Fiftieth Report - Bounce Back Loans Scheme: Follow-up

Select Committee

Public Accounts Committee HC 951 27 April 2022

Report Status Government responded

Conclusions & Recommendations 26 items (17 recs)

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Government Response (AI assessment · 24 of 26 classified)

Accepted 21

Acknowledged 1

Not Addressed 2

Recommendations

2 results

2 Not Addressed

The potential Scheme losses are eye-watering, and we are not convinced the Department has the...

Recommendation

The potential Scheme losses are eye-watering, and we are not convinced the Department has the data it needs to manage the risks to the taxpayer. The Department estimated in its 2020–21 Annual Report and Accounts that it would lose £17 … Read more The potential Scheme losses are eye-watering, and we are not convinced the Department has the data it needs to manage the risks to the taxpayer. The Department estimated in its 2020–21 Annual Report and Accounts that it would lose £17 billion as a result of the Scheme, of which £4.9 billion was because of fraud. We have seen similarly high levels of expected losses due to fraud in other Covid-19 business support schemes, with losses from fraud and error within the furlough and self-employment schemes estimated at £5.7 billion. This staggering amount of taxpayer money could have been spent on improving existing public services. The Department admits that fraud within the Scheme falls well outside what it would consider a tolerable level, although it cannot tell us what that level should be. Its fraud estimate does not include all potential types of fraud, such as suspected turnover inflation fraud to claim larger loans than a borrower is entitled to. To date, it has allocated just £32 million to countering fraud and does not know whether lenders or other stakeholders, including law enforcement agencies, have the resources they need to counter fraud. The Department reports its estimates of losses once each year and these have a high level of uncertainty. The Bank’s loan data from the 24 commercial lenders under the Scheme has data limitations as each lender categorises and reports data in a slightly different way. The Department is trying to improve its approach to quantifying losses in the Scheme, but it is almost two years since its launch. 6 Bounce Back Loans Scheme: Follow-up Recommendation: The Department should, within the next 3 months, develop a strategy setting out the increase needed in Scheme counter-fraud resources for all relevant government stakeholders to both reduce fraud levels to a tolerable level and to maximise recoveries. As part of its Treasury Minute response, the Department should explain how it intends to improve the accuracy and timeliness of Show less

Government Response Summary

The government's response discusses Électricité de France’s (EDF) strategies, plans and the estimated costs, which are scrutinised, challenged, and approved by the Non-NDA liabilities assurance team (NLA) under the terms of the revised funding agreement. It does not address the committee's recommendation to develop a strategy setting out the increase needed in Scheme counter-fraud resources, or explain how to improve the accuracy and timeliness of data.

HM Treasury

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7 Not Addressed

The Department has not yet identified how it will share the lessons from the Scheme.

Recommendation

The Department has not yet identified how it will share the lessons from the Scheme. The Department asserts that it has applied some of the lessons it has learned from this Scheme in the subsequent Recovery Loan Scheme, such as … Read more

Government Response Summary

The government's response discusses the Programme's uncertainty and states the CEO of the Delivery Authority will remain accountable for the skills and expertise to deliver the Programme, and their independence remains unchanged. An interim CEO was announced to assess capability and capacity gaps within the sponsor function to ensure it has the necessary skills and expertise. It does not address the committee's recommendation for the Department and the Bank to establish a strategy on how it intends to share lessons from the scheme within a month of the publication of their first evaluation report, or the Bank to develop a business case for an emergency loan scheme for future crisis within 6 months of publication of this report.

HM Treasury

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Conclusions (2) Observations and findings — click to expand

9 Conclusion

The Bank began collecting Scheme loan data from the 24 Scheme lenders in July 2021, where lenders provide data to the Bank via a collections system. The Bank said that it holds loan data from lenders across 70 different datapoints, including the name and address of the borrower, term of …

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21 Conclusion

Lenders used their own funds to make Scheme loans, with government guaranteeing to reimburse lenders if borrowers do not repay. How lenders raise funds differs according to size and type of lender; the more cheaply they can raise funds the more profitable the loans might be. While many large lenders …

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