Government ‘passive' in recovering £1.9bn of Covid loan losses, MPs warn
The Public Accounts Committee (PAC) – comprised of cross-party MPs – criticised the lack of incentive for lenders to recover the money.
The bounce back loan scheme was set up in the early days of the Covid-19 lockdowns when businesses across the country were forced to close or faced a drop-off in demand.
It provided loans of up to £50,000 per business, and were available to most UK firms without the usual credit and affordability checks in order to be issued more quickly.
However, the Department for Business and Trade (DBT) estimated that total losses due to fraud on the bounce back loan scheme will be at least £1.9 billion – with the figure likely to be higher as not all fraudulent cases had been identified.
The DBT also said that some £130 million worth of losses had so far been recovered from the bounce back scheme – but said it was not possible to identify how much related to borrowers contracting them fraudulently.
The Government guaranteed to cover any losses incurred by lenders on loans which could not be repaid when the scheme began.
It has nonetheless withdrawn its backing on £367 million worth of loans where it felt lenders have not done all it should have done – meaning banks foot the bill, rather than taxpayers.
Earlier this month, Starling Bank said it had agreed to remove the Government guarantee on a group of loans that had potential issues – leading it to put aside some £28 million.
But the PAC said the broader guarantee meant there was a lack of incentive for banks to recover taxpayers' money.
Sir Geoffrey Clifton-Brown, chairman of the committee, criticised 'passivity' in the Government's approach.
'DBT were unable to tell us if even the tiny fraction of that sum recovered was in fact even related to fraud,' he said.
'Indeed, relying on government-backed lenders to recover losses, who thus lack any incentive to pursue lost funds, has been a dangerously flat-footed approach.
'Now that the Insolvency Service has taken over responsibility for viable cases, we look forward to hearing how it fares where others have failed.'
The DBT has been approached for comment.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Herald Scotland
33 minutes ago
- The Herald Scotland
Top civil servant told to ‘get on it' after ruling on gender
Mr Griffin insisted the Scottish Government was 'taking action where we think that is appropriate and possible', pending a further update from regulators at the Equalities and Human Rights Commission (EHRC). But with two women's rights groups – For Women Scotland and Sex Matters – now threatening further legal action against the Scottish Government, Ms Thomson told the top civil servant he should 'get on it'. She challenged the Permanent Secretary on the issue in the wake of the Supreme Court ruling back in April that the words 'woman' and 'sex' in the Equality Act 2010 refer to a biological woman and biological sex. That judgment came about after a challenge to the Scottish Government by For Women Scotland – with ministers, including First Minister John Swinney, making clear that while they accept that, they are waiting for further guidance from the EHRC before acting. The Scottish Parliamentary Corporate Body made changes to its policy on the use of toilet facilities in the Holyrood building in May (Image: Jane Barlow/PA) Ms Thomson however pointed out that at Holyrood the Scottish Parliamentary Corporate Body has ruled that the use of toilet facilities designated as either male or female will be based on biological sex – preventing trans people from using the toilet of their preferred gender. Mr Griffin insisted there is a 'range of action we have been taking already', adding that Social Justice Secretary Shirley-Anne Somerville had tasked him with leading a short life working group 'to take stock of the actions we need to take'. Speaking as he gave evidence to MSPs on the Finance and Public Administration Committee, Mr Griffin said: 'These are the actions we are taking while we wait for the end of the EHRC process to review their statutory guidance. 'Once that is finalised we will then be able to take a further series of actions.' He added: 'We are taking action where we think that is appropriate and possible, pending the finalisation of the EHRC guidance.' READ MORE: When Ms Thomson then demanded to know what action had been taken 'beyond talking about taking action', Mr Griffin told her: 'Specific actions, I can't give you that right now.' But he insisted the work being done was looking to 'prepare the ground' so that the government is ready to implement changes once the EHRC guidance is finalised. The Permanent Secretary said: 'We in the Scottish Government are in a very similar position to the UK Government and the Welsh Government in our understanding of our responsibility being we need to wait for the guidance for the implementation of some actions.' Michelle Thomson insisted Scotland's most senior civil servant needs to 'get on it' and act after a landmark Supreme Court ruling (Image: Andrew Milligan/PA) But with two potential further legal challenges that Ms Thomson said could potentially result in a 'significant loss of public money', the SNP MSP told him she was 'staggered why you are not acting now'. Mr Griffin said the advice he was given 'remains nevertheless that we should wait for the statutory regulator to finalise their guidance'. He added: 'I am assured that the advice that I've got is the correct advice. 'We find ourselves in a very similar position to our colleagues at Westminster and in Cardiff.' But Ms Thomson told him: 'I think my firm advice to you would be to look afresh at that. It is no justification under law, frankly, to say: 'Ah well, that's what everybody else was doing.' 'The Supreme Court judgment was compellingly clear, there is a threat of two further legal actions. My firm advice to you, Permanent Secretary, would be to get on it, because I think you are ultimately the accountable officer responsible for ensuring the Scottish Government upholds the law. 'And regardless of your view in this matter, I personally think it is a very poor look that we're 10 weeks later and we haven't done anything about it.'
The Guardian
an hour ago
- The Guardian
Tory peer Liam Booth-Smith takes job at AI firm he encountered at No 10
A former chief of staff to Rishi Sunak who was made a Conservative peer has taken a job as 'external affairs' chief at an artificial intelligence company that he encountered while working at No 10. Liam Booth-Smith, who entered the House of Lords last year, has joined Anthropic, which recently signed a memorandum of understanding about working with the government on AI. His former boss Sunak was a supporter of the UK leading on AI during his time as prime minister, and hosted a meeting where Anthropic was present in May 2023 – which was attended by Booth-Smith as an observer. The Advisory Committee on Business Appointments (Acoba) said Booth-Smith should not engage in any lobbying on behalf of Anthropic for at least two years after leaving the government. Anthropic confirmed to Acoba his role would not involve lobbying and that it would abide by its terms. The committee said that Booth-Smith had not had any role in commercial or contractual decisions relating to Anthropic but noted that No 10 had overall oversight of AI policy. But it added: 'The committee's view is that there remains a risk associated with Lord Booth Smith's influence in government, particularly as he seeks to take up a role in external affairs. Anthropic is currently developing a UK presence to promote its services with a wide range of applications, including with and across the UK government. 'Lord Booth-Smith must avoid engaging in activity that could reasonably be seen as seeking to influence government decisions, including approaching the government, whether special advisers, other officials or ministers about its approach or policy on Anthropic's behalf. If he was to initiate contact with the UK government it would be difficult to manage the risk that this is seen as lobbying.' In addition to a two-year lobbying ban, it advised that Booth-Smith should not draw on any privileged information available to him from his time in government, make use of any contacts made in government to influence policy, or provide advice to Anthropic on any policy he had specific involvement in or responsibility for as chief of staff at No 10 for two years. As a peer, Lord Booth-Smith is already banned from lobbying the government on any subject. Gabe Winn, the chief executive of Blakeney, a lobbying firm, who is campaigning against peers being paid to offer political advice to companies, questioned whether Booth-Smith should be doing the external affairs role for an AI company as well as being a legislator. An Anthropic spokesperson said: 'Liam Booth-Smith is following all applicable Acoba guidance and the House of Lords Code of Conduct in his role.' Booth-Smith has been approached for comment.
The Guardian
an hour ago
- The Guardian
Government did not want to ‘harass' Post Office victims by chasing up claims
Post office operators yet to claim compensation of at least £600,000 relating to the Horizon IT scandal have not been chased up by officials because the government did not want to 'harass' them with letters, it has emerged. In a report criticising the speed and handling of payouts after the Post Office scandal, the House of Commons public accounts committee (PAC) said the government is taking 'insufficient action' identifying all the operators eligible to claim some of the £1.7bn being paid out across four compensation schemes. Last year, the Department for Business and Trade (DBT) opened a scheme to compensate 800 individuals who had their criminal convictions quashed by unprecedented legislation to exonerate those wrongly prosecuted for financial shortfalls using evidence from the Post Office's flawed Horizon IT system. Almost a year on, the PAC report found that only 42% have accepted a fixed and final sum of £600,000, and a third are yet to apply at all. According to the latest official figures, just over £1bn has been paid out in compensation to more than 7,300 claimants across the four redress schemes to 2 June. Around £560m has been paid out under the Horizon Shortfall Scheme (HSS), while £245m in compensation has been awarded through the Horizon Convictions Redress Scheme (HCRS). Sir Alan Bates, who led the 20-year campaign for justice for post office operators, was last month handed a 'take it or leave it' compensation offer of less than half his original claim. The DBT, which has only sent one letter to each post office operator eligible for the HCRS, admitted that it has not yet received any full claims from post office operator who do not want to accept the £600,000 deal. When asked by the PAC why it was not following up letters that had not received a reply, the government said that it was 'concerned that individuals receiving letters would feel harassed if they had a series of letters asking the same thing'. 'The Post Office Horizon scandal was one of the UK's worst ever miscarriages of justice,' said Sir Geoffrey Clifton-Brown, the chair of the PAC. 'This committee would have hoped to have found government laser-focused on ensuring all those eligible were fully and fairly compensated for what happened.' The DBT said it does not expect to receive any itemised claims for full assessment until the autumn because they are 'complex [and] the spread of potential payments is far greater'. The committee's criticism was extended to one of the other main schemes, the HSS, which is run by the Post Office. The committee was told that more than 18,500 letters were sent to post office operators eligible for the scheme, those who have suffered losses because of the Horizon system but were not convicted, but that the response rate was just 21%. The Post Office has not sent any chaser letters to eligible post office operators, but said it plans to send 5,000 more letters this year to those not yet contacted. 'It is deeply dissatisfactory to find these schemes still moving far too slowly, with no government plans to track down the majority of potential claimants who may not yet be aware of their proper entitlements,' said Clifton-Brown. Sign up to First Edition Our morning email breaks down the key stories of the day, telling you what's happening and why it matters after newsletter promotion 'It is entirely unacceptable that those affected by this scandal, some of whom have had to go through the courts to clear their names, are being forced to relitigate their cases a second time.' A spokesperson for the Post Office said: 'More than £1bn has been paid to victims of the Horizon IT scandal, and each week we are seeing more people receive their final settlements so they can begin to look beyond this painful chapter of their lives. 'However, more work remains to be done so that all victims receive full redress as quickly as possible and this is an absolute priority for the Post Office.' The MPs also raised concerns about the financial backing of the Post Office, which is wholly owned by the government. The government funds all of the Horizon compensation schemes and provides a 'letter of support' to the Post Office, giving assurance that the DBT will deliver wider financial support. The MPs raised concerns that the letter of support effectively gives the Post Office a 'blank cheque'. The DBT said that financial support is subject to approval from the Treasury and that the letter of support 'deliberately falls short of being a financial guarantee'. The Post Office made a pre-tax loss of £612m last year, while its debts have ballooned to more than the value of its assets, and is to close 115 loss-making branches, putting 2,000 jobs at risk.
