Former home secretaries back call for new ‘fraud minister’ role after billions stolen during pandemic

The furlough scheme is particularly vulnerable to exploitation, writes Andy Gregory

An example of a phishing email from someone posing as the head of the World Health Organisation (WHO) and asking recipients to donate money to a coronavirus fund (PA)

Sajid Javid and David Blunkett, two former home secretaries, have backed a report which warns that billions of public funds have been stolen by fraudsters during the coronavirus pandemic and calls for the creation of a new “fraud minister” role within government.

The Policy Exchange report, titled “Daylight Robbery”, calculates that fraudsters are likely to exploit emergency funding measures, in particular the furlough scheme, to the tune of between £1.3bn and £7.9bn during the crisis, with government errors also adding to the total.

In the week that chancellor Rishi Sunak unveiled his £30bn “mini-budget”, researchers cautioned the government’s response to the crisis is particularly vulnerable to fraud, due to the novelty and speed with which new measures have been introduced and the size of relief packages.

As a result, the report calls on Boris Johnson to introduce a minister for fraud and economic crime, with a portfolio straddling both the Home Office and Cabinet Office, “to oversee the prevention, detection, investigation and prosecution of all fraud crimes, including Covid-19 related offences”.

Furthermore, the National Crime Agency‘s National Economic Crime Centre (NECC) should establish a Covid-19 Fraud Crime Forum to play the same role in tackling coronavirus-related economic and fraud crimes across the entirety of the public sector, the report said, also calling for a new Fraud Hotline for the public.

In a foreword to the report, Mr Blunkett warns that criminals will have used the Covid-19 crisis to “dip below the radar in order to be able to take advantage of unusual and unforeseen circumstance, and bank on attention and resources being focused elsewhere”.

The former Labour home secretary notes that “with a further range of substantial recovery measures announced by the Chancellor of the Exchequer on 8 July, more opportunity exists for those willing to defraud the nation as well as services and individuals”.

Mr Javid, who served as home secretary under Theresa May and as chancellor under Boris Johnson, said: “Sadly, a number of individuals have sought to exploit the Treasury’s interventions, and sums involved are likely to be significant.

“The government has been alive to this issue, however, and now is a good time to join up counter fraud measures to keep it to an absolute minimum.”

The report comes shortly after the arrest of an individual in the Solihull area as part of an investigation into a suspected £495,000 fraud of the Job Retention Scheme – which the report said was the coronavirus intervention most susceptible to fraud.

While this was the first arrest made in connection with furlough fraud, HMRC had already received 1,868 claims of furlough fraud by the end of May, the think tank said.

The report also raised concerns that the increased use of third parties and digital channels made it easier for fraudsters to infiltrate the system.

It added that the speed with which bounce back loads are approved create the potential to make multiple applications, and warned that councils’ rapid issuing of Business Support Grant Funds are particularly vulnerable. It also cited reports of bad practices such as sending cheques in the post.

Lead author, Richard Walton, a former head of Scotland Yard’s Counter Terrorism Command said: “The government’s economic response has been entirely justified but it has had the unintended consequence of opening up opportunities for fraud on a significant scale.

“A new minister for fraud and economic crime and a forum in the National Economic Crime Centre to co-ordinate the government’s response to this fraud would help to address the scale of the problem.”

Chris Greany, former UK national police coordinator for counter fraud and economic crime, said: “This crime type continues to affect the lives of so many citizens across the UK.

“A joined-up effort, with real bite, is now needed to recoup lost funds, prevent further crime and deter others from this unlawful and immoral behaviour.”