The Government has increased the risk that taxpayers will lose money in the way it has treated banks who lent during its Covid-era loan scheme for small businesses, a group of influential MPs have said.
In a report published on Wednesday the Public Accounts Committee (PAC) accused the Department for Business, Energy and Industrial Strategy (Beis) of taking a “laissez-faire approach.”
“It is not clear how the Department holds to account third parties that deliver multibillion-pound programmes on its behalf,” the MPs said.
“The Committee is concerned that a laissez-faire approach may lead to failure to properly protect taxpayers’ money.”
The MPs added that the department was only making “slow progress” in combating fraud in the Bounce Back Loan scheme, which was launched during the early days of the Covid-19 pandemic.
The loans of up to £50,000 were paid out with minimal checks in order to ensure that they could be paid out rapidly and at scale.
The loans were paid out by normal banks, but with a guarantee that if the borrower could not pay back then the Government would compensate the bank.
At a time of financial crisis the department for business has lost billions of taxpayers’ desperately needed funds— Dame Meg Hillier
But the MPs said that the department lacked curiosity about how the banks were performing.
There were “limited requirements” for the data that lenders should collect and share with the Government, the MPs said.
PAC chair Dame Meg Hillier said: “At a time of financial crisis the department for business has lost billions of taxpayers’ desperately needed funds.
“It shows no real signs of making the improvements that would prevent the big mistakes it has made over many years, especially during the pandemic, happening all over again.”
In the wide-ranging report into the department, the MPs also said that it was being too slow compensating people who were impacted by the Post Office Horizon scandal.
Beis expects to pay out around £579 million to the Post Office so it can compensate the victims and still stay afloat.
But according to reports, victims are only getting partial payments, and the committee said that Beis should set a date for when it expects all claims to be settled.
Ms Hillier said: “It’s moving too slowly to compensate people for the lives ruined through the Post Office Horizon scandal.”
