Tackling Fraud and Preventing Government Waste

I beg to move,

That this House agrees with the remarks of Lord Agnew of Oulton in his resignation letter that the Government’s record on tackling fraud is lamentable; recognises the vast amount of taxpayers’ money that has been lost to waste and fraud since the start of the coronavirus pandemic, including the estimated £4.3 billion recently written off from Treasury-backed Covid business support schemes; notes the Government’s unacceptable record of poor procurement over the last decade, including £13 billion wasted on defence projects; further notes the warnings the Chancellor received in 2020 regarding the serious weaknesses allowing for public funds to be diverted to criminal enterprises; calls on the Government to set out a strategy to recover all taxpayers’ money obtained by criminal groups and to fully engage with a thorough National Crime Agency investigation into all issues related to the fraudulent exploitation of the covid-19 support schemes; and further calls on the Chancellor of the Exchequer to make a statement to this House before 31 March 2022 detailing how much taxpayers’ money has been successfully retrieved.

Millions across our country are facing a cost of living crisis, but while many are worried about soaring energy and food bills, the Government are preparing to hike taxes for working people and businesses. It will be the biggest tax burden in 70 years, yet while the Government are delving into people’s pockets for their hard-earned cash with one hand, they are throwing it away with the other. With endemic waste and fraud, taxpayers’ money is being poured down the drain. We see billions of pounds of waste on vanity projects, crony contracts and poor procurement. Basic checks and measures on who was handed covid support are completely ignored. We have had £4.3 billion in fraud written off by the Chancellor—that is a third of the tax hike that the Conservatives are about to impose on working people and the businesses that employ them.

The truth is, that is only the tip of the iceberg. That is why Labour has brought this motion before the House, calling on the Government to come back by 31 March with a clear answer on the true extent of fraud in their covid support schemes and to report back on how much taxpayers’ money has been clawed back from the criminals. It is because the Chancellor has lost a grip—and he seems to have fled the scene—that the motion calls on the Government to allow the National Crime Agency full access to investigate all aspects of fraud within covid support, not just the mere 13 cases that the Chancellor suggested they are looking at.

Was my hon. Friend as surprised as me not only by the terms with which Lord Agnew, the Minister in the Lords, resigned—the “schoolboy errors” made—but to learn that the National Crime Agency was shooed away by the Treasury when it offered help to try to get back some of the fraudulently taken money?

It was nice to see a Government Minister with a bit of integrity doing the right thing and resigning because of the errors that the Government are making.

Let us look at the details. On 12 January, the following details were published on gov.uk: £5.8 billion of fraud, with—yes—£500 million already retrieved and up to £1 billion to be clawed back by the end of 2023. That leaves an outstanding £4.3 billion of fraud written off by the Government. The grants number refers to the assessment of the losses made by Her Majesty’s Revenue and Customs from just three schemes: the coronavirus job retention scheme, which was £5.3 billion; the self-employment income support scheme, which was £493 million; and eat out to help out, which was £71 million. That fraud adds up to a combined £5.8 billion. In addition, page 121 of the Department for Business, Energy and Industrial Strategy’s annual report states that bounce back loan fraud is estimated to be 11% of the total. When the Minister comes to the Dispatch Box, will he tell us whether he recognises those figures? Does he understand what an affront that is to taxpayers and to those who were excluded from Government support during the pandemic?

The shadow Chancellor is making an excellent speech. Does she agree that not only is it a disgrace to write off all those billions, but, to add insult to injury, working people will have to pay for that with the national insurance tax rise and through a lack of help on energy bills, which is another worry for households all around the country?

My hon. Friend is exactly right. The Government say that they need to raise taxes to fund public services, and yet at the same time they are writing off billions of pounds-worth of taxpayers’ money. That is why I say it is an affront to taxpayers and to all those businesses who were excluded from Government support when they most needed it. They now know that criminals got their hands on the money while genuine businesses and self-employed people could not get a penny.

Given the rate of return for every pound spent by HMRC in compliance, is my hon. Friend puzzled about why money is not being invested to get back furlough fraud?

My hon. Friend is absolutely right that it is good value for money to invest in HMRC to get that money back, but the truth is that it did not need to be like this in the first place. The Government could have avoided these enormous levels of waste and fraud, but they set up the covid support scheme without proper checks and balances. It is not beyond the wit of Government to direct money where it is needed without giving it to organised criminals and fraudsters. It is incredible that the Government were dishing out lump sums of £50,000 to businesses that were not even trading at the start of the pandemic. It just does not make any sense. The Treasury did not even require checks with Her Majesty’s Revenue and Customs to see that self-certifying businesses had made a tax return as proof that they were genuine. What on earth was going on in Government? Those checks take just a matter of minutes. The result of those failures was that criminals created fake companies to receive public money and that is a disgrace.

My hon. Friend the shadow Chancellor is making an incredibly powerful speech on the eye-watering sums that have been wasted by this Government. The amount of funding that has been lost in Barnsley since 2018 is £30 million. In that context, is it not outrageous that the Chancellor, who cannot even be bothered to turn up today, has wasted so much public money?

As an hon. Member mentioned earlier today, this morning was the first we had seen of the Chancellor at the Dispatch Box since the beginning of December—perhaps we were lucky to see him today.

Disturbing reports of court cases are now emerging. They reveal how an organised crime leader, with no less than 48 previous criminal convictions, was handed £50,000 of taxpayers’ money. If only that were a one-off case. The same judge had seen, two months prior, a case where a drugs gang had been given a £25,000 Treasury bounce back loan. Well, good for them to bounce back! What about those who were excluded?

I thank my hon. Friend for making an incredible speech. What we cannot forget are the stories we have heard, like the one from a woman in my constituency who had set up a business as a driving instructor. The rules the Government set meant that she was entitled to no compensation and no support whatever. She was left with no income and had to rely on food banks. As my hon. Friend says, at the same time that drug barons were being given taxpayers’ money, people in my constituency were given absolutely nothing and were forced to rely on charity. It is a disgrace.

My hon. Friend speaks powerfully. I would like the Minister to explain, at the Dispatch Box, why drugs gangs got tens of thousands of pounds of taxpayers’ money when my hon. Friend’s constituents could not get a penny.

The Chancellor and other Ministers were warned repeatedly about the risk of fraud. In June 2020, the Chancellor was advised by the Fraud Advisory Panel, Transparency International, Spotlight on Corruption and the former director of the Serious Fraud Office that there were

“serious weaknesses that enable fraudsters and corrupt insiders to exploit the bounce back loan scheme and the covid business interruption loan scheme.”

and that that would create a “risk to the taxpayer”. They offered to provide the Chancellor with information, advice and support to improve the control of the funds, yet it seems the Government were not interested in that advice.

Stripping away the political rhetoric, the hon. Lady is making some very serious points for the Government to consider. However, on reflection, does she now think it was wrong for her Labour colleagues in 2021 to call so readily for the Government to use taxpayers’ money to support GFG Alliance, which was subsequently investigated by the Serious Fraud Office?

I understand that MPs want to represent businesses employing people in their constituencies, but it is the role of the Chancellor and the Government to make sure that money goes only to people who deserve it, not fraudsters. The hon. Gentleman was a member of the Business, Energy and Industrial Strategy Committee, which I chaired. The Committee did ask the Government to get money to businesses that needed it, like those mentioned by Labour Members, but basic checks that could have been done in a matter of minutes were not done. He will know, because of this Government’s tax rises and the increase in energy prices, that an average household in his constituency will, from April, be £1,378 worse off.

Does my hon. Friend agree that the £4.3 billion that has been written off is a disgrace, given that the austerity that local authorities have suffered over the past 12 years has had a major impact on the people they serve and our communities?

My hon. Friend makes an important point. Her council in Liverpool and all our councils have lost money, and this Government are handing it out to criminals. Billions of pounds of taxpayers’ money has been written off, but it was not the Chancellor’s money to write off; it is the public’s. The Government have clearly lost their grip. We must restore faith and confidence in how taxpayers’ money is spent.

We have a National Crime Agency in our country for a reason: to tackle serious and organised crime. It should be the National Crime Agency that the Government ring first on such occasions, but instead there are reports that they do not even want it to look into the matter. The Chancellor said earlier that just 13 cases are being looked at by the National Crime Agency. That is why Labour has brought our motion to the House today: to call on the Government not only to come back by 31 March with a clear answer about how much of their money has been clawed back from criminals, but to allow the National Crime Agency full access to investigate all aspects of fraud within covid support. The Government should not be resisting any effort whatever to retrieve taxpayers’ money and to hold people responsible. We need to know how it is so easy for organised criminals to steal from right under the Treasury’s nose.

As a point of correction, the hon. Lady says that the Chancellor said that only 13 cases were being looked into by the National Crime Agency, but what he said was that 13 people have been arrested. Many more cases have been looked into.

I think the hon. Lady is in danger of missing the point. Lord Agnew actually said that the Government did a very good job of rolling out the schemes; his problems were with the checks and balances afterwards on banks drawing on the guarantee. Two banks were responsible for 81% of claims on the guarantee. That is where our attention should be focused: what are the banks doing about getting the money back?

Lord Agnew did not resign from the board of a bank; he resigned as a Government Minister because of

“schoolboy errors…indolence and ignorance.”—[Official Report, House of Lords, 24 January 2022; Vol. 818, c. 20-21.]

How does the hon. Gentleman explain to constituents in Thirsk and Malton that they will be £1,175 worse off in April because of the energy price hike and the tax increases from this Government, who all the while are giving money away to criminals? That is why Labour has brought our motion to the House.

The shadow Chancellor is giving an excellent speech exposing the systemic problems with the Government’s schemes. Does she share my concern that the emergency procurement procedures and the crony contracts given out for personal protective equipment meant that £280 million-worth of substandard masks were contracted for, with £100 million on unusable gowns and £200 million to Conservative party friends and donors, yet those shady and untransparent emergency procurement procedures are still being used?