The government has been “dangerously flat” in its approach to recover almost 2 billion in estimated losses of taxpayers of the Covid recovery loan scheme, the parliamentarians warned.
The Public Accounts Committee (PAC), composed of cross parliamentarians, criticized the lack of incentives for lenders to recover money.
The recovery loan scheme was established in the early days of the COVID-19 blocks when companies across the country were forced to close or face a fall in demand.
It provided loans of up to £ 50,000 per business, and were available for most of the United Kingdom companies without the usual credit and affordability checks so that they are emitted more quickly.
However, the Department of Business and Commerce (DBT) estimated that total losses due to fraud in the recovery loan scheme will be at least 1.9 billion, with the figure that is probably greater, since all fraudulent cases have not been identified.
The DBT also said that until now some losses had been recovered for a value of £ 130 million of the recovery scheme, but said it was not possible to identify how much related to the borrowers who contracted them fraudulently.
The Government guaranteed to cover any loss incurred by lenders on loans that could not be paid when the scheme began.
However, he has withdrawn his support in loans of £ 367 million in which I felt that lenders have not done everything he should have done, which means that banks step on the bill, instead of taxpayers.
Earlier this month, Starling Bank said he had agreed to eliminate the government guarantee from a group of loans that had potential problems, which led him to set aside about 28 million.
But the PAC said the broader guarantee meant that there was a lack of incentives for banks to recover taxpayers' money.
Sir Geoffrey Clifton-Brown, president of the Committee, criticized “passivity” in the government approach.
“DBT could not tell us if even the small fraction of that recovered sum was in fact even related to fraud,” he said.
“In fact, trusting the lenders backed by the government to recover losses, which, therefore, lack any incentive to pursue lost funds, has been a dangerously flat approach.
“Now that the insolvency service has assumed the responsibility of viable cases, we hope to listen to how others have failed.”
The DBT has been contacted to comment.
