THE UK Government is spending more on tackling benefits fraud than addressing the “national scandal” of billions of pounds of economic crime, according to campaigners.

The failures in tackling fraud have been thrown into the spotlight by the spectacular resignation of Lord Agnew in the House of Lords last week.

Boris Johnson’s own anti-fraud minister quit by launching a scathing attack on the Treasury and its handling of a Covid loan scheme, saying it appears to have “no knowledge of, or little interest in, the consequences of fraud to our economy or society”.

Agnew attacked the oversight of the UK Government’s business department and the British Business Bank as “woeful”, highlighting “schoolboy errors” such as allowing more than 1000 companies to receive bounce-back loans which were not trading when Covid struck.

In an interview yesterday he spoke further of his resignation, saying: “I took no pleasure from it but the failure of Government to tackle fraud felt so egregious, and the need for remedy so urgent, that I felt my only option left was to smash some crockery to get people to take notice.”

The bounce-back loans were issued to smaller firms as a means of emergency support during the Covid crisis – offering up to £50,000 or 25% of turnover, backed by the state and with less checks than normal.

But estimates on levels of default vary from £27 billion by House of Commons Committee of Public Accounts in June last year, to £17bn by the Department for Business, Energy and Industrial Strategy (BEIS).

Parliament has heard the Treasury expects to write off about £4.3bn of Covid loans, with money having gone to “fraudsters”. The Treasury has since disputed this figure.

Dr John Tribe, senior lecturer in law at the University of Liverpool, said the overall figures were “staggering” when compared to the budgets of state departments.

“It isn’t the fraud point that is most startling – going forward there are estimates of up to 30-40% [of default] across the whole loan book – up to £27bn,” he said.

“You are always going to get fraud, but the extent of the rest of the default is so extreme that is gets to the very nature of how directors of companies at the time were thinking and behaving.”

In one high profile criminal case, two members of a Manchester organised crime gang received £145,000 in bounce-back loans, with the judge saying the “most basic of checks” would have revealed the fraud.

Tribe said he had heard anecdotal reports of recipients of Covid support buying flats, renting them out and closing down their business, blaming it on conditions when “in fact they had no intention of running that business again”.

He said there were questions to be asked of whether lending decisions made by the banks were rigorous enough, even if they say they were acting on government instructions to get the money out as quickly as possible.

“There is a balance between getting taxpayers’ money out in a prudent way and just spending it because you don’t view it in the same way you might view your own money,” he added.

A report published last week by charity Spotlight on Corruption warned Covid fraud has worsened an “already critical situation”.

The UK Government spends £852 million – the equivalent of just 0.042% of GDP – per year on fighting economic crime such as corruption, bribery, money laundering and fraud, according to the new analysis.

But it says that figure is dwarfed by the “conservative estimate” cost of economic crime to the UK economy – which at £290bn, is equal to 14.5% of GDP.

Susan Hawley, executive director at Spotlight on Corruption, said: “The UK’s enforcement agencies are chronically underfunded and losing the fight against economic crime, with around one in every seven pounds in the UK economy lost to crimes like fraud and money laundering.”

Questions have been raised over a crucial economic crime bill, which Lord Agnew claimed had been “killed off” during the next parliamentary year in his resignation letter.

Alison Thewliss, the SNP’s shadow chancellor, said: “The cost to the taxpayer in economic crime and stolen public money is more than just a number on a piece of paper, it comes at the cost of welfare support, NHS investment and vital public services.

The National: Alison ThewlissAlison Thewliss

“Despite this it seems clear the Tories will keep kicking the can down the road, allowing tens of billions to fall out the pocket of the Treasury and into the hands of criminals.”

The Treasury insist they are taking action on “multiple fronts” to track down anyone who has sought to “exploit our schemes”.

A spokesman said: “Our Covid support schemes were implemented at unprecedented speed to protect millions of jobs and businesses at a time when families needed it the most.

“As a result, our economy is back to pre-pandemic levels and growing at the fastest rate in the G7.

“Last year we stopped or recovered nearly £2.2bn in potential fraud from the Bounce Back Loan Scheme and £743m of overclaimed furlough grants.

“We’ve also invested over £100m in a Taxpayer Protection Taskforce made up of nearly 1300 staff – which is expected to recover an additional £1bn of taxpayers money.”

But critics say far more is ploughed into tracking down benefits cheats. In December last year the UK Government announced it would spend £510m to tackle “record levels” of benefit fraud, including recruiting 2000 investigators for the Department of Work and Pensions.

George Turner, of investigative think-tank Tax Watch UK, said: “We will know that the government is beginning to take fraud seriously when they start putting as much effort into tackling white collar crime as they do chasing benefits fraud.

“The UK has had a long term problem with the enforcement of economic crime. Criminals know this and act with impunity. You are now more likely to be the victim of fraud than any other type of crime.

“Victims include people from all walks of life, from pensioners scammed out of their life savings, to wealthy individuals who have their money stolen by dishonest advisers.

“It is a national scandal that we continue to do so little about it.”