Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Business survival rates are a key metric for measuring the Scheme’s impact.
Conclusion
Business survival rates are a key metric for measuring the Scheme’s impact. The Bank has commissioned an external evaluation study, which will report in stages over the next three years.50 We therefore asked the Department when we could expect to see the results from the first stage of its evaluation. The Department told us that it expected the first stage shortly from Ipsos MORI and London Economics. The Department agreed to write to us to confirm the exact timing for publishing the findings.51 The NAO explained that the Bank’s evaluation over the next three years will seek to draw lessons from both an operational perspective (‘process evaluation’) and economic perspective (‘impact evaluation’). The process evaluation will examine the effectiveness of the Scheme’s design and delivery mechanisms and will report in 2022. The NAO reported, however, that 44 Public Accounts Committee, Covid-19: Bounce Back Loan Scheme, Thirty-Third Report of Session 2019–21, HC 687, 16 December 2020 45 Treasury Minutes, CP 389, February 2021, para 6.2 46 Q 8; C&AG’s Report, Figures 2 and 3 47 Qq 9, 10 48 Department for Business, Energy & Industrial Strategy, Annual report and accounts 2019–20, Page 223 49 Qq 9–10; C&AG’s Report paras 6, 13 50 Q 10; C&AG’s Report, para 24 51 Qq 10, 12, 99–101 16 Bounce Back Loans Scheme: Follow-up measuring the Scheme’s impact will be challenging as there is a lack of reliable data to compare the recovery of businesses that used the Scheme with a similar group that did not.52 The Department and the Bank recognised that finding a counterfactual for this Scheme and other Covid support schemes is an issue. The Bank assured us that it was confident that it would be able to find a control group from businesses that did not take a loan, which would allow it to understand if the Scheme itself had made a difference.53 Unintended impacts of the Scheme on the lending market
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.