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Question
The shadow questions why, despite robust measures being in place from the start, fraud has still led to a £4.3 billion write-off. He asks about the downgrading of HMRC’s recovery estimates and challenges the government's efforts against fraud.
Minister reply
HMRC uses data from its systems to ensure eligibility for grants up front and has implemented post-payment compliance measures. The taxpayer protection taskforce is expected to recover £800 million to £1 billion in fraud over two years, but HMRC will continue wider compliance activity beyond that timeframe.
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Question
The MP asks if the opposition would have prioritised perfection over timely support for businesses during the pandemic.
Minister reply
The Government acted swiftly to ensure that financial aid reached businesses quickly, changing schemes like the bounce back loan scheme to make it 100% backed and provide £46 billion to 1.5 million businesses.
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Question
It seems, again, that when the going gets tough, the Chancellor goes missing. HMRC said in its statement that fraud in the covid support schemes is in line with its original planning assumptions, but expecting this eye-watering level of fraud seems almost worse than it happening by accident. We see it also in the bounce back loan schemes. How much of the fraud relates to UK company structures and the related issues at Companies House, which make the UK such a magnet for money laundering? As well as the Treasury being out of pocket, constituents of mine employed by companies deliberately employing dubious corporate structures did not even receive the furlough payments to which they were fully entitled. What consequences will there be for those companies, and for those people who never received the money that they were due, due to fraud and error? For the many people around these islands who received no support whatsoever—those who were excluded from support schemes—this fraud and error is all the more galling. Will the Minister apologise to them and put that right? Finally, when HMRC is chasing down an estimated 170,000 families who claimed child benefit in error, why is it letting fraudsters and criminals waltz off with £4.3 billion of public money, all of this in the midst of a cost of living crisis?
Minister reply
I listened very carefully, as I always do, to the hon. Lady. I totally agree that we must not accept any fraud and error as inevitable, and we will continue to bear down on that. From the start we designed the schemes to involve “know your customer” and anti-money laundering checks on application. Measures were put in place by the British Business Bank to detect multiple applications—indeed, there was co-operation among UK Finance members on that. Subsequently, we have developed further interventions involving the National Investigative Service, the Insolvency Service and Companies House data to prevent rogue company directors from escaping liability. We will continue to bear down on the fraud that may have occurred.
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Question
It is right that we look carefully at how council tax payers’ money is spent, but let me refer to the current covid grant scheme, particularly for Cornwall. We in Cornwall need reassurance that Cornwall Council has absolute discretion in how to ensure that current leisure grants, for example, go to the businesses that most need them. At the moment, the council is saying that it has to pay the money to whoever applies, irrespective of how well their business is doing. My understanding from the Government is that, if a business is impacted by omicron, staff shortages, or reduced consumer demand, that is when the grant is paid. Could the Minister confirm to me, and to Cornwall Council, that it is for the council to ensure that the money goes where it is most needed, and that is what the Government intend?
Minister reply
I can certainly confirm that the intention behind the range of interventions was to find the most appropriate delivery mechanism for the different support payments, and obviously we have worked with local authorities to give them that discretion. Every authority will need to be held to account for how it has decided to deliver the grants.
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Question
Seventy-one million pounds of taxpayers’ money was fraudulently claimed through the eat out to help out scheme. How many arrests have been made, and are the criminals now enjoying prison food?
Minister reply
I am sorry, but I cannot give the hon. Gentleman an exact answer. What I can say to him is that, according to HMRC, the expectation of fraud as part of that particular intervention in the summer of 2020 was about 8.5%, and the figures submitted by Jim Harra, the head of HMRC, in last year’s report were in line with the expectations set out at the start of this journey.
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Question
Our much-loved Kettering gymnastics club provides sporting facilities for about 1,000 local young people every week. It is a not-for-profit club, registered with HMRC under the community amateur sports club scheme, and it operates as a club and not as a business. It has previously received covid grant funding from the council, but the later schemes issued in December 2021 seem to refer just to businesses, rather than to clubs. Can the Minister clarify the Government’s guidance to local authorities about whether clubs are eligible for the new funding?
Minister reply
I recognise that the gymnastics club in Kettering, along with so many other clubs of that type around the country, provides an enormously valuable point of contact for young people. I should be happy to examine my hon. Friend’s point in detail and write to him with clarification, rather than dealing with it from the Dispatch Box.
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Question
The Minister referred to default as though it were the equivalent of fraud. The Public Accounts Committee has examined in great detail the issue of fraud in this area. As I am sure he knows, there are grants and bounce back loans taken fraudulently that people will be repaying, but the criterion on which they obtained them was itself fraudulent.
Minister reply
I know that the hon. Lady’s Select Committee is conducting an in-depth inquiry. I believe that the second permanent secretary and others appeared before the Committee last week, and I look forward to its report. I can absolutely clarify that we do see the distinction between a credit loss and fraud.
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Question
The Government are saying that fraudsters will still be relentlessly pursued. If, heaven forbid, the Minister ever had to implement such a scheme in the future, would he regard it as a satisfactory result to know that 99% of these huge sums of money went to the intended recipients?
Minister reply
I thank my right hon. Friend for his question. He helpfully highlights that many of these grants and schemes were very effective in getting money to the right people in a timely way. I spoke earlier to an official from HMRC, who said, “We managed to get some of the money out in six days. If we had spent more time designing in more verification, we could have made it watertight. That would have taken several months and many businesses would have gone to the wall.”
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Question
The announcement that no action will be taken to recover the nearly £4 billion fraudulently claimed from the covid support schemes stands in stark contrast to the Government’s treatment of some of the poorest people in my constituency who had their benefits cut off, and who were even chased through the courts, for making the simplest of mistakes when claiming benefits. Will the Minister concede there is a double standard when it comes to holding the rich and powerful to account, whether for breaching lockdown restrictions or even for downright fraud? Will he also commit to providing redress to my constituents who have suffered so enormously as a result of this Government’s heavy-handed approach to accidentally misclaimed benefits?
Minister reply
I do not accept the premise of the hon. Gentleman’s question. The estimate of the amount of fraud is broadly in line with what we see in other Departments, including the Department for Work and Pensions. There is no complacency here.
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Question
It is interesting to hear the Minister confirm what I have often believed—that it was pressure from my colleagues on the shadow Treasury Bench that forced the Government to extend their proposed action to support businesses. I am glad he has confirmed that, but, on the specifics of this case, does it not say everything about this Chancellor that he is willing to write off £4.3 billion but does not have the courage to come to this place to respond to the question asked by my right hon. Friend the Member for Wolverhampton South East (Mr McFadden)?
Minister reply
I have been in the Treasury for more than four years under three Chancellors. I have supported them all to the best of my ability, and I will continue to do so.
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Question
What does it say about the integrity of this Tory Government that they are willing to write off billions of pounds of taxpayers’ money while, at the same time, cutting the income of millions of people on universal credit during a cost of living crisis?
Minister reply
This Government made interventions to support people but had to reconcile verification issues which arguably stopped some from accessing benefits. I do not accept the premise that the Government’s actions are indicative of poor integrity.
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Question
Did the Government act on warnings about fraudulent activity in companies during 2020-21? If not, why not?
Minister reply
The government relied on HMRC and Companies House data for scheme design. Subsequent insights from these organisations have guided fraud recovery efforts.
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Question
What would the £4.3 billion bill have done for those that did not qualify for any assistance?
Minister reply
The economy has recovered faster than anticipated, and unemployment is at 4.1%. The Government is committed to supporting businesses in recovery with targeted interventions.
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Question
Why were those who fell through the gap between job retention scheme and self-employed scheme not supported, while fraudulent companies were?
Minister reply
Checks against data to verify identity were necessary but meant some could not secure support. The schemes focused on sectors hit hardest at different stages of the crisis.
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Question
How many companies had only just been formed before receiving emergency loans?
Minister reply
There were examples of fraud, but getting funds out quickly was urged by organisations like the CBI and FSB. I urge MPs to give information to HMRC for chasing up issues.
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Question
What response did you get when raising concerns about fraud in July 2020?
Minister reply
The right hon. Gentleman raised concerns but the government moved £81.2 billion of support through various schemes to businesses and individuals, acknowledging some element of fraud.
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Question
Does he understand that many people feel anger when they see the Government write off £4.3 billion?
Minister reply
As a former arts Minister, I recognise the contribution of creative industries but acknowledge there was a balancing act between speedy support and fraud risk.
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Question
How much money will be returned from HMRC’s taskforce investigations into fraudulent or incorrect claims?
Minister reply
HMRC is recovering some £1 billion in fraud and incorrect claims, with 25% expected to be returned. Lessons are being learned about the design of future schemes.