UK junior minister quits over 'woeful' efforts to stop COVID loan fraud

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  • Theodore Agnew says 'schoolboy errors' were made
  • Treasury says no fraudulent claims have been written off

LONDON, Jan 24 (Reuters) - A British junior government minister resigned on Monday in protest at what he said were "woeful" efforts to stop the fraudulent abuse of coronavirus support schemes.

Theodore Agnew, a Conservative who sits in parliament's upper house, said he was quitting his post as a minister in the Treasury and Cabinet Office departments. Part of his role included oversight of spending and reducing fraud.

The government last week defended its record of providing support to businesses during the pandemic, disputing reports it had written off 4.3 billion pounds ($5.8 billion) in fraud across more than 80 billion pounds of job support given by the Treasury, but acknowledging that some fraud had occurred.

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However, Agnew said oversight of some other schemes - administered by the British Business Bank and the business ministry - had been "woeful", and that the Treasury had shown little interest in the wider consequences of fraud.

"Given that I'm the minister for counter-fraud, it feels somewhat dishonest to stay on in that role if I'm incapable of doing it properly, let alone defending our track record," Agnew told the House of Lords, listing his efforts to raise a number of problems through official channels.

Finance Minister Rishi Sunak said on Twitter that Agnew had served with diligence and commitment and thanked him for his "tireless work" during the pandemic.

The National Audit Office, which scrutinises public-sector spending, said in December the government had failed to guard properly against fraud in its 47 billion pound ($63 billion) COVID-19 emergency lending programme for small businesses, opening itself up to billions of pounds of losses. read more

The business ministry estimated that around 4.9 billion pounds of the loan claims had been fraudulent, the NAO said.

"Schoolboy errors were made," Agnew said. "For example, allowing over 1,000 companies to receive the bounce-back loans that were not even trading when COVID struck."

The Treasury said it was taking action on multiple fronts to crack down on anyone who had sought to exploit its programs.

"Our COVID support schemes were implemented at unprecedented speed to protect millions of jobs and businesses at a time when families needed it the most," a spokesperson said.

"Absolutely no fraudulent claims have been written off - last year we stopped or recovered nearly 2.2 billion pounds in potential fraud from the Bounce Back Loan Scheme and 743 million pounds of overclaimed furlough grants."

Agnew walked out of the debating chamber at the end of his statement, drawing applause from opposition lawmakers for his parting words: "I hope that, as a virtually unknown minister beyond this place, giving up my career might prompt others more important than me to get behind this and sort it out ... thank you and goodbye."

The British Business Bank said it had ensured appropriate counter-fraud measures had been in place from the start of the scheme.

"The Bank is working with accredited lenders to ensure they fulfil their regulatory obligations along with their contractual commitments under the terms of the Guarantee Agreement, to recover the loans and tackle fraud," a spokesperson said in a statement.

($1 = 0.7430 pounds)

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Reporting by William James and Paul Sandle; Editing by Kevin Liffey and Paul Simao and David Gregorio

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