ALTHOUGH it was initially believed that criminals might embezzle up £1.9 billion (€2.1 billion) from the Government Bounce Back Scheme, the UK National Audit Office (NAO) has announced that it estimates that the scale of loss could be as much as £26 billion (€28.6 billion).
That is an incredible 60 per cent of the total amount loaned and the main banks who were involved, Barclays, HSBC, Lloyds, NatWest and Santander, which provided more than £30 billion (€33 billion) in funding will be protected and should between them earn more than £1 billion (€1.1 billion) in government paid interest.
To summarise, the Bounce Back Loan Scheme provides registered and unregistered businesses with loans of up to £50,000 (€55,000) or a maximum of 25 per cent of annual turnover, to maintain their financial health during the pandemic.
According to the NAO, once government decided to support small businesses facing cash flow problems owing to the pandemic, it moved very quickly to set up a scheme.
It prioritised one aspect of value for money – payment speed – over almost all others and has been prepared to tolerate a potentially very high level of losses as a result.
The problem is that because of the speed in which it set up and the 1.2 million cases approved in record time, it didn’t really know who was legitimate and who would be able to pay back loans received.
Time will tell as the loans are over a 10-year period with first repayments due in May 2021.
Reporting on the potential loss to the taxpayer, the BBC said that it had already identified more than 100 bogus companies set up by scammers who have each received the £50,000 maximum loan, often using the names of individuals who had absolutely no idea of what was happening.