British Business Bank chiefs question ex-minister’s claims on Covid loan fraud data

Barclays boss tells MPs that HMRC could have given more anti-fraud help
Former minister Lord Agnew. Photo: Mark Thomas/Alamy Live News

By Jim Dunton

16 Mar 2022

Senior officials at the British Business Bank, which is owned by the Department for Business, Energy and Industrial Strategy, have questioned a former minister’s claims that performance data on one of the government’s biggest Covid support schemes has been withheld.

Bank chief commercial officer Patrick Magee and managing director for small-business lending Richard Bearman insisted to MPs that data about the £47bn Bounce Back Loan Scheme was available to Lord Theodore Agnew when he was a joint Cabinet Office and Treasury minister.

Magee and Bearman’s comments came at a Business, Energy and Industrial Strategy Select Committee session probing fraud in the government’s Covid support schemes for business yesterday.

Earlier in the day, Agnew – who quit the government in January over what he described as failings by BEIS and the Treasury in relation to fraud – accused BEIS and the British Business Bank of attempting to shut down scrutiny of handling of the Bounce Back Loan Scheme. It is currently estimated that £3.3bn has been paid out in loans sparked by fraudulent claims.

In particular,  Agnew complained that he had been repeatedly refused access to data about the scheme. The peer said he had requested a “dashboard” of basic information on bank performance relating to Bounce Back Loans but the request, and a reminder, had not been answered. He also voiced frustration at BEIS’s refusal to publish details of Bounce Back Loan recipients. 

British Business Bank small-business MD Bearman later told the committee the bank had a “huge amount of data” that it shared through a number of forums, particularly a counter-fraud forum that Cabinet Office staff are members of, along with Treasury and BEIS counterparts.

“I can’t speak for whether Lord Agnew was passed that data, but we share that data through a fraud dashboard that we provide and also we work very closely with the Cabinet Office to produce other data,” he said.

Bearman said he couldn’t comment on what Agnew had or had not been provided in response to his requests.

But he added: “We provide a fraud dashboard that has a lot of data on fraud and a lot of data on the lender performance.”

Bearman said the dashboard was available for ministerial access and that it included data on arrears and defaults.

He conceded that since Agnew’s request, the bank had begun work to combine information from two data dashboards into a single location.

Under further questioning about what data had been available to Agnew, and when, chief commercial officer Magee said the bank had worked with Cabinet Office officials from May 2020 and there had been a dashboard on fraud statistics that was “shared frequently” during 2021.

“His colleagues had access to that and he had access to that,” Magee said of Agnew. “He’s cited some of those statistics.”

Magee said the other dashboard contained lender-performance statistics for BEIS and the Treasury, and that both dashboards had been combined as of 7 March.

He said that because of the Bounce Back Loan Scheme’s interest-free period, data on lender performance only started to become available in the summer of 2021, at which point the BBB started to provide dashboards.

“The governance within the BBB is much better than Lord Agnew would have you believe,” he said.

“There’s many things I would agree with him around. I think fraud is a huge issue. We need to challenge the lenders. We need to track the data. We are doing that.”

Magee rejected Agnew’s suggestion that the BBB needed to be placed under the same regulatory framework as high-street banks, including coming under the oversight of the Prudential Regulation Authority and the Financial Conduct Authority.

He said the PRA existed to make sure depositors’ savings were safe and the FCA was there to make sure customers were treated fairly.

“We’re an economic-development bank,  we’re not a high-street bank,” he said.

HMRC ‘could have done more to help crack down on fraud’

Although the Bounce Back Loan Scheme is overseen by BEIS and administered by the BBB, its loans – of up to £50,000 – were made by retail banks, bankrolled by the government.

MPs on the select committee heard from five high-street lenders about their experiences of the scheme.

Hannah Bernard, head of business banking at Barclays, said she believed that applicants overstating their business turnover to maximise their entitlement to borrow via the Bounce Back Loan Scheme was the “main issue” with the fraud in the scheme.

She said HM Revenue and Customs had been asked to assist with verifying business turnover to substantiate would-be loan recipients’ claims, but it had been unable to do so.

“Ideally we would have wanted an HMRC data feed so we could have checked the turnover they were stating. That wasn’t available, so we had to go with self-attestation,” Bernard told MPs.

She said that although high street banks were typically lending to their own customers, they would not necessarily have had access to full business figures.

“We haven’t got the whole picture,” she said. “That’s why the HMRC feed would have been useful,  because they’re the only people who will know what the turnovers are.”

However, Bernard said that in comparison with other forms of fraud – such as organised crime or multiple fraudulent applications – Bounce Back Loan recipients who overstated their business turnover to get the largest loan possible could still repay what they had borrowed.

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