After months of chaos MPs have today published a report into the government’s failings to support small businesses with the bounce back loan scheme.
The Public Accounts Committee has published a devastating report into the government’s handling of the bounce back loan scheme, which has received criticism since its inception.
The BBLS was introduced in April following criticism of the CBILS scheme which froze smaller businesses out.
It allows SMEs to borrow up to a quarter of their annual turnover, capped to £50,000. In September MPs slammed the “inconsistency” of the loan scheme after City A.M. revealed multiple applications had been declined despite firms being eligible for funding.
Today the Public Accounts Committee has said that the government was “not sufficiently prepared to support micro businesses”. Its plans for managing risks to the taxpayer – from fraud and borrowers unable to repay loans – are “woefully under-developed”.
“Despite knowing that it was a case of ‘when’ rather than ‘if’ a serious pandemic hit the country, Government didn’t develop plans for how to support the economy,” Meg Hillier MP, chair of the committee said.
“Rushing to get money out of the door after the fact didn’t allow for analysis of how many businesses needed this help, could benefit from it, or could repay it.”
The committee’s report found that while the scheme was implemented with “impressive speed” it could expose the taxpayer to significant losses.
A report by the Department for Business, Energy & Industrial Strategy in September confirmed that up to 60 per cent of the loans would be written off. As such the Association of Accounting Technicians recommended that the loans be written off entirely, which would save the taxpayer £1bn in interest payments.
“AAT repeats its recommendation that all bounce back loans for small businesses be written off to provide a much-needed boost for the SME sector, enable a speedier recovery, more growth, more investment and to benefit the taxpayer in the long run,” said AAT’s head of public affairs and policy Phil Hall.