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Fraud is rampant — and no one in government is paying attention

The writer was UK minister for efficiency and transformation

On Monday, I took the difficult decision to resign as a government minister in a slightly controversial way.

It was a decision not taken lightly. In four and a half years as minister for efficiency and transformation in the Treasury and Cabinet Office, I have rarely been in the public gaze. But the failure of government in tackling fraud is, I believe, so egregious and the need for remedy so urgent that, in the end, I felt the only option was to smash some crockery to get people to take notice.

Fraud in government is rampant. Public estimates sit at just under £30bn a year. There is a complete lack of focus on the cost to society, or indeed the taxpayer.

The rapid roll out of the government’s bounce-back loan scheme was an important and successful intervention to protect the productive capacity of our economy in the worst peacetime crisis since the second world war. But the cack-handed implementation and catastrophic follow-through is costing us probably hundreds of millions of pounds a month.

Repeatedly over the past 18 months, I have tried in my role as minister for counter-fraud to bring some focus to this issue. In life one should try to stay in the tent to win the arguments for as long as possible. But ultimately there comes a breaking point.

In this case the lack of grip by the British Business Bank and Department for Business, Energy and Industrial Strategy to manage the syndicate banks properly is indefensible. An avalanche of claims on the 100 per cent state guarantee has already started. But they have failed to implement either rigour or clarity in how they are paid out.

People follow incentives, and if the incentives to pursue fraud are weak, that is what the outcome will be.

Watch now for an outpouring of defensiveness and lists of inputted activity over the past 18 months. But then look at the outcomes — levels of fraud as a multiple of what should be happening.

The reason I have decided to speak out now is that there is still time to instil some discipline to avert even more loss.

The failure is not just political. The government machine has failed spectacularly both in the business department in its weak oversight of the British Business Bank and in the Treasury for allowing such dysfunctionality to continue on such a colossal scale (£47bn of bounce back loans have been advanced).

Beyond that, the safety mechanisms of the National Audit Office, House of Commons public accounts committee and select committees have all failed to embarrass the system into action.

At least three things must happen quickly. First, no more payouts should be made on the state guarantee until there is clarity on the work banks are doing to tackle fraud.

Second, there should be no more grant, loan or state assistance packages without pre-clearance by counter-fraud experts (this would delay things by about five days — just so we kill off the excuse that this would be unduly time-consuming).

Finally, and in the longer term, an economic crime bill to fill the regulatory gaps should be presented to parliament. This was foolishly rejected last week as a candidate bill for the next parliamentary session.

If my departure and bid for pariah status moves the machine to action, it will have been worth it.

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