The Government take fraud extremely seriously and have been consistently clear that fraud is never acceptable. The latest estimates are set out in the department’s 2020-21 annual report and accounts. Updated estimates will be published in the next few months in the 2021-22 annual report and accounts. The Government are investing in tackling fraud and error across these schemes. Most recently, the Chancellor announced an additional £48.8 million for a new package of measures to tackle fraud.
My Lords, under this Government, we now have the highest level of taxation and fraud. Annual fraud is between £29 billion and £52 billion. Last year, the government counter-fraud function classified £219 billion of the £387 billion of Covid-related financial support as “high or very high” fraud risk. Will the Minister tell the House how much is now classified as high or very high fraud risk and when an independent investigation into the Government’s failure to apply proper due diligence checks will commence?
My Lords, as I said to the noble Lord, updated estimates from the Government will come out in this year’s annual accounts. However, I have two points to make to the noble Lord. The first is on the scale of support that this Government put in place during the Covid-19 pandemic, which safeguarded 12 million jobs and more than 1 million businesses, which might not otherwise be here. Secondly, I referred in my Answer to the extra money for a new package of measures to tackle fraud. That includes setting up a new public sector fraud authority. One of the roles that it will focus on is understanding and measuring the losses around the Covid-19 spending, so that we can learn lessons for the future.
Never mind—there is plenty of time.
Three quarters of a million new companies were registered—most of them dormant. Will the Minister tell the House how many of those dormant companies were given Covid financial support and how many took support and then were dissolved?
My Lords, in relation to the Bounce Back Loan Scheme, the estimate of fraud in that scheme has already come down, but there is more work to be done. On the question from the noble Baroness, we have given new powers to the Insolvency Service to look at these issues and to stop companies with bounce-back loans seeking to escape liability for their loans by winding down before settling their debts. Some 61,758 companies holding £2.1 billion of loans have been prevented from striking off to give lenders time to assess for fraud.
My Lords, does the Minister not agree that it is absolutely essential to public confidence in the effective enforcement of our laws that those whose greed led them to shamelessly loot the public Exchequer during the course of a public health emergency should be brought to justice?
I absolutely agree with the noble Lord. In addition to the £48.8 million that we announced in the Spring Statement, we have also put additional resources and money into the HMRC fraud service. The Taxpayer Protection Taskforce from HMRC, which is also targeting recouping money from those people, is expected to recover between £800 million and £1 billion by the end of 2022-23.
My Lords, while the public is very grateful for the support it got during Covid, I do not believe it will easily excuse the levels of fraud and abuse of public money. Can the Government now tell us what they are putting in place in preparation for the next crisis and the next need to put out emergency funding, to make sure that the systems have within them decent checks and safeguards? For example, the British Business Bank estimates that it could have saved nearly all of that fraud had it waited 24 to 48 hours before actually issuing the money, and used that time for essential checks.
My Lords, we have given the British Business Bank additional resources to tackle the issue in bounce-back loans. As I said in response to an earlier question, part of the role of the new public sector fraud authority is to conduct post-event assurance, which will specifically look at Covid 19 spending and learn lessons. A few of the authority’s other functions will be across government, such as the provision of data analytics capability, and for those government departments that do not already have it, greater expertise in assessing fraud risk up front, learning lessons and enforcement for particular Government spending.
My Lords, following on from the question from the noble Baroness, Lady Kramer, would the Minister not agree that the Covid-related government support has been entirely necessary, and I hope very much that the Government would not be dissuaded from rolling out such schemes if required in the future, and at the pace they did, because of concerns about fraud.
I agree with the noble Earl, and I recognise that, particularly with bounce-back loans and the CJRS, the speed at which the Government needed to act was one of the trade-offs with the checks that could be put in place. We will make sure that lessons are learned, to ensure that we got that balance correct, but one of the reasons we introduced the Bounce Back Loan Scheme and reduced the checks on it, was that original government support programmes that had greater levels of checks were not getting the money to people who needed it, and the scheme prevented the loss of businesses and livelihoods in our economy.
My Lords, at 3.31 pm on 24 January, I asked a similar question. I did not get a reply, but the House was treated to an insightful resignation speech by the noble Lord, Lord Agnew. Among other things, he said,
“The oversight by both BEIS and the British Business Bank of the panel lenders of the BBLS has been nothing less than woeful. They have been assisted by the Treasury, which appears to have no knowledge of, or little interest in, the consequences of fraud to our economy or society.”—[Official Report, 24/1/22; col. 20.]
Assuming the Minister agrees with the statement, what action has been taken to rectify this lamentable situation?
My Lords, I would like to pay tribute to my noble friend’s hard work in this area, but I disagree with him about the seriousness with which the Government take this issue. I was pleased to note that he welcomed the announcement in the Spring Statement of the funding to deliver the public sector fraud authority, about which I have already spoken to noble Lords.
My Lords, I declare my interest as a chairman of a bank. Can I ask my noble friend: if the banks did not do elementary due diligence, such as checking that a company was trading or checking a national insurance number, why on earth should the Government pay out on the guarantee? Should it not fall on the banks for not having done their job properly?
My noble friend is correct that, while there were reduced checks in place on bounce-back loans, there was still a requirement for lenders to make checks, and we are quite clear in the terms of the loan guarantees that, if it appears that those checks were not made, then those businesses do not have a claim against their guarantee.
Following on from the question from the noble Lord, Lord Tunnicliffe, and his reference to the noble Lord, Lord Agnew, the explanation that the noble Lord, Lord Agnew, gave to the Treasury Committee as to why the Government’s performance was so parlous was that there was a 20% to 25% staff turnover at Her Majesty’s Treasury. Can the Minister explain why there was such a high turnover of staff and what the Government are doing to ameliorate a situation, which is clearly creating a problem?
I think one of the reasons that the Treasury, and other government departments, can have high turnovers is that they have talented staff who do excellent work, and that can be desired by those in the other sector. We work hard to ensure that the Civil Service is a great place to work, and that people have the job satisfaction to carry on.
My Lords, the Minister says that the Government take fraud seriously. I am tempted to say that if they did, this would not have happened—but let us test that. In the Spring Statement, the Chancellor announced £48.8 million for this new authority, but that money is against an estimated loss of £15 billion from fraud and error across Covid-19 state-backed business schemes. The £48.8 million over three years is
“to support the creation of a new Public Sector Fraud Authority and enhance counter-fraud work across the British Business Bank”—
which lost lots of money—
“and the National Intelligence Service”,
with the intention of recovering “millions of pounds”. Those are the Chancellor’s words. Does that not tell us a lot about the Government’s priority in relation to this when, in the same Statement, the Chancellor announced investing
“£510 million to increase DWP’s capacity and capability to prevent and detect fraud and error”?
My Lords, that investment in detecting fraud and error in universal credit is incredibly important. If we look at the statistics on universal credit during the pandemic, fraudulent claims went up significantly. Again, it was really important that universal credit was there for people during the pandemic—it worked very effectively in providing support to those who needed it most. But it is also quite right that, where you have high levels of fraud, action is taken on behalf of the taxpayer to recoup that money.