A Conservative minister has resigned from his Cabinet Office and Treasury role over the Government’s “lamentable” handling of Covid fraud.

       Lord Agnew of Oulton made the decision to quit after ￡5 billion was thought to have been lost to fraudulent applications for emergency Bounce Back business loans during lockdown.

       He was appointed as a minister of state in February 2020 with a brief to deliver public sector reform and efficiency, as well as supporting the Chancellor of the Duchy of Lancaster with oversight of spending controls.

       “I’m here to defend the Government’s record in the deployment of counter-fraud measures over the last two years or so, but I will only be able to do that in part,” he told the Lords on Monday afternoon.

       “The assertion made by the Economic Secretary of the Treasury in the Commons debate in the Treasury last week that the priority was speed and distribution of funds is absolutely correct. But what has followed has been nothing less than desperately inadequate.”

       Lord Agnew ‘argued with Treasury for two years’

       Lord Agnew attacked what he claimed were “emblematic failures” and labelled oversight by the Department for Business, Energy and Industrial Strategy (BEIS) and the British Business Bank as “nothing less than woeful”.

       “They have been assisted by the Treasury who appear to have no knowledge or little interest in the consequences of fraud to our economy or our society,” he said.

       “I have been arguing for two years with Treasury and BEIS officials to get them to raise their game - I have been mostly unsuccessful.”

       Lord Agnew laid out several differences of opinion with Treasury officials as he called for urgent improvements on lender performance data and said officials’ reliance on audits was “far too reactive”.

       There was a “failure by Treasury [and] BEIS officials” to understand the “complete disjunction” between the scale of fraud and enforcement by the Government where it took place, he added.

       In his concluding remarks, Lord Agnew said it was his “deeply-held conviction that the current state of affairs is not acceptable”.

       “Given that I am the minister for counter-fraud, it feels somewhat disingenuous to stay on in that role if I am incapable of doing it properly, let alone defending our track record.

       “It is for this reason that I sadly decided to tender my resignation across the Treasury and Cabinet Office with immediate effect.

       “It is worth saying that none of this relates to far more dramatic political events being played out across Westminster. This is not an attack on the Prime Minister and I’m sorry for the inconvenience it will cause.”

       Lord Agnew’s final words before closing his folder and walking out of the Chamber were “Thank you and goodbye” as he was applauded by peers.

       The National Audit Office last month attacked plans by ministers to claw back just 0.1 per cent of the estimated ￡5 billion lost to fraudulent applications. Just ￡3 million had been recovered as at Dec 3, according to the office. Other schemes including furlough and the loan support programme have also been targeted by fraudsters.

       In a statement, a spokesman for the Treasury said: “We are grateful to Lord Agnew for the significant contribution he has made to government.

       “On the wider issues that he’s raised, we introduced our unprecedented Covid support schemes at speed to protect jobs and livelihoods, helping millions of people across the UK, including nearly 12 million on the furlough scheme alone.

       “We’ve always been clear [that] fraud is unacceptable and are taking action against those abusing the system, with 150,000 ineligible claims blocked, ￡500m recovered last year and the HMRC tax protection taskforce is expected to recover an additional ￡1bn of taxpayers’ money.”