MPs attack oversight of Bounce Back loans: Fears taxpayer could be on the hook for £26bn of bad debt
An influential group of MPs has accused the Treasury of having a ‘woefully under-developed’ system for recovering Bounce Back loans, as the taxpayer could be on the hook for £26billion of bad debt.
The scheme was launched by Chancellor Rishi Sunak in April, to help small businesses survive the coronavirus.
It allowed banks to lend them up to £50,000 with minimal checks, with the taxpayer covering any bank losses.
Minimal checks: The Bounce Back scheme was launched by Chancellor Rishi Sunak in April. It allowed banks to lend small firms up to £50,000 with the taxpayer covering any bank losses
But the House of Commons Public Accounts Committee (PAC) has accused the Treasury of an ‘astonishing’ lack of planning, and of failing to balance the interests of small businesses and taxpayers.
Labour MP Meg Hillier, chair of the committee, said: ‘Rushing to get money out of the door didn’t allow for analysis of how many businesses needed this help, could benefit from it, or could repay it.
‘Dropping basic checks was a huge issue that puts the taxpayer at risk to the tune of billions.’
The National Audit Office in October said up to 60 per cent of the £42.2billion Bounce Back loans could turn sour, leaving a £26billion bill.
The PAC report said: ‘Government’s plans for managing risks to the taxpayer are woefully under-developed.’
A Government spokesman said: ‘Government loan schemes have provided a lifeline to thousands of businesses across the UK – helping them survive the outbreak and protecting millions of jobs.
‘We targeted this support to help those who need it most as quickly as possible and we won’t apologise for this.
‘Fraudulent applications can be criminally prosecuted.’