Recommendations & Conclusions
4 items
6
Recommendation
Thirty-third Report: Covid-19: Bounce B…
Not Addressed
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 …
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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 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 2020 and there are no plans in place to measure the scheme’s impact. The performance measures—for example the number of insolvencies prevented— have therefore not been decided, making it difficult to evaluate and measure the success of the scheme to date. This is similar to the Bank’s other schemes, where it has not brought together information on costs, activity, and outcomes to be able to effectively measure impact and evaluate success. Furthermore the Scheme has likely reduced competition in the small business lending market as the five largest UK lenders have provided most loans. This has, in the short term at least, increased their market share which works against the Bank’s target of creating a more diverse finance market for smaller businesses. The Government intends to set up a further lending scheme in the new year meaning learning lessons from this Scheme is very important for the value for money of future schemes. Recommendation: The Department and the British Business Bank should set out, within the Treasury Minute response, how they plan on measuring the Scheme’s impact on businesses. They should ensure that any new schemes have, prior to launch, agreed performance measures. The Department should also analyse the impact of the Scheme on the lending market, paying attention to levels of competition and consumer choice. 8 Covid-19: Bounce Back Loan Scheme 1 Scheme design and launch
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Government response AI summary
The government's response provides context on the Bounce Back Loan Scheme and the committee's report, but it does not address the specific recommendations regarding measuring the scheme's impact, establishing performance measures for new schemes, or analyzing the lending market.
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HM Treasury
1
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Not Addressed
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 …
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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 the smaller end of small- and medium-sized enterprises, or ‘micro businesses’, and maintain their financial health during the pandemic.1
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Government response AI summary
The government's provided response discusses cash access, future legislation, and cashback facilities, entirely unrelated to the committee's introductory conclusion about the Bounce Back Loan Scheme.
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HM Treasury
13
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Not Addressed
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 …
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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 laundering and ‘know your customer’ checks. The Bank believes that these checks have prevented around 27,000 fraudulent loans that represent £1.1 billion, but it has no data on fraud levels among approved loans.33
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Government response AI summary
The government's provided response addresses a different Public Accounts Committee recommendation (3b) regarding balancing taxpayer and business interests and reliance on self-certification, not the preceding conclusion #13 on fraud management data.
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HM Treasury
16
Conclusion
Thirty-third Report: Covid-19: Bounce B…
Not Addressed
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 …
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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 informed us that TheCityUK Recapitalisation Group estimates between £20 billion and £23 billion of ‘unsustainable business debt’ is expected to stem 32 Qq 57, 58 33 Letter of 3 November 2021 from the British Business Bank, para 4] 34 Q 61 35 Q 61 36 Q 24 37 Q 39; C&AG’s Report, para. 3.13 38 Qq 38, 40 39 Q 42 40 C&AG’s Report, paras 20–21 12 Covid-19: Bounce Back Loan Scheme from all UK government guaranteed lending schemes. And there are further cashflow demands for businesses on the horizon including: VAT and other taxes which have been deferred; loan repayment holidays; and interest free periods ending. Thus, Government expects that many SMEs will struggle to pay back what they owe when payments are due.41 The Department explained to us that when a borrower does not repay the loan, this will appear in their credit history and affect future borrowings.42
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Government response AI summary
The government's response addresses a different recommendation regarding the finalisation and uniformity of recovery rules for overdue loans, and therefore does not engage with the committee's conclusion about the high likelihood of businesses struggling to repay Bounce Back Loans.
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HM Treasury