The Guardian’s view of a Tory resignation: a minister goes over government mistakes | Editorial

Tthe hallmarks of this government have been its cavalier breach of integrity, accountability and honesty. But there are exceptions; Lord Agnew’s resignation shows ministers can do the right thing. The Minister for Combating Fraud decided to abandon the alarming scale of theft taking place under the government’s coronavirus support scheme and the apparent unwillingness of colleagues to do anything about it. His departure should be a wake-up call.

Since May 2020, around £ 50 billion had been lent to companies under the state-funded Covid loan scheme. The National Audit Office warned in December last year that it had “limited verification and no credit checks on borrowers, which made it vulnerable to fraud and losses”. The government also chose not to disclose the companies that received Bounce Back loans, leaving ministers open to accusations that there was something to hide. Lord Agnew agreed, saying a “desperately inadequate” effort was being made to prevent the state’s cash from being stolen. The Tory peer believed Covid loan fraud ran as high as 26%, suggesting the state has handed over £ 10 billion to thieves. Chancellor Rishi Sunak refused to “ignore” fraudulent Covid funding, saying he would recover looted money. Lord Agnew believes it would give Mr Sunak a “sporting chance to lower income tax before a likely election in May 2024”. This is true under the Ministry of Finance’s fiscal policy rules. Labor says recovering such losses would hardly mean any need for a national insurance increase.

Offers from the government were advances of up to £ 50,000, or a maximum of 25% of annual turnover, to support companies during the pandemic. More than DKK 1.5 million was provided. loan. Yet there are only about 1.4 million. UK private companies with employees. That more than 100% of UK companies could have benefited from 24-hour self-certified loans for which the state was fully responsible should have rang the alarm. Lord Agnew said schoolboy mistakes were made; more than 1,000 companies received government loans that did not even act when Covid hit. Anti-fraud measures were not introduced. Simple actions could have helped. David Clarke, the former chairman of the Fraud Advisory Panel, suggested to MPs last year that a centralized bank data warehouse could have identified long-dormant corporate accounts that received government cash. Companies House fails to carry out basic checks on its business register. Inexplicably have ministers abandoned long promised plans to revise it.

The former minister blames the banks for the losses. Lenders had no reason to complete checks as there was a 100% government guarantee for non-payment. Honest companies needed the money to pay the rent. This cash helped landlords pay off their mortgages – which in turn kept banks afloat with cash. Bankers also make money by creating and selling mortgage derivatives, a financial investment instrument that depends on the underlying value of mortgage loans. If they went bad, billions of pounds in the Square Mile could possibly be affected. No wonder many financial houses are reporting record profits. The suspicion is that the loss of £ 10 billion. due to fraud could have been seen as an acceptable price to pay for keeping Britain’s jewel in the crown – the city – safe from harm. But if that is the case, then it’s just another example of how funding has become an end in itself, independent of the economy and from the people and businesses it should serve.

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