Recommendations & Conclusions
28 items
2
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Department and the Bank struck the wrong balance between making decisions quickly and protecting taxpayer interests. We have previously found that the need to work at speed in responding to the pandemic has in some instances resulted in increased risk and potentially exposed the taxpayer to huge losses. The …
Government response. agree with the Committee’s conclusion. The department assesses the value for money of all its investments. Value for money is evidenced and scrutinised at key approvals and assurance milestones and all programmes in the Government Major Programmes Portfolio must comply …
HM Treasury
3
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Bank’s approach to due diligence in accrediting Greensill was woefully inadequate. The Bank took comfort in Greensill having raised significant funding from global investors and its activities in managing billions of pounds in lending. In doing so, the Bank has placed too much reliance on the work of others …
Government response. agree with the Committee’s conclusion. The department recognises the importance of managing supplier performance including the apportionment of financial and programme risk. CAAS (Cost Assurance & Analysis Service) Approvals Team help define specific estimating and scheduling evidence requirements to underpin …
HM Treasury
4
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Bank has been insufficiently curious when identifying where money lent through the schemes, including by Greensill, has ultimately gone. Companies have borrowed around £30 billion under CBILS and CLBILS. The schemes’ rules require these funds be used to support business activity in the UK. However, the Bank does not …
Government response. agree with the Committee’s conclusion. The department has a track record of delivering savings; the underlying cost of the Defence Equipment & Support (DE&S) managed element of the Equipment Plan has reduced by £5.4 billion since 2015, excluding Foreign Exchange …
HM Treasury
5
Conclusion
Twenty-Sixth Report - Lessons from Gree…
We are concerned that the Bank’s investigation into Greensill has progressed much more slowly than we would expect given the seriousness of the potential breach. The Bank launched an investigation into Greensill on 12 October 2020, 10 days after discovering Greensill had issued seven CLBILS loans, totalling £350 million, to …
Government response. 5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The Bank has written to the Committee on this matter on 17 December 2021. 5.3 The Bank’s priority is that the investigation into Greensill’s lending under the scheme is …
HM Treasury
6
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Department’s enquiries of the Bank during Greensill’s accreditation created a damaging perception of interference, though the Bank asserts that this did not affect its judgement. The Department had eight email exchanges with the Bank between April and September 2020 requesting updates on Greensill’s accreditation to CLBILS and whether it …
Government response. agree with the Committee’s conclusion. The £16.5 billion extra funding from Spending Review 2020 will support the aims and priorities outlined in the Integrated Review to better counter developing and future threats. Further detail and a breakdown of the £16.5 …
HM Treasury
7
Recommendation
Twenty-Sixth Report - Lessons from Gree…
Government has not yet identified the lessons it will take from its accreditation of Greensill or from its COVID-19 business support schemes. Our work over the last 18 months has shown that the scale and nature of the COVID-19 pandemic and the government response are unprecedented in recent history and …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 7.2 The government is committed to building on the experience of the COVID-19 loan schemes, which were designed and delivered in the response to extraordinary economic circumstances …
HM Treasury
1
Conclusion
Twenty-Sixth Report - Lessons from Gree…
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury (the Treasury), the Department for Business, Energy & Industrial Strategy (the Department), and the British Business Bank (the Bank) about the involvement of Greensill Capital UK Limited (Greensill) in COVID-19 business support …
Government response. In Spring 2020, HM Treasury (the Treasury), the Department for Business, Energy & Industrial Strategy (the Department) and the British Business Bank (the Bank) developed several business support schemes to help businesses facing economic challenges as a result of the …
HM Treasury
8
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Bank accredited Greensill to lend under both CBILS and CLBILS. As Greensill was not PRA regulated nor did it have a pre-existing relationship with the Bank, it was initially 6 Qq 17, 19; C&AG’s Report para 2, 2.4 7 C&AG’s Report, para 2.6, Figure 9 8 Q 14 9 …
Government response. 2021. This is the government’s response to the Committee’s report. Relevant reports • NAO report: Investigation into the British Business Bank’s accreditation of Greensill capital – Session 2021-22 (HC 301) • PAC report: Lessons from Greensill Capital: accreditation to business …
HM Treasury
9
Conclusion
Twenty-Sixth Report - Lessons from Gree…
We asked the Bank how much weight it had placed on the work of others, such as Greensill’s auditors, Saffery Champness, in its decision to accredit Greensill. The Bank told us that the auditor’s opinion about the financial health of Greensill was considered as part of the accreditation process and …
HM Treasury
10
Conclusion
Twenty-Sixth Report - Lessons from Gree…
We asked the Bank why it had accredited Greensill despite several press reports highlighting it had a string of its clients default on their debt, potentially damaging Greensill. The Bank told us that it discussed the losses with Greensill and their potential impact on its financial position, which had provided …
HM Treasury
11
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The NAO found that the Bank treated Greensill’s application like other similar applicants, but that the Department was particularly interested in Greensill’s accreditation. The Bank applied the same accreditation and due diligence process to Greensill as it did to the two other non-bank lenders that it considered. Between April and …
HM Treasury
12
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Department told us that it had requested updates on when a decision would be made about accrediting Greensill so that it could decide whether it needed to create a “separate bespoke solution … [if] the process was ultimately going to end in a no”.31 It explained that its interest …
HM Treasury
13
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The NAO found that, when challenged on its loans to borrowers within the GFG Alliance group, Greensill told the Bank that it had received “political steers” that its support for the steel industry was welcomed.34 We asked the Department what Greensill had meant by receiving political steers. The Department told …
HM Treasury
14
Conclusion
Twenty-Sixth Report - Lessons from Gree…
We asked the Bank whether it considered the Department’s questions about Greensill’s accreditation as the Department encouraging the approval of Greensill’s application. The Bank told us that it had considered the level of interest from the Department as “unusual”, but that it considered it “understandable that the Department in charge …
HM Treasury
15
Conclusion
Twenty-Sixth Report - Lessons from Gree…
In early 2020, Greensill approached a number of government departments seeking involvement in various business support schemes.41 Greensill approached the Treasury and the Bank of England to access the Covid Corporate Finance Facility (CCFF) and was rejected as it was ineligible.42 The Treasury Select Committee covered Greensill’s application to the …
HM Treasury
16
Conclusion
Twenty-Sixth Report - Lessons from Gree…
We were concerned that Greensill had approached various parts of government looking for financial support, with different decision-makers arriving at conclusions in isolation and without engaging with officials in other departments. For example, the Bank told us that it was not in touch with UKEF during its accreditation of Greensill, …
HM Treasury
17
Conclusion
Twenty-Sixth Report - Lessons from Gree…
In May 2020, the Bank of England shared information with the Treasury that it had raised concerns with the National Crime Agency about Wyelands Bank. Wyelands Bank is a part of the GFG Alliance which was a significant Greensill client.48 The Treasury told us that information about a possible criminal …
HM Treasury
18
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Greensill lent a total of £418.5 million under the government’s COVID-19 business support schemes between July and October 2020. Of this, Greensill lent £400 million under CLBILS, the maximum amount it was authorised to lend, through eight loans of £50 million. This made Greensill the fifth largest lender under this …
HM Treasury
19
Conclusion
Twenty-Sixth Report - Lessons from Gree…
On 12 October 2020, the Bank launched an investigation into Greensill’s compliance with the CLBILS scheme rules. This was 10 days after the Bank first noticed that Greensill had made six CLBILS loans on 30 September to companies associated with the GFG Alliance; in addition to a loan made in …
HM Treasury
20
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Bank told us that it had acted immediately to protect the taxpayers’ position by preventing Greensill from making any further loans under the schemes.56 The Bank engaged Ernst & Young (EY) between October 2020 and March 2021 to examine all eight of Greensill’s CLBILS loans.57 The Bank explained that …
HM Treasury
21
Conclusion
Twenty-Sixth Report - Lessons from Gree…
In the Letter of Concern, the Bank outlined what it considered to be breaches of the guarantee agreement. In the Letter, the Bank also suspended the guarantee while the investigation was ongoing and invited representations from Greensill.59 We asked the Bank why it had taken so long between initiating the …
HM Treasury
22
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Bank confirmed that the investigation was still ongoing as it was awaiting a formal response from Greensill’s joint administrators. The Bank explained that it had agreed to extend the deadline for Greensill’s response to August 2021 because it wanted to receive a “fulsome answer” to its detailed set of …
HM Treasury
23
Conclusion
Twenty-Sixth Report - Lessons from Gree…
In total, under CBILS and CLBILS, lenders have issued more than 110,000 loans worth around £30 billion.68 Part of the eligibility criteria for receiving a loan included borrowers having its business activity based in the UK.69 The Treasury, which was responsible for developing the COVID-19 business support schemes alongside the …
HM Treasury
24
Conclusion
Twenty-Sixth Report - Lessons from Gree…
To understand how the Bank ensures that these schemes support UK businesses, we asked about the barriers that were in place for preventing the offshoring of the taxpayer- guaranteed loans. The Bank responded that a requirement of the scheme was that “the economic benefit needs to go to the company—a …
Government response. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The Bank has written to the Committee on this matter on 17 December 2021. 4.3 Both the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption …
HM Treasury
25
Conclusion
Twenty-Sixth Report - Lessons from Gree…
We asked the Treasury and the Bank whether they had undertaken any analysis of how the £350 million loaned to GFG Alliance companies was used, or in which country the money was spent. The Bank told us it was aware that the loans were transferred to a “central treasury function …
Government response. 4.1 The government agrees with the Committee’s recommendation. Recommendation implemented 4.2 The Bank has written to the Committee on this matter on 17 December 2021. 4.3 Both the Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption …
HM Treasury
26
Conclusion
Twenty-Sixth Report - Lessons from Gree…
Our work on the government’s response to the COVID-19 pandemic has demonstrated that there are important lessons to be learnt to improve government’s ability to respond to future emergencies and its business-as-usual service delivery. In 2021, as part of our Initial lessons from the government’s response to the COVID-19 pandemic …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 7.2 The government is committed to building on the experience of the COVID-19 loan schemes, which were designed and delivered in the response to extraordinary economic circumstances …
HM Treasury
27
Conclusion
Twenty-Sixth Report - Lessons from Gree…
We asked what lessons had been learnt or what could have been done differently as a result of Greensill’s access to these taxpayer-backed schemes. The Treasury told us that it wanted to review all the reports and inquiries, such as the Boardman Review and reports by Select Committees, “in the …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 7.2 The government is committed to building on the experience of the COVID-19 loan schemes, which were designed and delivered in the response to extraordinary economic circumstances …
HM Treasury
28
Conclusion
Twenty-Sixth Report - Lessons from Gree…
The Bank told us that it will closely evaluate its COVID-19 business support schemes, including assessing whether there were things it would need “to do differently” with the accreditation processes going forward and more specifically whether there could have been better engagement with regulators as part of the accreditation process. …
Government response. 7.1 The government agrees with the Committee’s recommendation. Target implementation date: Summer 2022 7.2 The government is committed to building on the experience of the COVID-19 loan schemes, which were designed and delivered in the response to extraordinary economic circumstances …
HM Treasury