ON Monday, January 24, a British politician did a remarkable thing. He resigned.
Lord Agnew, successful businessman, generous Tory donor, knighted then elevated to the Lords, later in 2020 appointed Minister for Efficiency and Transformation, and charged with the custodianship of the £47billion handed out in Covid-related bounce-back loans to banks and private companies, finally threw in the towel.
Much of the loaned cash, he reckoned, may never be recovered, some has been lost to fraud, and as the counter-fraud minister, he felt driven to do the honourable thing.
His criticisms focused on the Treasury, and the British Business Bank (BBB), where management had been chaotic, oversight and auditing woeful, with those responsible showing no interest, or even having little knowledge of the situation.
The sums involved are eye-watering. Of the £47billion dished out, £17billion is unlikely ever to be repaid, with at least £5billion lost to fraud.
Sixty per cent of the monies had been disbursed even before checks were introduced to weed out fraudulent claims. It is believed that loans went to serial fraudsters, paying off gambling debts, and even to known gangsters. The tax authorities admit a mere £536million has been repaid, but already £4.3billion has been written off.
These figures should be read in the knowledge that while government forecasting models are now admittedly presented at the most pessimistic level, the Treasury’s forecasts of recouping lost funds will probably tend in the opposite direction. And all of these losses are from public funds, the taxpayers’ money.
In December 2021, the Tax Payers Alliance (TPA) commented: This £4.9billion (their figure) is only part of the total £17billion estimated to be lost from unpaid business loans, as any losses were guaranteed to be covered by taxpayers. That’s 36 per cent of the entire scheme. And this will likely be just the tip of the iceberg. Furlough was another programme backed by taxpayers and targeted by fraudsters.’
Scandalous doesn’t even begin to describe it.
Now, the National Crime Agency (NCA) has accused Treasury officials of rebuffing its offer to instigate a comprehensive investigation into the fraudulent misuse of Covid handouts, presumably to avoid embarrassment over the scale of the losses.
Instead of harnessing the wide-ranging powers of the NCA, the Treasury has preferred to work through the National Investigation Service, an obscure body capable of investigating a mere 200 cases a year.
As fraudulent dealings go, these sums are not nothing. In a review of the biggest financial scams of the century, a group of Canadian commentators list the following: Madoff at 65billion dollars, Parmalat at 20billion dollars, Enron at 11billion dollars, and BCCI at 15billion dollars.
But these played out internationally and made global headlines. Faced with the TPA estimate of a £17billion hole in public finances in respect of this one scheme alone, a single resignation from Government seems a wholly inadequate response. But that is not the end of it.
In his resignation speech, Lord Agnew reckoned the total fraud across the public sector here was now running at £29billion a year, the equivalent of 5p on income tax; and the bounce-back element alone is equivalent to one third of the annual revenue of the new National Insurance (NI) levy of 1.25 per cent, due in April. Staggering amounts.
Chancellor Rishi Sunak has promised to ‘do everything we can do to get the money back’ – initially, it would appear, by raising taxes on the law-abiding. Hard-pressed households, already facing punitive cost increases in food and energy bills, incipient interest rate rises, and now a tax hike, are unlikely to be reassured.
In a recent article, co-written with Boris Johnson, Sunak has defended this NI increase, despite open criticism from fellow MPs John Redwood, Robert Jenrick and Mel Stride, chair of the Treasury Committee.
Yet together, Sunak and Johnson describe themselves as ‘tax-cutting Conservatives’ and ‘Thatcherites in the sense that we believe in sound money.’ They insist that they must go ahead with the health and social care levy, because it is the right plan, believing the increase to be progressive, because higher earners pay more. ‘There is no magic money tree.’
Their Cabinet colleague Liz Truss weighed in with support. ‘As soon as possible, we want to be in a position to lower our tax rates. But we do face a short-term issue, which is that we have spent significant amounts of money dealing with the Covid crisis that does need to be paid back.’
TPA chief executive John O’Connell points out that the tax burden now stands at a 70-year high. Many critics will say that to increase this further, just to cover the scandalously inadequate government oversight of past public funds, takes some nerve.
But that, it appears, is what Chancellor Sunak has plenty of.
With new revelations coming to light about investments made from the Government’s £1.1billion start-up scheme, he has simply batted aside tax-payers’ alarm over the additional sums being sunk into, for example, an online betting start-up, BetConnect (at a time when colleagues elsewhere consider methods of tackling gambling addiction); or a luxury holiday firm Edge Retreats, which markets ‘the world’s finest’ in villas and private islands to the wealthy (rumoured to cost as much as £400,000 a week to rent).
And all this, while polishing up his PR-led leadership challenge campaign, having openly stated that Partygate could be unsurvivable by the PM.
Sunak is believed to have drafted his campaign website (inspired by his No 11 newsletter), and developed a marketing strategy. A special adviser is ‘building the Chancellor’s online brand’, through canny use of social media, Instagram, and his newsletter. His ‘Ready for Rishi’ Twitter account boasts in his latest January tweet that ‘it’s time for a leader who doesn’t break the rules’.
Darwin Friend, a TPA policy analyst, has stated: ‘People who wrongly pocketed taxpayers’ cash should be properly punished.’ He could well extend this to cover those responsible for the mismanagement of the Covid cash handouts, instead of them potentially being rewarded by the upward mobility of the Establishment’s revolving door.
On Sunday, TCW Defending Freedom asked readers: ‘Is Britain under a Tory government any better than a banana republic?’ At £27billion per annum in public sector financial fraud, the country is well on its way to the top of that tropical tree.