Fraudsters drained an eye-watering £6.5bn of taxpayers' cash from the public purse as part of Covid schemes - an amount so big Rishi Sunak could have cut Brits' income tax by £370 next year.
Shadow Chancellor Rachel Reeves accused the Government of a "huge waste" of public money with pandemic support schemes and said basic checks could have guarded against losses.
Covid support schemes, including the Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back Loans, have seen the Government guarantee almost £80bn of loans and grants.
The vast majority of the cash has gone to firms struggling under the weight of lockdown restrictions when Covid hit.
But the Government's own accounts show a staggering £6.5bn has been written off due to fraud.
Mr Sunak said the government was set to recover "£1bn to £2bn" of the cash.
It came as news reports revealed the Chancellor will draw up a "star chamber" to wage war on wasteful Whitehall spending in the wake of the pandemic.
Ms Reeves said the "incompetent" Chancellor's "hallmark" had been waste.
Taking him to task in the Commons, she said: "Can the Chancellor explain why quick electronic checks – such as cross-referencing with HMRC tax return data – were not conducted before money was handed out?
"And given this huge waste of taxpayers money, can the Chancellor confirm that he will be the first to be hauled in front of his own 'star chamber'?"
Her attack came as a report in Bloomberg revealed that corporate records show one £4.7m emergency loan went to one firm which was founded just two days before it got the cash.
Mr Sunak said at the time the Government would do "whatever it takes" to get firms through the pandemic and his quick response has been praised, as many businesses faced bankruptcy in the face of lockdown curbs.
He claimed in the Commons that the loss by fraud had been cut by a third to around £4bn and he was "absolutely committed" to tackling fraud.
But Reeves said frausters have been allowed to "loot the public purse" as ministers have only been able to pursue one in 40 cases where fraud has been reported.
She went on: "We all want money to get to businesses that need help.
"But the Chancellor acts like the only way to help businesses is by pouring money down the drain. It shouldn’t be beyond the wit of government to get money where it needs to go, without allowing fraudsters to steal taxpayer funds.
"Leaving the till open and unattended for thieves would be a sackable offence for a shopworkers, yet I don’t know of any cashier who lost £6.5bn on their shift.
"The truth is, two months ago, government officials described these schemes as 'the leading public sector fraud risk'."
