A Norfolk Conservative peer, who quit as a minister in what was dubbed “one of the most dramatic moments ever seen” in the House of Lords, has claimed fraud is rampant in the government.

Lord Agnew of Oulton - the founder of the Norfolk-based Inspiration Trust group of academy schools - had been minister for efficiency and transformation.

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But he announced his resignation on Monday (January 24) after he was asked for an update on the £4.3bn of Covid loans the Treasury had written off.

In his exit speech, the Tory peer criticised his party’s “schoolboy” handling of fraudulent Covid business loans.

In a subsequent op-ed in the Financial Times, Lord Agnew said the government had “failed spectacularly” for allowing dysfunctionality to continue on such a colossal scale.

The former minister wrote of his “slightly controversial” exit: “The failure of government in tackling fraud is, I believe, so egregious and the need for remedy so urgent that, in the end, I felt the only option was to smash some crockery to get people to take notice.

“Fraud in government is rampant. Public estimates sit at just under £30bn a year. There is a complete lack of focus on the cost to society, or indeed the taxpayer.

“The rapid roll out of the government’s bounce-back loan scheme was an important and successful intervention to protect the productive capacity of our economy in the worst peacetime crisis since the Second World War.

"But the cack-handed implementation and catastrophic follow-through is costing us probably hundreds of millions of pounds a month.”

Labour leader in the Lords, Baroness Smith of Basildon, said of his resignation: “I think we have just witnessed one of the most dramatic moments we have ever seen in the House from a minister who felt his integrity could no longer ensure he remained a member of the government.”

The prime minister’s official spokesman said: “We’ve always been clear fraud is unacceptable and are taking action against those abusing the system, with 150,000 ineligible claims blocked, £500 million recovered last year and the HMRC tax protection taskforce is expected to recover an additional £1 billion of taxpayers’ money.”