Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Too much chopping and changing of the new schemes has created uncertainty for the UK...
Conclusion
Too much chopping and changing of the new schemes has created uncertainty for the UK nations, regions and businesses, regarding financial support and job security. Nations, regions and businesses, as well as their employees, need as much certainty as possible to allow them to plan ahead. Instead what they got in the autumn was a sequence of announcements, right to the very end of the end of first phase of the schemes, constantly adjusting the levels and availability of funding support for workers. The government announced on 5 November that both the CJRS and SEISS would be extended with levels of support broadly equivalent to the levels provided under the first phase of the schemes. We are concerned that businesses’ response to this initial uncertainly may have resulted in more workers being laid- off, even though eligibility for the government’s extended schemes was moved back to 23 September to cover such redundancies. Recommendation: The Departments should provide as much clarity and forewarning as possible about the employment support arrangements that will be available for UK nations, regions and businesses under conditions of national lockdown, regional lockdown and easing of restrictions for the remainder of the covid-19 pandemic. It should commit to this ahead of the Treasury minute response so employers can be clear that they can plan ahead with greater certainty.
Government Response
Acknowledged
HM Government
Acknowledged
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 Scheme sought to provide businesses with loans of up to £50,000, or a maximum of 25% of annual turnover, to maintain their financial health during the covid-19 pandemic. The loans are delivered through commercial lenders such as banks and building societies. The Scheme expects lenders to approve and pay out the loans within 24 to 48 hours of application. To make the process as fast as possible the Scheme does not require lenders to check the information on the loan application form or to perform credit and affordability checks. Borrowers are expected to repay the loans in full but owing to the absence of these checks government provides lenders a 100% guarantee on the loans: if the borrower does not repay the loan, government will. The loans have a fixed interest rate of 2.5% and a maximum length of ten years; in the first year of the loan there are no capital repayments due, and government pays the interest—making it interest-free for the borrower. As of 15 November, the Scheme had provided over 1.4 million loans to businesses, totalling £42.2 billion. The Scheme will now run until 31 January 20211. Based on a report by the National Audit Office, the Committee took evidence, on 5 December 2020 from the HM Treasury, the department and the Bank. The Committee published its report on 16 December 2020. Relevant reports • NAO report: Investigation into the Bounce Back Loan Scheme – Session 2019-21 (HC 860) • PAC report: COVID 19: Bounce Back Loan Scheme – Session 2019-21 (HC 687) Government responses to the Committee