Chancellor Rishi Sunak is set to extend the UK’s £68bn coronavirus emergency loan schemes to help support businesses hit with the double whammy of Covid and Brexit, according to reports.
Officials are drawing up plans to extend the three main loan guarantee schemes, including the government’s £43.5bn coronavirus bounce back loans programme, the Financial Times reported.
The fresh batch of funding from the Treasury is expected to include the £19.6bn Coronavirus Business Interruption Loan Scheme and the £5bn Coronavirus Large Business Interruption Loan Scheme.
The loan scheme extensions are anticipated to last until the end of the financial year in March, when the implementation of the tier system will be reviewed.
That would mean that businesses will have had support from the government-backed loans for almost a year, with the programme having started in April.
The move is understood to be announced tomorrow, following a speech from the health secretary setting out new regional tier allocations this afternoon.
It comes after London’s move into Tier 3 yesterday ignited fury across the hospitality industry, which has repeatedly had to close and reopen during the pandemic.
Under Tier 3, all hospitality venues including pubs, restaurants and cafes must close and provide takeaway service only.
The UK’s leading business bodies last week warned that placing London under the highest alert level would deliver a “killer blow” for the capital’s hospitality venues.
Kate Nicholls, chief executive of UK Hospitality, told City A.M. that “many hospitality businesses simply wouldn’t recover from” the move, warning that it could lead to tens of thousands of job losses.
The Night Time Industries Association, which represents more than 1,200 bars, clubs, casinos and music venues across the country, last week warned that the new tier system will cause three-quarters of the country’s night-time venues to shut forever.
It comes after MPs yesterday published a scathing report into the government’s failings to support small businesses with the bounce back loan scheme during the pandemic.
The Public Accounts Committee (PAC) slammed ministers’ handling of the scheme, adding 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”, PAC added.
Bounce back loans have come under strict scrutiny following reports by City A.M. that small businesses were being “locked out” of applying for the loans despite being eligible for funding.
Kevin Hollinrake, chair of the all-party parliamentary group (APPG) for fair business banking, told City A.M. that top-ups risked creating a “two-tier system”, with SMEs that bank with non-traditional lenders “particularly disadvantaged”.
Hollinrake added that the introduction of top-ups “doesn’t solve the problem if you weren’t able to get a loan in the first place”.
“For many people that is existential, it is the difference between succeeding and failing,” he said.
The Treasury was approached for comment.