Source · Select Committees · Public Accounts Committee
Recommendation 19
19
We asked the Department whether it currently had the information that it needed to determine...
Conclusion
We asked the Department whether it currently had the information that it needed to determine whether the Scheme had been a success. The Department told us that it considered that the quality of information that it had about what was currently happening with the Scheme was “very good”, but there was “very limited information” to tell whether the Scheme was working over the longer term. It explained that “it is very early days” given the 6 or 10-year term of the loans and the limited repayment data available so far.47 While most borrowers have started to repay loans, not all are in repayment as some borrowers took a payment holiday. The Department estimated that 31% to 48% of loans will not be repaid as of 31 March 2021, with its ‘most likely’ estimate being £17 billion worth of loans. This is a narrowing on the estimate in its 2019–20 Annual Report & Accounts that stated up to 60% of loans would not be repaid.48 The Department acknowledged that it will be able to judge whether the Scheme has made a difference as it sees firms’ survival rates over the longer term.49
Government Response
Not Addressed
HM Government
Not Addressed
1: PAC conclusion: The Department and The Bank delivered the Scheme at breakneck speed, but the long-term impact of the Scheme is uncertain. 1a: PAC recommendation: The Department should put in place a clear strategy to manage the long-term legacy of the Scheme within a month of the publication of its evaluation report. 1.1 The government agrees with the Committee’s recommendation. Target implementation date: Autumn 2022 1.2 The ongoing management of the Bounce Back Loan Scheme (BBLS) remains one of the highest priorities for the department. A key component of this is the work being undertaken to tackle fraud in the scheme, and the department is currently formalising a strategy that will set out its long-term approach to counter fraud in the BBLS, building on work to date. The strategy will reflect recent developments in the government’s counter fraud landscape, including how additional funding made available by the Chancellor in the Spring Statement will be deployed. The department expects to finalise the strategy by Autumn 2022. 1.3 More broadly, the department’s strategy for managing the long-term legacy of the scheme will develop as its understanding of the scheme’s impact matures. The first evaluation report published in June 2022 provided an indication of the short-term impact of the scheme on business outcomes, though the longer-term impact will only become apparent in time and will depend in large part on wider economic conditions. The economic impact of the scheme will be explored further in subsequent phases of the evaluation, which will also include a value for money assessment. 1.4 Regular monitoring of data about loan facilities provided by lenders enables the department to assess the health of the loan book on an ongoing basis. Amongst other things, this information gives an indication of the proportion of borrowers who are experiencing difficulty in making their repayments. Meanwhile, the British Business Bank’s expected credit loss models provide a longer term forecast of the eventual level of defaults. BEIS reports on expected credit losses in relation to the scheme via its Annual Report and Accounts. 1.5 Finally, the department undertakes regular analysis to understand the financial health of the wider UK small and medium-sized enterprises (SME) population, which helps to inform ongoing policy development.