Monday, June 27

Even Johnson’s own fraud minister couldn’t stand the stench of this government | Simon Jenkins

THeodore Agnew was the model of a modern Tory oligarch. A successful businessman, he did enough to get into the new politics. He did all the right things. He endorsed a chain of academic schools and joined a conservative think tank, Policy Exchange. She donated £134,000 to the Tory party between 2007 and 2009. Agnew, co-owner of an AI consultancy called Faculty, put her to work for Johnson’s Vote Leave campaign. He received a knighthood, then a peerage, and then was offered a ministerial post in the government of Boris Johnson, at the time mentored by former Vote Leave director Dominic Cummings. The faculty won a handful of government contracts worth nearly £1 million. Still, Agnew could appear in an Armando Iannucci satire on Boris’s Britain.

Then this week, Agnew went nuts. Even he had had enough. In February 2020, he was given the title of Yes Minister for “efficiency and transformation”, and in a speech on Monday in the House of Lords he was supposed to congratulate himself on his work. It had been one of the custodians of the £47bn of public money that had been given to private companies and banks in recovery loans between 2020 and 2021. However, of this sum, Agnew calculated that £17bn had been lost. sterling and at least £5bn of those losses were from fraud, or 1p in income tax. He clearly choked on the task that was asked of him. And then something unprecedented happened. A Johnson minister proceeded to tell the truth and resign on the spot.

The plan had been chaos, he said. The Covid loan scheme had made “schoolboy mistakes” such as the recovery loans being given to over 1,000 businesses that had not even been operating when Covid hit. Regarding the government 100% warranty to the banks that it would cover any losses, this had led to great indiscipline on the part of the lenders. When the checks came in to remove the fraudulent duplicate requests, 60% of the £47 billion had already been paid. Agnew estimated that a quarter of the money lost through the scheme is due to fraudulent claims rather than credit failures. Many scammers had simply called in the loans, then they dissolved their businesses months later.

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Agnew’s speech was scathing. He declared that the government’s record as guardian of the country’s resources was “hopelessly inadequate.” The business department and its cash-wasting British Business Bank (BBB) ​​had been “pitiful” in their oversight and audit of the scheme. The Treasury had shown “no knowledge or little interest in” the level of fraud. Using his words carefully, Agnew accused them of refusing to “up their game” even as he warned them of the scale of the scandal.

As for the system’s reluctance to police itself, the BBB, a government agency, wouldn’t even share fraud data with Agnew, the anti-fraud minister. A presumably desperate letter from Agnew to the bank. released this week it was sent on December 16 but received no response. The BBB misled investigators by saying that it had been “held in the House of Lords’ IT system”.

Agnew estimated that total fraud in the public sector now amounts to £29bn a year, or about 5p in income tax. Repossession loan fraud is estimated to have it costs a third of annual income from the new 1.25 percent national insurance rate due in April.

A picture of this scandal is already emerging from the mundane world of the courts, from crime and insolvency records. TO manchester judge It was reported last week frightened in recovery loans which have been made under Treasury guarantee to two serial fraudsters to the tune of £145,000. The loans went to known mobsters involved in costly car thefts. Other loans were used to pay off gambling debts or to buy a £2,400 watch, according to the times.

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Clearly, much of this money will have gone to worthy businesses caught in the lockdown and actually facing bankruptcy. Most of the world’s governments caught up in the pandemic felt entitled to print money to alleviate what was supposed to be an unprecedented and temporary financial hardship. This mainly took the form of “helicopter money”, disbursed to those in the furlough scheme and totaling £70bn.

The recovery loan scheme was more like B-52 money. He bombed the increasingly murky financial no man’s land that separates productive businesses from the City. The £47bn must explain why banks and other financial services survived the lockdown in a remarkably healthy way.

It would seem that Cummings’s ‘insane asylum’ extended much further across Whitehall than just Downing Street. It encompassed the Treasury and the business department, in what appears to have been a conspiracy of high-spending anarchy. Foreign Minister Rishi Sunak has already responded by promising do “everything possible to get that money back.” However, so far HMRC investigators have recovered just £536m of stolen money. While Agnew was polite to the prime minister in his resignation speech, he conspicuously made no mention of Sunak. It’s hard to escape the suspicion that his anger was largely squarely at the Treasury.

While Sunak has been desperate to distance himself from Johnson’s spendthrift tendencies, his leadership narrative of pursuing fiscally stable and responsible conservatism must be damaged by these revelations. When Covid ends, there will be an incredible day of reckoning on many fronts. Ministers can reasonably protest that they faced a wholly exceptional crisis in 2020. From this, Britain emerged hesitantly at first, but then with some panache. Surely it shouldn’t suffer comparison to banana republics or kleptocracies?

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Last November, the website politician published a leaked list of 47 companies that were awarded PPE contracts early in the pandemic through the so-called VIP lane. These were mostly without competition or serious verification of his often dubious qualifications. The list of those who referred companies to the scheme dripped with the names of Conservative ministers, MPs, peers and party donors (including Lord Agnew himself). According to the National Audit Office, clearly now a broken cane in Whitehall, this gave them 10 times the chance of a contract.

All British politics is based on clubs. For Alexis de Tocqueville it was this that saved democracy from the tyranny of the majority. The bonds of friendship and mutual support that hold communities together also bind political parties together in their shared ideas and interests. Debts build up, and it’s probably best to pay them off.

But such debts require absolute transparency and auditing. Public trust depends on those in charge of the nation’s wealth distributing it competently, openly, and fairly. The coronavirus has been a traumatic experience for many Britons. The fury of the reaction to “partygate” shows the delicacy of the public mood. It is intolerable that the club of those in power not only party while the nation suffers, but lightly line their pockets and those of their friends.

To this there can be only one answer: ruthless inquiry and, as far as possible, restitution. At the very least, if Sunak knows what’s good for him, his penance is to say goodbye to April’s stinging Social Security hike.

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