Tackling Fraud and Preventing Government Waste

Ben Lake Excerpts

Tuesday 1st February 2022 Commons Chamber

[Ben Lake (Ceredigion) (PC)]

It is a pleasure to follow the hon. Member for Broadland (Jerome Mayhew). I agree that we should not accept fraud as a cost of doing business—indeed, there is a moral imperative for us to pursue fraudsters for any losses to the public purse as a result of fraudulent activity. When we come to have further discussions about taxation and increases in taxation, it is even more important that any losses are pursued, as he described, with vigour and that those who commit fraud in such a way are brought to justice.

I thank the shadow Chancellor, the hon. Member for Leeds West (Rachel Reeves), for bringing forward the debate. I intend to keep my remarks brief by focusing on some of the startling figures already raised in the debate, foremost among which is that about 26% of public money unlawfully taken from covid-19 schemes is likely not to be recovered by HMRC, so £4.3 billion of the total £5.8 billion stolen from covid-19 support schemes will be in effect written off.

It is important to put the figures in some context. In doing so, I would like to us to consider another large figure: £3 billion. That, at just over half the cost of the moneys lost to fraud, is the cost of increasing working-age benefits and pension credit by 6%—the likely inflation rate by April—rather than the planned 3.1%. That prompts the question of what the Treasury could afford, if it wished, to end the cost of living crisis and build towards our net zero transition, or indeed honour promises to match EU regional funding for Wales and other parts of the UK that previously received it.

The outrage and indignation that we have heard is understandable, but the mismanagement of some of our public finances by the UK Government should not come as a great surprise. One need only read some of the Public Accounts Committee’s work to understand that there are many examples of serious mismanagement of public finances. I call to mind its July 2020 report that concluded that

“HMRC does not understand the impact of any of the largest tax reliefs”.

Indeed, it found that between 2015 and 2020, HMRC did not “evaluate the effectiveness” of the 10 largest tax reliefs supporting economic and social objectives. Those unevaluated reliefs cost about £117 billion, which is some 5% of the UK’s GDP. One could argue that we have been very lax with our public finances for quite some time, yet such laxity does not always extend to smaller businesses.

I listened with great interest to the Paymaster General’s remarks, and I accept that the need for speed, which we have discussed, meant that there was always a risk of some fraud. I do not think that necessarily justifies there being no need for checks and safeguards on any of the schemes. However, it makes me think of a few examples from Ceredigion of businesses that were in receipt of furlough funding and entitled to it—HMRC accepts that—but, due to some clerical errors in real-time information submissions, now have to repay thousands of pounds. HMRC acknowledges that those businesses would have been entitled to that money, but sadly they have fallen foul of RTI submission rules. One can accept that—those are the rules—but here are businesses being pursued for thousands of pounds for a clerical error while we see the potential for writing off billions of pounds of money lost to fraud. It is difficult for those businesses to accept that they must be brought to task when others are getting away with it.

We find ourselves facing a mounting national debt alongside cost of living and climate crises. I accept that the public finances are in a precarious position, but, if the Government seek to convince us that they cannot afford greater support for in-need households or greater measures to tackle the climate crisis, they must do more to recover the billions of pounds of public money lost to fraud and hold those who have benefited from unscrupulous deals to account. If they fail to do so, they will have little moral authority to increase tax on households and businesses in April.