Theodore Agnew stepped up his criticism – after the chancellor denied he had written up £4.3bn of taxpayer’s money – saying: “Not a zippo have we heard about how he will do it.”
Lord Agnew’s despatch box resignation has fuelled criticism that Mr Sunak has written off the money, which is “now in the hand of criminals and gangs”, Labour said.
He astonished fellow peers by accusing the Treasury of “arrogance, indolence and ignorance”, branding oversight of the loans “nothing less than woeful”.
In response, Mr Sunak defended his approach, tweeting: “I’m not ignoring it, and I’m definitely not ‘writing it off.
“Clearly criminals have sought to exploit our support schemes. We’re going to do everything we can to get that money back and go after those who took advantage of the pandemic.”
In an interview with The Times, Lord Agnew said he was “nearly sick” ahead of announcing his resignation, but added: “I didn’t want to blow my top, but I was very angry.”
“The failure of government to tackle fraud felt so egregious, and the need for remedy so urgent, that I felt my only option left was to smash some crockery to get people to take notice.
“In life one should try to stay inside the tent to win the arguments but ultimately there comes a breaking point.”
On Mr Sunak’s response, the peer said: “I felt then that I’ve achieved something, my resignation was worth it. But not a zippo have we heard about how he will do it.”
During Covid lockdowns, loans to companies from high street banks and other commercial lenders were given state-backed guarantees against default.
But many were claimed by fraudulent shell companies that were suddenly registered in the UK.
Lord Agnew added: “The Treasury kept saying ‘it’s up to the banks’, but when it’s billions of pounds of taxpayers’ money it is to do with them.
“If we are going to attribute blame, 70 per cent goes to the Treasury mandarins. I pushed for more money to counter the fraud but was told it would have to wait another seven months until the spending review.”
The former minister also warned about the damage to trust in politicians, saying: “It’s a huge problem.
“My own personal view is that politicians would do much better being honest with voters and straight when things go wrong – rather than pretending everything is wonderful.”
Asked about Boris Johnson’s position, Lord Agnew said: “For everyone’s sake and sanity we have to draw a line under ‘partygate’.
“I don’t know the PM personally. I’ve never met him in person, only on Zoom or in a crowded room so I don’t want to feed the frenzy.”
Register for free to continue reading
Registration is a free and easy way to support our truly independent journalism
By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists
Already have an account? sign in
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies