Recommendations & Conclusions
21 items
2
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The Scheme was implemented with impressive speed but does not strike the right balance between supporting business and protecting the taxpayer. Thanks to the hard work and effort of civil servants, the Scheme was launched within two weeks of the Chancellor of the Exchequer proposing it to the Department and …
Government response. 2: PAC conclusion: The Scheme was implemented with impressive speed but does not strike the right balance between supporting business and protecting the taxpayer. 2: PAC recommendation: The Department should use all available data when implementing new business support schemes. …
HM Treasury
3
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Shortcomings in the Scheme’s design have exposed the taxpayer to potentially significant losses. Government achieved its very narrow objective of distributing cash quickly and to a very large number of small businesses across the UK. It delivered £8.4 billion in the first week and £21.3 billion in the first month, …
Government response. 3: PAC conclusion: Shortcomings in the Scheme’s design have exposed the taxpayer to potentially significant losses. 3a: PAC recommendation: Before launching or renewing a Scheme, HM Treasury should be explicit on the level of losses it is likely to entail …
HM Treasury
4
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Government’s plans for managing risks to the taxpayer—from both fraud and borrowers who are unable to repay loans—are woefully under-developed. Government does not have a counter-fraud strategy for the Scheme and has not identified what types of fraud it will prosecute. The Bank does, nevertheless, have a weekly lender fraud …
Government response. 3b: PAC recommendation: For the remainder of this Scheme, and future schemes, HM Treasury must better balance the interests of the taxpayer with the interests of businesses. It should demonstrate that its controls are cost effective and associated judgements reflect …
HM Treasury
5
Conclusion
Thirty-third Report: Covid-19: Bounce B…
HM Treasury has not yet finalised the rules lenders need to follow to ensure overdue loans are repaid. If a borrower does not repay the loan HM Treasury expects lenders to try to recover the money owed. But there is no requirement to complete this recovery process before the lender …
Government response. 5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 The government has worked closely with UK Finance and accredited Scheme lenders to develop a consistent, industry-wide approach to the collection and recovery of the loans. Guidance has now …
HM Treasury
6
Recommendation
Thirty-third Report: Covid-19: Bounce B…
Government has no apparent plans to measure the Scheme’s impact, including identifying how many businesses have been unable to access support. The Department indicates that its initial barometer for success was delivering cash to as many businesses in need, as fast as possible. However, no written objectives were outlined at …
Government response. 2020. HM Treasury, the Department for Business, Energy & Industrial Strategy (the department) and the British Business Bank (the Bank), based on a limited evidence of the underlying challenges for businesses, developed the Bounce Back Loan Scheme (the Scheme). The …
HM Treasury
1
Conclusion
Thirty-third Report: Covid-19: Bounce B…
On the basis of a report by the Comptroller & Auditor General (C&AG), we took evidence from HM Treasury, the Department of Business, Energy & Industrial Strategy (the Department) and the British Business Bank (the Bank) on the Bounce Back Loan Scheme (the Scheme). The Scheme was developed to support …
Government response. 2020. This sought views on the key considerations associated with cash access, including deposit and withdrawal facilities, cash acceptance, and regulatory oversight. The government is considering the responses and will seek to set out its next steps in due course. …
HM Treasury
7
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Both Germany and Switzerland delivered schemes to support small and medium- sized enterprises (SMEs) much earlier than the UK.16 Their schemes offered 100% guarantees.17 CBILS, although in place at a similar time, offered an 80% guarantee attempting to remain line with state aid legislation, but unlike other jurisdictions was not …
HM Treasury
8
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Notwithstanding the lack of preparedness, it is clear that staff at HM Treasury, the Department, and the Bank pulled out all the stops to get the Scheme up and running as quickly as possible; we should not underestimate the level of commitment they have shown in the response to the …
HM Treasury
9
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The Scheme is designed with the objective that borrowers receive the loans within 24–48 hours of a valid application. This target was based on independent research which suggested that one-third of businesses would probably not be able to access enough cash to continue trading for more than two weeks of …
HM Treasury
10
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The government’s view that businesses were unable to survive more than a two- week lockdown period was based on anecdotal evidence, and a survey conducted by the Association of Chartered Certified Accountants in mid-April.23 The Department told us that its prime role when gathering data to inform decisions on support …
Government response. 2: PAC conclusion: The Scheme was implemented with impressive speed but does not strike the right balance between supporting business and protecting the taxpayer. 2: PAC recommendation: The Department should use all available data when implementing new business support schemes. …
HM Treasury
11
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The Department informed us that the speed at which finance could be provided was a key design and operational requirement. We were told that the Department placed no budgetary cap on the Scheme and that demand was far greater than the Department anticipated. Government does not know how much of …
Government response. 2: PAC conclusion: The Scheme was implemented with impressive speed but does not strike the right balance between supporting business and protecting the taxpayer. 2: PAC recommendation: The Department should use all available data when implementing new business support schemes. …
HM Treasury
12
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Under the Scheme, the Government pays a borrower’s first 12 months of interest directly to the lender. At the end of September, when some 1.2 million loans were issued, the Department and the Bank forecast this to cost £1,068 million (£847 million in 2020–21 and £221 million in 2021–22); this …
Government response. 3: PAC conclusion: Shortcomings in the Scheme’s design have exposed the taxpayer to potentially significant losses. 3a: PAC recommendation: Before launching or renewing a Scheme, HM Treasury should be explicit on the level of losses it is likely to entail …
HM Treasury
13
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The Bank told us that lenders are responsible for the Scheme’s fraud management. The Bank does, nevertheless, have a weekly lender fraud prevention collaboration working group, as well as conducting ‘data-analytics’ work with the Cabinet Office.32 Lenders are responsible for processing loan applications and are required to conduct counter-fraud, anti-money …
Government response. 3b: PAC recommendation: For the remainder of this Scheme, and future schemes, HM Treasury must better balance the interests of the taxpayer with the interests of businesses. It should demonstrate that its controls are cost effective and associated judgements reflect …
HM Treasury
14
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The Department has not identified what types of fraud it will prosecute, with the Department suggesting there is a range of criminality in fraud; it has euphemistically referred to ‘hard’ and ‘soft’ fraud.34 Hard fraud refers to a type of fraud committed by criminal organizations with the intention to defraud …
Government response. 4: PAC conclusion: Government’s plans for managing risks to the taxpayer—from both fraud and borrowers who are unable to repay loans—are woefully under-developed. 4a: PAC recommendation: The Department needs to provide clear updates on how it intends to deal with …
HM Treasury
15
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The Bank does not collect information on how businesses have used the loans.36 The NAO report outlined that there is some evidence that businesses are using the money to pay back existing debt, which the Bank describes as a ‘economically rational’ for businesses to do.37 But this would reduce the …
Government response. 6: PAC conclusion: Government has no apparent plans to measure the Scheme’s impact, including identifying how many businesses have been unable to access support. 6: PAC recommendation: The Department and the British Business Bank should set out, within the Treasury …
HM Treasury
16
Conclusion
Thirty-third Report: Covid-19: Bounce B…
After the initial interest-free period, borrowers will need to make repayments (capital and interest) to the end of the loan period, in line with their loan agreement.40 There is a high likelihood that some businesses who wish to re-pay the loans will simply be unable to do so. UK Finance …
Government response. 5: PAC conclusion: HM Treasury has not yet finalised the rules lenders need to follow to ensure overdue loans are repaid. 5: PAC recommendation: HM Treasury should ensure that the recovery rules are confirmed prior to repayment, and that they …
HM Treasury
17
Conclusion
Thirty-third Report: Covid-19: Bounce B…
HM Treasury and the Bank told us they are continuing to work with lenders on debt recovery protocols and processes that are fair to businesses, lenders and taxpayers. HM Treasury expects lenders to try to recover the money owed but there is no requirement to complete this recovery process before …
Government response. 5: PAC conclusion: HM Treasury has not yet finalised the rules lenders need to follow to ensure overdue loans are repaid. 5: PAC recommendation: HM Treasury should ensure that the recovery rules are confirmed prior to repayment, and that they …
HM Treasury
18
Conclusion
Thirty-third Report: Covid-19: Bounce B…
HM Treasury explained to us that, at present, recoveries for the smaller loans are captured and overseen by the FCA and, for larger loans, by the Lending Standards Board. Thus, although the details have not been clarified, there is already an existing structure regarding recoveries. In turn, it is the …
Government response. 5: PAC conclusion: HM Treasury has not yet finalised the rules lenders need to follow to ensure overdue loans are repaid. 5: PAC recommendation: HM Treasury should ensure that the recovery rules are confirmed prior to repayment, and that they …
HM Treasury
19
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The Government indicated that its overarching objective was speed.48 No written objectives were outlined at the inception of the Scheme and no business case was put forward. The Bank, HM Treasury and the Department, did not agree the Scheme objectives until 15 July and there are no plans in place …
Government response. 6: PAC conclusion: Government has no apparent plans to measure the Scheme’s impact, including identifying how many businesses have been unable to access support. 6: PAC recommendation: The Department and the British Business Bank should set out, within the Treasury …
HM Treasury
20
Conclusion
Thirty-third Report: Covid-19: Bounce B…
The National Audit Office has previously recommended that the Bank focus more 41 UK Finance Written Evidence, para 27 42 Q 49 43 Q 70; C&AG’s Report, para 3.8 44 Q 72 45 Q 64 46 Qq 70, 71 47 Qq 48, 71 48 Qq 19, 26, 27 49 C&AG’s …
HM Treasury
21
Conclusion
Thirty-third Report: Covid-19: Bounce B…
As HM Treasury informed us, during the 24 September Winter Economy Plan Statement, the Chancellor indicated there would be a further loan scheme, which is currently in development and will be announced early 2021.54 It is important that any replacement guarantee scheme also enables all lenders to compete effectively in …
HM Treasury