It was the best of times, it was the worst of times.
The Covid pandemic brought out some of the best aspects of human nature. Communities came together, neighbours helping each other out with shopping, collecting prescriptions and making phone calls to those living alone. Front-line healthcare workers, teachers and many more went beyond our expectations, putting themselves at risk to help others. Restaurants provided new takeaway and delivery services. Scientists worked together and pooled resources to create vaccines. We saw rainbows in windows, thank you messages taped to dustbins and clapping on doorsteps.
Then there is the other side. People who for some reason saw the crisis and the suffering and the levels of financial support offered by the government through grants, loans and furlough payments – a lifeline for many – and simply wondered how they could profit from it all.
The various failings of the government have been well documented and discussed. A fast-track lane to assess and process potential PPE leads from government officials, ministers’ offices, MPs and lords. Contracts worth about £8 billion awarded to families and friends of politicians or companies with no previous experience and without being put to tender. Billions more wasted on PPE which was not suitable for use or failed to arrive.
What is staggering to me is the level of fraud perpetrated by part of the general public who chose to abuse the financial support schemes made available to businesses.
One of those schemes was for bounceback loans
These loans of up to £50,000 were offered to businesses with a low fixed-interest rate of 2.5%, and a 12-month delayed start date for repayments. There was a focus on speed of delivery which meant that lenders did not have to carry out credit or affordability checks or even verify information provided with the application. The government backed 100% of these loans, so if the borrower does not repay them then taxpayers will.
Back in 2020 a Public Accounts Committee (PAC) report warned that the taxpayer was being exposed to potentially huge losses, and now the latest figures show that of £47 billion paid out in bounceback loans around £17 billion is expected to be lost with almost £5 billion of that being down to fraud.
I’m sure that all of us involved in the tax world have heard stories about this. People set up companies just to take a bounceback loan, withdraw the money and then close the company. Applicants provided inflated figures of turnover and profits to borrow money that, even with perfect trading conditions, they knew they would never be able to repay. Companies borrowed money and paid it out to shareholders who now have shiny new cars and conservatories.
So, what’s been the reaction of the government?
Something akin to a shrug. They have no particular plan in place to chase unpaid funds and are relying on lenders to minimise the losses – despite the scheme, by design, offering no incentive to lenders to do so.
Treasury minister Lord Agnew recently resigned his post over the issue, accusing the Treasury of having ‘little interest in the consequences of fraud to our society’ and of making ‘schoolboy errors’ over the awarding of loans.
The latest PAC report, published at the end of April, is highly critical, accusing the Department for Business Energy & Industrial Strategy of missing opportunities and being ‘complacent in preventing fraud’. The report also comments that ‘It is unacceptable that the Department has no long-term plans for recovering overdue debts and it cannot just accept the current level of accepted debt.’
Despite their shortcomings, the government cannot be held entirely responsible for the scale of these losses. They might have provided the means, but it was people who took the opportunity. Whilst some chose to help, others deliberately set out to cheat and steal from all of us.
There have been many moments recently when I have despaired at this aspect of human nature. I was reminded by a very good friend that despite everything there is still a core of good people who are out there working hard, quietly and without fanfare, to improve the lives of others and the community in which they live. My advice? Look for these people. Look for the rainbows.
