Lord Agnew accuses Treasury of complacency over Covid loans fraud

The minister who quit over the government’s handling of multibillion-pound losses to criminals on a pandemic loan scheme has criticised the Treasury’s top civil servant for being complacent about fraud and failing to accept that mistakes were made by his department.

Lord Agnew of Oulton told MPs on the House of Commons’ Treasury Select Committee that Sir Tom Scholar, permanent secretary to the Treasury, “embodies everything about the complacency that grips the civil service” when he gave evidence on alleged government failings in administering the bounce back loan scheme yesterday.

Agnew, 61, resigned as a Treasury and cabinet office minister in January over what he claimed were “desperately inadequate” efforts to stop taxpayers’ money being stolen from the scheme, which gave 1.6 million emergency loans worth a total of £47.4 billion.

Official estimates suggest that £17 billion may never be repaid, with as much as £5 billion thought to have been stolen. The loans are underwritten by the taxpayer, allowing banks to make a claim on the state to cover their losses.

Agnew said a small counter-fraud team in the cabinet office was “shut out” when the scheme was created and that the Treasury had not been transparent, the Cabinet Office instead turned to PwC for advice . “Why didn’t he go to the people on his doorstep who understand fraud in all its manifestations?”

The government was warned by its own British Business Bank, that the scheme would expose taxpayers to significant fraud risks.

In a letter to the Treasury committee last week, Scholar said the National Investigation Service had made 49 arrests relating to alleged fraud in the scheme. He added that a “higher than normal” degree of fraud and error was inevitable because such schemes involved paying lots of money “as quickly as possible”.

Agnew said this did not wash to excuse wholesale anti-fraud failings.

The Treasury said last night: “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.”

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Lord Agnew accuses Treasury of complacency over Covid loans fraud