Coronavirus Grants: Fraud

Private Notice Question

Asked by

To ask Her Majesty’s Government what is the expected cost of fraudulent claims made under the Coronavirus Grant Schemes.

My Lords, this Question might seem familiar because it is the third time that we have asked it. I thank the noble Viscount, Lord Younger, for coming to the House to answer this today.

Perhaps I should start by thanking my noble friend Lord Agnew for allowing me the opportunity to stand here today—

Oh!

I promise that I shall stay the course. Throughout this dreadful crisis that we have had to endure over the past two years, the Government’s number one priority has been to protect jobs and livelihoods while also supporting businesses and public services across the UK. We had to work particularly quickly to produce some generous packages to give the necessary support back in lockdown 1.

I hesitated because I was not sure if the noble Viscount had finished—because, again, he did not answer the Question. Whistleblowing is vital in exposing undesirable or unlawful conduct. The Government rightly expect others to operate to high standards but do not seem to be able to meet those standards themselves.

Yesterday, the serious frustrations of the noble Lord, Lord Agnew, finally bubbled over, leading him to blow the whistle on his own colleagues as he departed. His lengthy statement yesterday exposed chaos and mismanagement across government, but it did not answer the question posed by my noble friend Lord Tunnicliffe. The Chancellor has gone AWOL, and, in his absence, although the noble Viscount did not give the figure today, other junior Ministers have insisted that putting the coronavirus fraud at £4.3 billion is too simplistic.

Taxpayers are footing the bill; your Lordships’ House and they deserve answers. If it is not £4.3 billion-worth of fraud, how much is it? If he has not got the answer today—I think noble Lords will understand why—can we at least be told when we will know and exactly how much of that the Treasury intends to write off?

It is a slightly complicated picture, but the Government continue to work actively with the British Business Bank, lenders and fraud authorities to identify and address fraud risks and recover loans obtained fraudulently. On the noble Baroness’s question, the £4.3 billion figure is not recognised by HMRC; it is an inference made in the report by the Times, which I am sure the noble Baroness has read. The figure that was taken out of that was £5.8 billion, which was in the report and accounts of HMRC. Some £500 million, which was returned, should be deducted from that, so we think that there is £800 million to £1 billion to recover.

My Lords, I am grateful to my noble friend. Was not the object of the loan scheme to enable existing companies to continue trading through the pandemic? If, as we heard from my noble friend Lord Agnew yesterday, banks paid out money to companies incorporated post Covid, and did so negligently, are we not entitled to revoke the 100% taxpayer guarantee?

Again, we should remember that, in lockdown 1—roughly from March to April 2020—there was a clear need for urgent action to encourage a greater take-up of different support measures. That is why we intervened to change the design of the bounce-back scheme to make it 100% backed, which led to £46 billion being sent to 1.5 million businesses. To take up my noble friend’s point, I am sure that lessons can be learned, but, at the time, it was imperative that the Government acted quickly.

My Lords, when Covid struck, HMRC stopped answering its fraud-reporting phone line—the phones just rang and rang. The alternative way of reporting fraud online required entering intrusive personal details that most people were afraid to provide. How much fraud does the Minister estimate has been unreported due to the Government’s attitude towards whistleblowers?

The noble Lord’s question is focused on HMRC, but I can say that the expected losses to error and fraud in 2021 were £5.8 billion, and expected losses for 2021-22 will be published in due course. But a lot of work is going on in terms of recovery, and the expected recovery by HMRC is estimated to be between £1.3 billion and £1.5 billion.

My Lords, did the Government anticipate the potential use of existing ready-made off-the-shelf companies as instruments of fraud? Is it yes or no?

I think the answer has to be no. We had to move particularly quickly in very difficult circumstances. Of course, there is always a risk of fraud—all fraud is unacceptable, but there was a risk because we had to move quickly. As I say, there is a lot of work and, particularly from HMRC’s point of view, in the months and years ahead there is big scope to recover.

My Lords, fraud in government is rampant and is estimated at just under £30 billion—so writes the noble Lord in the Financial Times today. Why, in those circumstances, did the Government agree to drop the long-awaited economic crime Bill from next year’s legislatory list for Parliament to consider?

I do not have an answer to that; I will have to get an answer to the noble Lord. I say again that the schemes brought forward during those very difficult times were designed in response to a pronounced market failure, particularly with the UK’s smallest businesses struggling to access the finance that they needed to survive at the start of the pandemic. Voices from across the spectrum, including from the party opposite, were shouting at us to be sure that we acted quickly. We were already doing so, but we continued to do so.