NAO warns loan scheme could result in £26 billion in losses

The National Audit Office (NAO) has warned the government that it faces a potential loss of £15 billion to £26 billion as a result of criminals taking advantage of the coronavirus (COVID-19) Bounce Back Loan Scheme (BBLS).

08 Oct 2020

The National Audit Office (NAO) has warned the government that it faces a potential loss of £15 billion to £26 billion as a result of criminals taking advantage of the coronavirus (COVID-19) Bounce Back Loan Scheme (BBLS).

The BBLS was announced on 27 April 2020 and is designed to quickly provide loans of up to £50,000, or a maximum of 25% of annual turnover, to small businesses to support their financial health during the COVID-19 pandemic.

Over the coming months, the extent of losses due to fraud will become clearer, the NAO said, but the full extent of losses, both credit and fraud, will not emerge until BBLS loans are due to start being repaid from 4 May 2021.

When compared to other COVID-19 support schemes, the BBLS has less strict eligibility criteria in place, the NAO said. It stated that the lower level of checks presents credit risks as it increases the likelihood that loans are made to businesses which will not be able to repay them.

Commenting on the issue, Gareth Davies, Head of the NAO, said: 'With concerns that many small businesses might run out of money as a result of the COVID-19 pandemic, government acted decisively to get cash into their hands as quickly as possible.

'Unfortunately, the cost to the taxpayer has the potential to be very high, if the estimated losses turn out to be correct.

'Government will need to ensure that robust debt collection and fraud investigation arrangements are in place to minimise the impact of these potential losses to the public purse.'

Quick Links

Home | Contact us | Accessibility | Disclaimer | Help | Site map |

© 2020 Blue Spire Limited. All rights reserved.

We use cookies on this website, you can find more information about cookies here.

Contact Chichester Office

Tel: +44 (0)1243 781234
Fax: +44 (0)1243 791770
Email: chichester@bluespiregroup.com


Contact Brighton Office

Tel: +44 (0)1273 739533
Fax: +44 (0)1273 732844
Email: brighton@bluespiregroup.com

Chichester Address
Cawley Priory, South Pallant, Chichester, West Sussex PO19 1SY

Brighton Address
5th Floor Intergen House, 65-67 Western Road, Hove, East Sussex BN3 2JQ

Blue Spire Limited is Registered to carry out audit work in the UK and Ireland and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales C004152645. Professional indemnity insurance is provided by Royal & Sun Alliance Insurance Plc 9th Floor, One Plantation Place, 30 Fenchurch Street, London, EC3M 3BD and its territorial coverage is worldwide (excluding United States/Canada).
Blue Spire Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. FSA register https://www.fca.org.uk/register reference 566257. This guidance and/or advice contained within this website is subject to the UK regulatory regime, and is therefore targeted at customers based in the UK