Tackling Fraud and Preventing Government Waste

John Glen Excerpts

Tuesday 1st February 2022 Commons Chamber

[The Economic Secretary to the Treasury (John Glen)]

It is a privilege to close this debate on behalf of the Government. I thank the 14 Back-Bench Members who made contributions this afternoon; I listened carefully to all those speeches, and I will try to address many of their points in the next few minutes. I particularly thank my hon. Friend the Member for Broadland (Jerome Mayhew) for his thoughtful speech.

I think it is clear that we are united in our recognition of the importance of tackling the twin scourges of fraud and waste, and I start by taking this opportunity to remind the House why we consider it a matter of great importance. This Government are ambitious for this country; that is why, during the pandemic, we sprang into action to save the economy, rapidly unleashing more than £400 billion in a package of support to protect jobs and businesses.

That is also why we are opening up opportunities to all through our transformative levelling-up agenda and our plan for jobs, and why we are focused on building back better and stronger from the coronavirus. All those policies and ambitions are underpinned by a pledge we made to the British people to safeguard our nation’s finances, so I turn now to the specifics of the debate.

First, I address the matter of covid-related fraud. Our covid support schemes have safeguarded millions of jobs and livelihoods throughout the country during the most difficult of periods. Our priority during the pandemic was always to ensure that support swiftly reached the businesses and individuals who needed it most. I think back to the reality of the situation in March, April and May 2020, when the first iteration of the CBILS met with delays; it did so because banks, following the previous crisis, had been forced and indeed constituted to do affordability checks. There was an outcry of anxiety, quite reasonably, from business owners and individuals up and down this country, and from hon. Members across the House. As a consequence, the Government recognised that we needed to develop a new iteration of that particular support, involving a 100% guarantee. We had conversations with the shadow Chancellor at the time about certain measures that needed to be taken to accommodate some of the challenges in getting that scheme to work quickly. We did so in full knowledge that the speed of delivery was critical if businesses were to be protected. Indeed, I am glad that so many were. That did not involve recklessness, but know your customer, AML and anti-fraud checks.

The bounce back loans helped 1.5 million businesses through the crisis. As the Paymaster General pointed out, the sheer volume of schemes that we introduced and the speed at which they were designed and implemented meant that it was not possible to prevent every instance of fraud and error.

[Peter Grant]

We all vividly remember the triumphant statements from the Chancellor at the time about how much money was being made available, but can the Minister refer us to any mention in Hansard from the Chancellor at the time about the levels of fraud that were being provided for in any of those schemes?

[John Glen]

When we designed the schemes, it was clear that we had to put in reasonable measures around the identity of individuals and that we had to allow people to self-report their turnover. The whole conversation with the banks was designed to ensure that that money was available as quickly as possible while not being reckless with those finances. We did it on the basis that, inevitably, there would be a measure of fraud. I am grateful for the measured way in which the hon. Gentleman speaks in the House. I cannot give a specific answer to his question, but that explains the context in which the schemes were designed.

The measures that we put in place were robust and comprehensive. There was no one single point in time where we said, “We’ve got everything right”—I would never stand at this Dispatch Box and say that. Some £2.2 billion of potentially fraudulent bounce back loan applications were blocked through up-front checks and extra fraud checks were introduced in relation to the bounce back scheme at the earliest practical point. The Government categorically do not accept the suggestion, however, that those checks could have been part of the scheme at its launch.

I have spoken to officials on several occasions over the last two years about what more could have been done at the inception of those schemes. The extra checks that we put in place as quickly as we could would have delayed the start of the schemes, which were already delayed because of the circumstances I explained earlier. It would have caused further delay—in some cases, not just weeks but months—and would have led to serious harm for many SMEs at a time of what we all acknowledge was acute crisis.

Subsequently, however, we have given the Insolvency Service and Companies House new powers to prevent rogue company directors from escaping liability for their loans by winding down their businesses. We have invested £4.9 million in the National Investigation Service to probe serious fraud and it has recovered £3.1 million in the last year alone.

[Alison Thewliss]

The Minister has made the point about pursuing rogue company directors. Can he tell me more about how he intends to pursue them if the name given is clearly false or the address is incorrect?

[John Glen]

I pay tribute to the hon. Lady’s work to highlight the inadequacies, which she reflected in her amusing but serious speech about Companies House reform. She knows my view, which I have stated numerous times, including at Treasury questions earlier today, that the reform of Companies House is an urgent priority. That is why, in the last spending review, the Treasury gave an extra just over £60 million to start that process. More needs to be done and legislation will be required to fulfil that process.

I will now address the motion’s claim that the Treasury has written off £4.3 billion in the furlough scheme and other HMRC-delivered covid support schemes, which could not be further from the truth. As the Chancellor has previously said, no, we are not ignoring that money and no, we are definitely not writing it off. We are taking decisive action to recoup it. We have invested more than £100 million in a taxpayer protection taskforce, which has over 1,200 HMRC staff focused on combating fraud. Make no mistake: this is one of the biggest and swiftest responses to a fraud risk ever made by HMRC. In fact, over 13,000 one-to-one inquiries were set up in the last tax year, and already the taskforce has contacted over 75,000 people, some of whom could face criminal prosecutions. Meanwhile, HMRC has already recovered over £500 million through a host of other robust measures, and I know that it will continue to consider every avenue when it comes to recouping money lost through fraud and error.

The motion refers to an NCA investigation. I stress that we have not prevented the NCA from investigating fraud associated with covid-19 support schemes. The NCA has investigated cases of fraud against the schemes and contributed to 13 arrests in relation to bounce back scheme fraud. The Treasury has worked closely with the Home Office on the law enforcement response to fraud, and I agree that the NCA should continue to pursue cases of serious fraud against bounce back loan schemes. As part of the 2020 spending review, the Government committed a further £63 million to the Home Office to tackle economic crime, including fraud.

I now want to address some of the points raised on procurement; the motion talks about public procurement. As my right hon. and learned Friend the Paymaster General said, we take our duty extremely seriously. On personal protective equipment, our focus during the crisis—rightly—was on saving lives and protecting our healthcare workers. However, as has been mentioned today, the pace of this roll-out involved a change in risk appetite, and meant that Treasury Ministers and officials had to make calculated judgments on how to apply that spending control. It was not business as usual. None the less, at all times, the principles set out in “Managing Public Money” continued to apply, DHSC took decisions on the basis of sound advice and all transactions were approved by the Cabinet Office and the DHSC clearance board. We will continue to combat fraud in that area. We will pursue any contracts where there has been a technical failure or other breach, and we will not hesitate to take legal action against suppliers where needed.

I will finish on some of the other aspects included in the motion, starting with defence. As somebody who was a member of the Defence Committee for a couple of years and attended the Royal College of Defence Studies course, I take a great interest in these matters personally. My hon. Friend the Member for Barrow and Furness (Simon Fell) mentioned the complexity of some of the procurements and the evolving scope of individual projects—sometimes, at the inception of these capabilities, their formation is not fully known, so it is a particularly challenging element of Government spending. However, the National Audit Office has noted the progress that we have made so far. The financial settlement of the 2020 spending review is helping the Ministry of Defence to move to a sound financial footing and we are focused on driving improvements that will result in greater value for money.

Equally, we are sharpening our tools to deal with the scourge of economic crime. We are committed to delivering reforms through the economic crime plan and the forthcoming fraud action plan and, thanks to the spending review settlement and private sector contributions, as has been mentioned, we have an additional £400 million to tackle such crime over the next spending review period.

I repeat my thanks to Members across the House for participating today. I have listened very carefully to their remarks and will reflect carefully on them. There can be no doubt that fraud and waste hamper a Government’s efforts to change lives and transform a country for the better. That is why we are focused on combating those threats to our national wellbeing, while working hard at boosting efficiency across every part of Government. We are right to take this action to fulfil that enduring commitment to the economy, to the country and to every citizen.

Question put and agreed to.

Resolved,

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.