Recommendation 21

As HM Treasury informed us, during the 24 September Winter Economy Plan Statement, the Chancellor indicated there would be a further loan scheme, which is currently in development and will be announced early 2021.54 It is important that any replacement guarantee scheme also enables all lenders to compete effectively in the market. The Bank’s Reservation Notice at the start of the Scheme highlighted concerns about the impact on competition in the market. This is in direct relation to the Bank’s objective of creating “a more diverse finance market for smaller businesses, with a greater choice of options and providers”.55 The five largest lenders provided 89% of loans under the Scheme, compared to 65% of total SME debt, increasing their share of the SME lending market.56 52 C&AG’s Report, British Business Bank, Session 2019–20, HC 21, 10 January 2020 53 Q 83 54 Q 34 55 https://www.british-business-bank.co.uk/what-the-british-business-bank-does/ 56 C&AG’s Report, para 24 14 Covid-19: Bounce Back Loan Scheme