Covid-19: Business Interruption Loans

Lord Forsyth of Drumlean Excerpts

Wednesday 22nd April 2020 Lords Chamber

Asked by

[Lord Forsyth of Drumlean]

To ask Her Majesty’s Government what lessons they have learned from the experience of Switzerland, Germany and the United States in ensuring that businesses have easy and speedy access to Coronavirus Business Interruption Loans.

The Question was considered in a Virtual Proceeding via video call.

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[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)]

My Lords, we are constantly reviewing the Coronavirus Business Interruption Loan Scheme to make sure that businesses can access loans quickly and easily. This includes looking at what other countries are doing in order to inform our own scheme’s design. Changes that we have made to eligibility tests mean that even more UK businesses are able to apply to the CBILS and we are working with the British Business Bank and lenders to ensure that we are doing what we can to speed up lending. As of 15 April, 6,020 loans, worth a total of £1.1 billion, have been given out to SMEs. We expect to see this increase substantially when weekly figures are published tomorrow.

[Lord Forsyth of Drumlean (Con)]

My Lords, I draw attention to my interests in the register. Given that there are more than 5 million SMEs in this country and fewer than 1% have formal applications being considered or approved under the Coronavirus Business Interruption Loan Scheme, amounting to just over £2 billion, how many businesses do the Government expect to fail as a result of the lockdown? Given the Chancellor’s promise to “do whatever it takes” to see the UK through this crisis, why is he rejecting the advice from the Governor of the Bank of England, the Bank’s chief economist, three former Chancellors, a former Bank governor and experienced bankers to re-engineer the CBILS to provide a 100% guarantee to ensure the speedy and efficient transfer of cash to desperate businesses?

[Lord Callanan]

I thank my noble friend for his question. Of course, the issue of 100% guarantees has been raised by a number of other contributors. It is something that we are keeping under review. However, we think that the structure of the scheme at the moment is appropriate to its function. We do not believe that it is right to put all the cost of these loans directly on to taxpayers. Banks should have some involvement in those loans. As I say, we are keeping the scheme under review.