Parliament’s Public Accounts Committee has today has published a report into the Bounce Back Loan Scheme (BBLS) set up to help businesses at the height of the coronavirus (Covid-19) pandemic.
The new report contains six key findings:
- The Government was not sufficiently prepared to support micro-businesses despite the economic impact of the pandemic being a known risk
- The BBLS was implemented with impressive speed but does not strike the right balance between supporting business and protecting the taxpayer
- Shortcomings in the BBLS design has exposed the taxpayer to potentially significant losses
- The Government’s plans for managing risks to the taxpayer – from both fraud and borrowers who are unable to repay loans – are woefully under-developed
- HM Treasury has still not finalised the rules lenders need to follow to ensure overdue loans are repaid.
- The Government has no apparent plans to measure the Scheme’s impact, including identifying how many businesses have been unable to access support.
Commenting on the report Meg Hillier MP, Chair of the Public Accounts Committee, said “We all hope the Bounce Back Loan Scheme saves a significant number of Britain’s small businesses, who will play a key part in the economic recovery from this pandemic.”
“But despite knowing that it was a case of ‘when’ rather than ‘if’ a serious pandemic hit the country, the Government didn’t develop plans for how to support the economy. Rushing to get money out of the door after the fact didn’t allow for analysis of how many businesses needed this help, could benefit from it, or could repay it.”
The Department for Business, Energy & Industrial Strategy annual report, published in September 2020, confirmed that up to 60% of Bounce Back Loans would be written off. In the same month the Government announced that BBLS repayments could be made over a ten-year period instead of the originally planned six-year period.
Responding to the report the Association of Accounting Technicians (AAT) said that extending the repayment terms merely deferred rather than solved the problem. Instead, AAT argued that loans to the small business community be written off, as had previously been suggested by former Chancellor George Osborne. This would save the taxpayer £1bn in interest payments, avoid the need for banks to utilise costly debt recovery agencies (and eliminate the chances of any small businesses being mistreated) whilst providing a shot in the arm for small businesses that are the motor of the British economy.
Phil Hall, AAT Head of Public Affairs & Public Policy, said “The Public Accounts Committee report again highlights that most of these loans are likely to be written off. As a result, AAT repeats its recommendation that all Bounce Back Loans for small businesses be written off to provide a much-needed boost for the SME sector, enable a speedier recovery, more growth, more investment and to benefit the taxpayer in the long run.”