The UK government reportedly removed state guarantees from approximately £1bn in loans given to businesses to stay afloat during the COVID-19 crisis. This means lenders are left high and dry as these funds will not be repaid. Reuters said it obtained these figures after submitting a Freedom of Information (FOI) request.
UK Government quashes guarantees on almost £1bn loans
British Business Bank (BBB), which administered the government pandemic loan schemes, removed guarantees with a total value of £979m. The bank quoted data corrections, application mistakes, and double funding as some of the reasons for this move.
At the onset of the pandemic, the UK government put different loan schemes in place in an attempt to hold up the economy. Although private banks ran these schemes, the government indicated it would stand in for some losses.
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After the coronavirus tide pulled out, concerns about fraud, among others, surfaced and it appeared the lending reached a staggering £77bn mark. In a September statement, the UK government indicated £7.4bn of taxpayers’ money went towards covering bank defaults, while £17bn was fully repaid.
On the back of this, the government increased the estimated total fraud by 43% to £1.7bn. Reuters indicated the alleged fraud was not necessarily the reason for nullifying the guarantees. The newsagent quoted a spokesperson for the UK’s Business Department, who said:
In unprecedented times, we stepped up to support the country.
This person added, that where necessary, they are in discussions with lenders to remove guarantees and lessen the load on taxpayers. Numerous banks were involved in this lending scheme, including big names such as Barclays (BARC.L), NatWest (NWG.L), Lloyds (LLOY.L), and HSBC (HSBA.L).
