Asked by
To ask Her Majesty’s Government what assessment they have made of
the operation of the Coronavirus Business Interruption Loan
Scheme for small- and medium-sized businesses.
The Question was considered in a Virtual Proceeding via video
call.
The Parliamentary Under-Secretary of State, Department for
Business, Energy and Industrial Strategy () (Con)
My Lords, as of 6 May, loans worth over £5.5 billion were issued
under the Coronavirus Business Interruption Loan Scheme for
33,812 businesses. The bounce-back loan scheme was launched on
Monday 4 May, and nearly 160,000 loans, worth almost £5 billion,
were approved in the first three days of the scheme’s operation.
The Government continue to monitor the schemes and to work with
the financial services sector to ensure that companies receive
the full benefit from the support available.
(LD)
Does the Minister accept that, although the number of loans is
quite large, the number of SMEs receiving them as a proportion of
the whole is relatively small? Is he concerned that, under the
two existing schemes, banks are primarily lending only to people
to whom they would have lent anyway in normal times? This is
particularly hitting the hospitality and retail sectors.
The noble Lord is right that only a relatively small proportion
of the total number of SMEs have applied for or received loans.
However, it is important to remember that not all businesses want
loans, and of course other government support schemes are also
available to help them through the crisis.
(Lab)
My Lords, the Government have to ease people back to work safely,
increase the flow of funding to SMEs and avoid scarring
unemployment. SMEs employ 60% of private sector workers, and many
are now critically dependent on both government-backed loans and
job retention schemes. Withdrawing these measures too soon when
their very purpose is to keep jobs and businesses going will
undermine them. When will the Government publish their road map
for phasing out the CBILS and job retention schemes, and what
impact will that have on structural employment and the
longer-term stimulus package for SMEs?
The Government will continue to monitor and review all their
business support schemes and make changes where necessary. I am
sure that the noble Baroness has noticed that this afternoon the
Chancellor will be making a Statement in the House of Commons on
the job retention scheme and the Government’s wider economic
coronavirus support package. I am sure that she will get more
information then.
(LD)
My Lords, under the bounce-back scheme, interest is charged at
2.5%, but under CBILS lenders are charging considerably more. At
the same time, banks are paying savers interest of less than 1%.
My noble friend talked about the small
number of SMEs taking up loans under the scheme. Does the
Minister agree that banks have a different idea of “We are all in
it together” compared with the rest of the population?
No, I do not accept that criticism of the banks. They have worked
extremely hard, as have the British Business Bank and the
department, to try to get as many loans approved as possible for
businesses that want them. The Government are—certainly through
the bounce-back scheme—supporting 100% of the amount of those
loans. Therefore, a lot of work is going on in all the sectors to
try to help the businesses that require support.
(Con)
My Lords, I strongly commend the Government for their support for
business during this crisis. Can my noble friend give more detail
of the operation of both the business interruption scheme and the
bounce-back scheme in Northern Ireland, which is predominantly an
SME economy? Will there be regular updates on the number of
successful applications, along with their value? Is he aware of
concerns among some big players, including the Bank of Ireland,
that they have yet to be accredited for the bounce-back scheme?
Finally, has any assessment been made of support available in the
Republic of Ireland and how it compares with what is on offer to
business in Northern Ireland?
I know that my noble friend takes a close interest in matters in
Northern Ireland. These schemes are available to businesses
across all regions of the UK, and many lenders acting in Northern
Ireland have received accreditation. However, we are working to
get more lenders fully accredited as quickly as possible.
Fourteen lenders have now been accredited for the bounce-back
loan scheme and we are seeking to get more approved as quickly as
possible.
(CB)
Smaller companies will rely on the future fund for support, yet
the Government have said that companies are required to have
already raised £250,000 to be eligible. This will put both
diverse funders and locations outside of the south-east at an
enormous disadvantage. How will the Minister ensure that the
future fund will neither deepen existing inequalities nor
perpetrate new ones, particularly when, as I understand it, all
13 advisers to the fund are men?
We have introduced a comprehensive package of measures designed
to support any business facing difficulties in this period,
including the various loan schemes and grants and support for the
self-employed. Start-ups may be able to access CBILS or the
bounce-back loan scheme if they fulfil the eligibility criteria.
We keep them constantly under review to ensure that as many
businesses as possible receive the support that they need.
(Lab)
My Lords, unlike the pubs that they supply, most of our small
breweries are not eligible for grants or business rate relief. As
a consequence, over half of them have not been able to access any
financial help from the Government. Two-thirds have stopped
brewing completely and there have been many redundancies. Will
the Minister agree to meet urgently with officers from the small
independent brewers association to see whether a satisfactory
solution can be found to this problem?
Small breweries are a subject close to many of our hearts. We are
responding rapidly to feedback to ensure that all eligible
businesses, including breweries, can feel the full benefit of
support that is available through the package. I would be very
happy to join the noble Lord in meeting representatives if that
is required.
(LD)
I do not expect the Minister to agree with me but it seems to the
business community that the business interruption loan scheme has
largely failed SMEs because the banks were not prepared to take
the risk. Now, the Government are taking the risk with taxpayers’
money through the bounce-back scheme but small businesses
applying for a bounce-back loan are still expected to take the
full risk, which many are hesitant to do. What difference to
take-up do the Government estimate that the introduction of the
bounce-back scheme will make?
As I said in an earlier answer, a huge number of loans have been
approved—160,000 in the first three days of the scheme—so I am
afraid that many small businesses do not agree with the noble
Baroness.
(Lab)
CBILS is much criticised for being slow due to the many checks.
This approach is much more suitable for equity investment. Will
the Government create such a vehicle instead, to help create new
ways of working and particularly to help those firms already
overloaded with debt?
As I said in earlier answers, there are a number of different
support packages besides CBILS, including the furlough and direct
grant schemes. A number of supports are in place for all
businesses. I do not accept that the systems have been slow to
operate. As I said, 160,000 loans were approved under the
bounce-back scheme in the first few days of operation.
(Con)
I draw the attention of the House to my interests as listed on
the register. I congratulate the Government on their package of
measures to support both businesses and individuals during this
difficult period but, as my noble friend the Minister will
appreciate, time is of the essence for businesses. Does he
therefore have an average figure for the time between
applications for business investment and bounce-back loans and
the arrival of funds into company accounts? Secondly, on the
furlough scheme, I understand there will be an announcement later
today by the Chancellor. Has any consideration been given to the
minimum furlough period for employees and whether it would be
appropriate for a more flexible approach to be taken for those
companies—many businesses—which are working week-on, week-off to
cope with ad hoc business conditions?
I can tell my noble friend that many bounce-back loans are being
approved within a day. We are getting the money out to companies
as quickly as possible. I am sure she will understand that I do
not want to give out information in advance of what the
Chancellor might say in Parliament this afternoon.
(Non-Afl)
My Lords, ethnic minority business owners have historically found
it more difficult to access bank loans and other finance. In many
cases, they operate microbusinesses where they would have to be
almost a prophet to accurately forecast their profit. Have the
difficulties faced by ethnic-minority business owners been
factored in?
The noble Lord raises a good point but CBILS is open to
businesses across all sectors in all parts of the country. We
continue to monitor and review the implementation of all our loan
schemes and we will not be slow to make any necessary changes. If
the noble Lord has any specific information about difficulties
being experienced by ethnic-minority businesses, I would be very
happy to see it.
