Last updated: 25 Sep 2023 11:00 Posted in:
The UK government paid out another £1.2 billion between April and June to settle Covid-19 loans that have not been paid back, according to the latest official figures.
The Department for Business and Trade said that the government had now paid out on 14.5% of the bounce back loans that they guaranteed during the early lockdowns in 2020.
Around £100 million was also paid out during the same period to banks under other government-backed loan schemes, taking the total paid out to date to £7.4bn, the department’s data shows.
The loan schemes were set up when businesses across the country were forced to close as the pandemic struck.
The Bounce Back Loan Scheme provided loans of up to £50,000 to individual businesses, but they were available to most of the UK’s companies without detailed checks on whether the borrowers would be able to pay the money back.
In June, the government said just under £1.7bn out of the £46.6bn that was borrowed under the scheme had been flagged by lenders as suspected fraud.
The data showed that 76.3% of bounce back borrowers have either fully repaid their loans (11.5%) or are on schedule to do so (64.8%), the government said. That is a reduction from 77.6% in March.
Benjamin Wiles, managing director insolvency firm Kroll, said there was “an uncomfortable level of suspected fraud, albeit it seems a lot lower than original concerns ”.
The Insolvency Service is continuing to prosecute firms that obtained the loans fraudulently. It recently secured the winding-up of 11 companies for their part in a scheme which orchestrated systematic fraud against UK taxpayers during the covid-19 pandemic.
Between them, the companies claimed £500,000 through the Bounce Back Loan Scheme. The companies claimed to be registered at various offices in Berkshire, Lancashire, London and Shropshire, however the Insolvency Service investigation could not identify trading premises for any of the businesses, nor that they had ever traded.
Nine of the companies were found to have claimed the maximum available £50,000 through the Bounce Back Loan scheme, with one company even claiming two loans. Investigators found a host of links between the various companies, including the use of common addresses, with funds being moved between them before ultimately being transferred to entities registered in Hong Kong.
