Once Government identified that businesses might run out of cash as a result of the pandemic it moved very quickly to support them. For the smallest of businesses it created the Bounce Back Loans Scheme (the Scheme) which guaranteed loans, enabling business to borrow money in as little as 24 hours. However, Government needed to move quickly because it was taken by surprise that these businesses would require tailored support for dealing with the economic impacts of a pandemic. Since 2010, the National Risk Register has identified the potential economic impact of a pandemic. HM Treasury, the Department for Business, Energy & Industrial Strategy (the Department) and the British Business Bank (the Bank) prioritised delivery speed over all other aspects of value for money, and they have not been able to offer clear objectives or measures of the Scheme’s success.
This focus on speed of delivery has exposed the taxpayer to potentially huge losses, estimated in the region of £15 billion to £26 billion. According to the Department, the majority of these are credit losses, where the borrower wants to repay the loan but cannot, but Government lacks data to assess the levels of fraud within the Scheme. It also lacks data or measures to understand the economic benefit of the Scheme. In addition, HM Treasury is yet to agree the process and protocols that lenders are expected to follow in recovering overdue loans. Government needs to use the lessons learned from this Scheme to inform the future schemes it plans to implement in its continued response to the covid-19 pandemic.