2
Recommendation
Fiftieth Report - Bounce Back Loans Sch…
Not Addressed
The potential Scheme losses are eye-watering, and we are not convinced the Department has the data it needs to manage the risks to the taxpayer. The Department estimated in its 2020–21 Annual Report and Accounts that it would lose £17 billion as a result of the Scheme, of which £4.9 …
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The potential Scheme losses are eye-watering, and we are not convinced the Department has the data it needs to manage the risks to the taxpayer. The Department estimated in its 2020–21 Annual Report and Accounts that it would lose £17 billion as a result of the Scheme, of which £4.9 billion was because of fraud. We have seen similarly high levels of expected losses due to fraud in other Covid-19 business support schemes, with losses from fraud and error within the furlough and self-employment schemes estimated at £5.7 billion. This staggering amount of taxpayer money could have been spent on improving existing public services. The Department admits that fraud within the Scheme falls well outside what it would consider a tolerable level, although it cannot tell us what that level should be. Its fraud estimate does not include all potential types of fraud, such as suspected turnover inflation fraud to claim larger loans than a borrower is entitled to. To date, it has allocated just £32 million to countering fraud and does not know whether lenders or other stakeholders, including law enforcement agencies, have the resources they need to counter fraud. The Department reports its estimates of losses once each year and these have a high level of uncertainty. The Bank’s loan data from the 24 commercial lenders under the Scheme has data limitations as each lender categorises and reports data in a slightly different way. The Department is trying to improve its approach to quantifying losses in the Scheme, but it is almost two years since its launch. 6 Bounce Back Loans Scheme: Follow-up Recommendation: The Department should, within the next 3 months, develop a strategy setting out the increase needed in Scheme counter-fraud resources for all relevant government stakeholders to both reduce fraud levels to a tolerable level and to maximise recoveries. As part of its Treasury Minute response, the Department should explain how it intends to improve the accuracy and timeliness of
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Government response AI summary
The government's response discusses Électricité de France’s (EDF) strategies, plans and the estimated costs, which are scrutinised, challenged, and approved by the Non-NDA liabilities assurance team (NLA) under the terms of the revised funding agreement. It does not address the committee's recommendation to develop a …
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HM Treasury
7
Recommendation
Fiftieth Report - Bounce Back Loans Sch…
Not Addressed
The Department has not yet identified how it will share the lessons from the Scheme. The Department asserts that it has applied some of the lessons it has learned from this Scheme in the subsequent Recovery Loan Scheme, such as introducing additional reporting requirements on lenders. It also recognises that …
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The Department has not yet identified how it will share the lessons from the Scheme. The Department asserts that it has applied some of the lessons it has learned from this Scheme in the subsequent Recovery Loan Scheme, such as introducing additional reporting requirements on lenders. It also recognises that it needs to ensure stronger counter-fraud capability and data-sharing across government to be in place from the start of any future scheme. Yet these learnings should have been obvious following the Department’s experience in the Financial Crisis when its approach was similarly reactive. We are surprised that the Department and the Bank were so ill-prepared to respond an economic shock, irrespective of the nature of the pandemic. The Department recognises that it would have been possible to design the outline of the Scheme five years ago, but it would not have planned for a scheme of this type because its pandemic preparedness plan did not foresee an event of such gravity. In responding to the pandemic, the Department was able to draw on some of the planning from its experience during the UK’s exit from the EU. Carrying lessons forward to future schemes, however, is hindered by the Department’s lack of corporate memory, with staff moving to other roles. The Department is shortly due to publish the findings of its first of three evaluations of the Scheme, as part of its three-year Scheme evaluation programme, but it has not shared any plans about how it would disseminate the lessons-learned across government. Recommendation: The Department and the Bank should establish a strategy on how it intends to share lessons from the scheme within a month of the publication of their first evaluation report. The Bank should develop a business case for an emergency loan scheme for future crisis within 6 months of publication of this report. Bounce Back Loans Scheme: Follow-up 9 1 Scheme risks and management The Bounce Back Loan Scheme
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Government response AI summary
The government's response discusses the Programme's uncertainty and states the CEO of the Delivery Authority will remain accountable for the skills and expertise to deliver the Programme, and their independence remains unchanged. An interim CEO was announced to assess capability and capacity gaps within the …
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HM Treasury