Funding not getting where it’s needed...

There’s been a lot of talk about the huge number of people falling through the gaps, when it comes to loans and other financial support to help people through the coronavirus crisis. People who had just left/started jobs in March/April 2020, company directors, young businesses and other self-employed people are all examples of individuals penalised by the system.

It’s true that many businesses have benefitted from bounce-back loans and government support; however, even when companies seemingly qualify for some sort of bail out, an alarming proportion of their applications are rejected.

At the beginning of the pandemic only one in five businesses actually received monetary support, and whilst figures for England, Scotland and Wales don’t appear to have been updated, Northern Ireland’s MPs have recently called upon their finance minister to review the situation, citing that fewer than 50% of applications for Covid funding in their provinces have been granted.

It’s perhaps a little unfair to assume the government should just chuck out the money without due diligence. The National Audit Office (NAO) warned in October that the level of fraud involved with the Bounce Back Loan Scheme would cost the taxpayer £26 billion pounds. This figure also includes loans given to businesses that will likely struggle to survive the pandemic and which will subsequently default on the loan payments—something that could have been prevented, the NAO claims, had more robust credit checks been carried out at the application stage.

Pressure to help the nation when the first lockdown was introduced, and the speed of its incarnation, perhaps accounts for the scheme’s apparent flimsiness. However, there has been plenty of time since to incorporate certain controls and processes to ensure the money reaches the people who need it, and who legitimately qualify for such help.

The scale of the issue will not be known for months—perhaps, years. As we are now amid a third national lockdown, and with many sectors still banned from trading, there are millions of people unable to work through no fault of their own.

The assets of many business owners are currently protected from repossession; however, there are plans to lift this covenant, which means things could get even worse for struggling businesses across the country. Already, CCJs are at a record high as people fail to meet the repayments on their debt. There have been calls to the government to create a package of measures to cushion this blow, particularly as the end of the pandemic is still months away. It’s certainly a contentious issue for those in power, whose responsibilities include reducing fraud and protecting the taxpayer and the economy whilst also trying to support genuine claimants and ensuring they can hold on to their businesses until the time comes when we can come out of hibernation…sorry, lockdown.

Even if we have a repeat of the ‘Eat out to help out’ scheme, or something similar aimed at boosting the economy, it will be a long time until the hardest hit will reach an even keel. Said Mick McAteer, chair of The Registry Trust, ‘The economy and household finances are still very vulnerable to Covid effects. Moreover, even when the economy recovers, households will not be out of the woods. 

Government, regulators, the financial services industry, creditors, and civil society organisations will have their work cut out to support vulnerable households and help them rebuild their finances.’