Labour is calling on Rishi Sunak to allow the National Crime Agency (NCA) to investigate fraud associated with the government’s COVID support schemes.

In an opposition day debate in the Commons today, the party will urge the government to allow the “astronomical levels of fraud” committed during the coronavirus pandemic to be investigated.

But the government has disputed reports it has written off £4.3bn of fraudulently claimed COVID loans, and the chancellor has denied “ignoring” the matter.

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Last week, Mr Sunak said the government would do “everything we can” to recover the money.

His comments came after a Conservative minister resigned over the government’s “woeful” efforts to stop abuse of coronavirus business support schemes.

Announcing his resignation in the House of Lords, Treasury minister Lord Agnew – who was responsible for efficiency and transformation – accused the government of making “schoolboy errors” by giving loans to more than 1,000 companies which were not trading when COVID struck.

Labour is urging the chancellor to provide an update on the amount of money fraudulently claimed that has been reclaimed by next month.

Shadow chancellor Rachel Reeves said Mr Sunak has shown “how little he and his government respect taxpayers”.

“His defence all along has been that there was pressure to get help to businesses. That’s no excuse for not even having minimal controls in place. And now the taxpayer is being asked to pay the bill,” Ms Reeves said.

“Endemic waste and fraud under the Tories are pouring taxpayers’ money away. Yet at the same time, they’re hiking taxes, asking working people to pay even more.”

‘We reserve the right to come after you’

On Monday, Chief Secretary to the Treasury Simon Clarke said he did not recognise reports that his department refused to allow the NCA to investigate fraud associated with the bounce back loan scheme.

The bounce back scheme was set up in April 2020 with the aim of keeping small businesses afloat during COVID, attracting applications from around a quarter of businesses in the UK. A total of 1.5 million loans worth £47bn were issued through it.

Mr Clarke said his department continues to work with the NCA and HMRC to pursue those who have inappropriately claimed money, and he insisted the government “have not written off any of this money”.

“We reserve the right to come after you if you’ve taken this money incorrectly,” he added.

Last year, the National Audit Office criticised the government for failing to implement measures to prevent people from exploiting COVID schemes.

In December, the spending watchdog estimated that the cost of fraudulent loans was £4.9bn – more than 10% of the total sum given out.

Sunak told to explain how cash will be recovered

In response to Lord Agnew’s resignation last week, a Number 10 spokesperson said the government was taking action against fraud, adding that 150,000 ineligible claims have been blocked and £500m recovered last year.

They noted that a HMRC tax protection taskforce was also expected to recover an additional £1bn.

Liberal Democrat Treasury spokesperson Christine Jardine said the government had “allowed fraudsters to steal billions of taxpayers’ money”.

She has also urged the chancellor to explain how he would get the money back.