Rishi Sunak accused of peddling a ‘fairy tale’ about his Covid loan scheme by former minister Lord Agnew

Rishi Sunak was today accused of peddling a 'fairy tale' about the effectiveness of his Covid loan schemes as he faced fresh anger for allowing billions of pounds to be lost to fraud.

Lord Agnew, who quit as Treasury minister in January, today tore up Mr Sunak's record as Chancellor accusing Mr Sunak of wasting taxpayers' money.

The Tory peer lamented that an estimated £5billion loss to fraud - through the rebound loan scheme for small and medium-sized businesses - could have been spent on helping the poorest during the cost of housing crisis. life.

He also claimed the public had been left 'completely in the dark' about the extent of taxpayers' money lost to Covid schemes.

Lord Agnew has accused Mr Sunak of 'blocking' the release of Covid loan performance data during his time as Treasury chief.

The ex-Chancellor is the favorite among five remaining candidates in the contest to replace Mr Johnson as Conservative leader and Prime Minister.

But Mr Sunak's leadership campaign is under fierce attack as rivals scrutinize his record since he was in charge of the country's finances.

Tory candidate Kemi Badenoch last night used an ITV debate to accuse Mr Sunak of not taking warnings about fraud seriously enough when he implemented Covid loan schemes as chancellor.

She grabbed a recent estimate that a total of £17billion will be lost to various Covid loan schemes.

Mr Sunak told the televised debate between Tory leadership rivals he was 'proud of my record' and insisted that 'new estimates of what fraud will be on the bounce back loan scheme have been reduced by a third.

He also claimed that "the payment performance of this loan portfolio has in fact far exceeded anyone's expectations."

But Lord Agnew, who served under Mr Sunak in the Treasury between February 2020 and January this year, today said he was 'astonished' by the former Chancellor's response.

"I was amazed because these estimates that he refers to - to me - are a fairy tale," he told Times Radio.

"But I don't have the data because he blocked the release of the data."

"So what I was pushing for then and since was a performance scorecard of the banks that are handling these loans."

"Because then, at a glance, you and everyone else would see what's really going on." But we don't, we don't have any view of what's going on.

Lord Agnew resigned as Treasury minister earlier this year and attacked the government for its handling of fraudulent Covid business loans.

"The reason I resigned six months ago was that the Treasury was very, very cowardly about how this thing was arranged," he said.

"But, worse than that - because that's in the past, we're now getting to the point where the banks are asking the Treasury for losses.

"The Treasury does not disclose how it manages this process. So you have a £47bn scheme with a complete lack of transparency.

Continuing his attack on Mr Sunak, he added: 'Until he releases the data, which he blocked when he was there (at Treasury), we just don't know.'

"And if everything is so wonderful, why can't we see it? It's really that simple - that's why I'm so frustrated.

"It's the kind of thing that undermines faith in politics, it's just words not deeds. I judge people by what they actually do, not what they say.

Lord Agnew backs Ms Badenoch for the Tory leadership and has claimed Mr Sunak's handling of Covid projects makes him unfit to be Britain's next Prime Minister.

He said: "While he presents himself as the guardian of the nation's finances, he has not been an effective guardian in that particular area."

"That's really what matters."

He highlighted how much money lost to Covid fraud could have been spent helping poorer households during the cost of living crisis.

"What's so frustrating is that there are billions of pounds at stake here that could be diverted to help with the cost of living crisis," the pair added.

'While I'm right that there's £5billion worth of fraud that could be stopped - if a little more energy was put into it - it would reduce the Universal Credit cut rate by a further 10 per cent.

"This would reduce the cost of the Universal Credit cut rate from 53% to 43%.

"Just using that money to do something to help people who are really struggling would make a difference.

"Meanwhile, the Treasury has just spent months blocking any effort to move forward even after I'm gone."