27 January 2022

Why Covid fraud could be a bigger threat to Rishi Sunak than parties

Billions of pounds were stolen from emergency schemes promoted by the Chancellor.

Illustration by Otto Dettmer / Ikon Images

As partygate rumbles on, it has overwhelmed much political news that would otherwise have topped bulletins. But one story is putting up a fight.

The Treasury has written off £4.8bn of taxpayers’ money stolen in fraudulent emergency Covid-19 scheme claims. The figures were quietly published on the HMRC website in the second week of January, as the row over claims about No 10 lockdown parties was heating up, but they led the Treasury minister Theodore Agnew to resign on 24 January, claiming that oversight had been “woeful”.

The money – taken via schemes like furlough, self-employment support and Eat Out to Help Out – amounts to £1 of every £4 of fraud during the pandemic.

All these schemes are most associated in people’s minds with the Chancellor, Rishi Sunak. In fact, his status as the only popular Westminster politician in the country with significant name recognition is thought to be down to his cool, calm announcements of such support at the beginning of the pandemic.

Yet Sunak is clearly concerned about the impact of this fraud story on his reputation. After all, Agnew – who held the counter-fraud remit – publicly resigned in the House of Lords chamber, accusing the Treasury of “schoolboy errors” and having “no knowledge or little interest in the consequences of fraud to our economy or our society”.

On Twitter, Sunak insisted: “No, I’m not ignoring it, and I’m definitely not ‘writing it off’.”

There are multiple examples of taxpayers’ money being spent poorly during the pandemic. The so-called crony contracts fast-tracked to individuals and companies known to government ministers have been a running sore.

[Listen: New Statesman Podcast: Has the UK covid response been hobbled by cronyism?]

The government wasted £2.1bn on useless PPE, and approved £37bn for its Test and Trace programme that the Public Accounts Committee concluded failed to achieve its “main objective” of cutting infection levels and returning the country to normal.

Keir Starmer’s team has identified wasteful and corrupt government spending during Covid-19 as a “weak flank” for the government. It’s telling that the shadow defence secretary, John Healey, went big on a “dossier of waste” he put together about Ministry of Defence spending at the beginning of this year, for example.

The shadow chancellor, Rachel Reeves, who has a proven pedigree in holding wasteful spending to account, is described as “credible” in Labour’s focus groups. The public is also shifting towards a more Labour-friendly view of the economy (associating it more with jobs and prices than “balancing the books”). The opposition could shed its reputation for higher taxing and spending if its opponents – whether led by Johnson or Sunak – are seen as sloppier spenders.