Yahoo Finance Names of firms given huge Covid loans will be secret
The names of thousands of companies which benefited from billions of pounds of Covid-19 loans schemes are to be kept confidential under new government rules to only publish state subsidies of £500,000 or more.
The higher threshold has been brought in after Brexit despite warnings that it may hamper the fight against fraudsters believed to have plundered billions from the schemes. The loan schemes have been called a “bonanza for fraudsters”.
Under the EU rules in force until the end of 2020, all pandemic business loans above €100,000 were required to be publicly disclosed with details of the recipients. The new £500,000 threshold for public disclosure of state aid, including pandemic loans, applies from 1 January 2021 and is set out in the government’s subsidy control bill which is going through parliament.
The disclosure rules mean the vast majority of businesses which claim loans will never be revealed. Only 3% of businesses which claimed support under the bounce back loan scheme, the biggest scheme, are expected to be named, according to the British Business Bank, the government-owned bank which delivered the support.
The treasury minister Lord Agnew resigned at the dispatch box in the Lords last month over what he described as a series of “schoolboy errors” in fighting fraud. He said the loans regime was more vulnerable to fraud because of a mix of “arrogance, indolence and ignorance.”
It has been estimated by the government that about £4.9bn was lost in fraud to the bounce back scheme which provided loans up to £50,000 to smaller businesses.
Ministers have not published figures for estimated fraud losses for two other schemes, the coronavirus large business interruption loan scheme and the coronavirus business interruption loan scheme. Loans worth nearly £80bn were distributed to businesses across the UK between 23 March 2020 and 31 March 2021.
The government faces a challenge under freedom of information laws by the campaign group Spotlight on Corruption which submitted a request last July for details of all the recipients of the loan schemes.
The British Business Bank refused to release those details, warning that identifying companies may have an adverse impact on trading. The Information Commissioner’s Office (ICO) upheld the decision to refuse the information, but the campaign group is appealing.
Related: How the UK government lost £4.9bn to Covid loan fraud
George Havenhand, of Spotlight on Corruption, said: “Covid loans were a bonanza for fraudsters. Publishing those names would support the government’s efforts to recoup the money lost to fraud and increase accountability for this national scandal.”
The ICO’s refusal decision in December 2021 said under a temporary EU framework all UK loans granted in 2020 were required to be publicly disclosed where they were above €100,000 (or above €10,000 for farming or fisheries).
From 1 January 2021 under the UK’s post-Brexit regime, companies in England, Wales and Scotland are only required to disclose loans at or above £500,000. Loans in Northern Ireland remain under the EU reporting regime under article 10 of the Northern Ireland protocol.
The legal challenge has highlighted concerns that the transparency requirements of the new subsidy control bill are inadequate. EU state aid is typically disclosed at a threshold of €500,000, a threshold which was reduced for the pandemic loans.
Campaigners want ministers to introduce tougher rather than weaker transparency requirements for the UK outside the EU and are calling for all subsidies at a threshold of £500 to be disclosed. Peers have supported an amendment to the bill in the Lords to reduce it to this level.
Anna Powell-Smith, the director of the Centre for Public Data, a data transparency group campaigning for the lower threshold for disclosure, said: “The subsidy control bill reforms how the UK awards grants and loans to businesses after Brexit, but it also makes subsidies less transparent, for no clear reason.
“The law should require all subsidies over £500 to be published. This will help prevent cronyism and fraudand has support across the political spectrum.”Officials at the British Business Bank say the government’s higher reporting threshold for pandemic support will only affect loans over a three-month period because the three schemes closed on 31 March 2021.
