Source · Select Committees · Public Accounts Committee
Recommendation 20
20
HM Treasury referred specifically to the Bounce Back Loan Scheme, which accounts for £22.8 billion...
Conclusion
HM Treasury referred specifically to the Bounce Back Loan Scheme, which accounts for £22.8 billion of the forecast total write-off costs of £26 billion.36 It told us that the first loan schemes had been too slow to grant loans to small businesses with no borrowing history and therefore no existing borrowing relationship with a bank or other lender. Even where there were existing relationships it had taken too much time for the lender to go through the approval process, introducing the major risk that a large number of businesses would not be able to survive long enough to get accredited for a loan. It was therefore an explicit policy decision to set up a scheme that would disburse loans quickly, and lenders were asked to set aside their normal processes for approving loans.37 However, HM Treasury stated that it expected loans to be repaid given the generous repayment terms offered, including repayment periods lasting up to ten years.38
Government Response
Acknowledged
HM Government
Acknowledged
5.1 The government agrees with the Committee’s recommendation. Recommendation implemented 5.2 HM Treasury has provided the resources for the British Business Bank (BBB) to deliver the ongoing administration of the government loan schemes and manage the associated risks to the taxpayer. Spending Review 2021 provides funding for the operating expenditure of the COVID-19 schemes, such as the running costs of the operations centre, developing the BBB’s financial crime capability and delivering the COVID-19 schemes audit and assurance programme. It additionally provides funding for BBB’s programme to transform its Data, IT, Outsourcing and Risk functions, which are critical to mitigating the risks linked to the COVID- 19 schemes. This is on top of the funding provided to the Department of Business, Energy and Industrial Strategy at Spring Budget 2021 and Spending Review 2021 to support counter fraud and strengthen enforcement for Bounce Back Loans. Further details on the loan schemes will be published in the Department of Business, Energy and Industrial Strategy’s annual report and accounts. 5.3 The government is also working closely with lenders to monitor and manage the government guaranteed loan scheme portfolios. Lenders are responsible for the recovery of these loans in line with the standards and legal obligations set out under the scheme. Lenders’ performance of their obligations is subject to a robust audit programme overseen by the British Business Bank. If lenders do not meet their obligations, the government has the right not pay out on any guarantee claims in scope.