taxpayers of billions of pounds.
“The billions lost on bounce back loans would be a huge chunk towards the £12billion the public is having to pay on National Insurance.
“This is not free money. People are now really struggling.”
Conservative MP Craig Mackinlay, a member of the PAC, said: “The committee has been all over this issue so I would say the Oxford University report is accurate but may actually be underplaying the scale of fraud. The problem we have is that we bring in permanent secretaries to talk about these issues but they all seem to be new and say ‘it was from before my time’. It’s an ‘other people’s money’ syndrome.”
Mr Mackinlay said there is around £30billion of unpaid tax due, £4billion lost to furlough provision and problems with the loan scheme.
And he added: “That’s before we get on to the issues of PPE contracts and what happened to those supplies.”
The MP has raised the issue directly with Jacob Rees-Mogg, the minister for Brexit Opportunities and Government Efficiency.
Mr Mackinlay added: “When you consider tax rises like the one on National Insurance that are being made now to pay for services, it will all be lost in the blitz of fraud from the last two years.”
Another PAC member, Conservative MP Mark Francois, said: “This is hard-earned taxpayers’ money, which was allocated to help get the country through the pandemic. If some of it has been misspent the taxpayer fully deserves their money back.”
An HM Treasury spokesperson said: “Fraud is totally unacceptable and we’re taking action on multiple fronts to crack down on anyone who has sought to exploit our schemes and bring them to justice.
“Our Covid support schemes were implemented at unprecedented speed to protect millions of jobs and businesses at a time when families needed it the most. As a result, our economy is back to pre-pandemic levels and growing at the fastest rate in the G7.
“Last year we stopped or recovered nearly £2.2billion in potential fraud from the Bounce Back Loan Scheme and £743million of overclaimed furlough grants.
“We’ve also invested over £100million in a Taxpayer Protection Taskforce made up of nearly 1,300 staff – which is expected to recover an additional £1billion of taxpayers’ money.”