Contingent Liability (Letter of Credit) and Bounce Back Loan Scheme Update

The data in this publication is as at 31 July 2022, unless otherwise stated. The data comes from information submitted to the British Business Bank’s (the Bank’s) scheme portal by accredited scheme lenders.

As of 31 July 2022, businesses have drawn a total of £46.6 billion through BBLS. The first evaluation of BBLS, published in June 2022, found that up to 500,000 businesses could have permanently ceased trading in 2020 in the absence of the scheme.

It is unfortunate that some have taken the decision to take advantage of this vital intervention by defrauding the scheme for their own financial gain. The Government have always been clear that anyone who sought to do so is at risk of prosecution.

Checks were put in place from the outset to reduce the risk of fraudulent applications being successful. Lenders are the first line of defence, and were required to make or maintain know-your-customer and anti-money laundering checks and use a reputable fraud bureau to screen applicants against potential or known fraudsters. Lenders reported preventing over £2.2 billion-worth of fraudulent applications as a result of these checks.

The Government remain focused on working with the Bank, lenders and law enforcement agencies to tackle fraud in the scheme. This work is supported by the Public Sector Fraud Authority, who have led the development of a sophisticated analytics programme to better understand the level and types of fraud committed against the scheme.

We are working with enforcement bodies including the National Investigation Service (NATIS) and the Insolvency Service to investigate instances of fraud, recover fraudulent loans and penalise fraudsters. Since September 2020, NATIS has opened 273 investigations into BBLS fraud, with a total value of £160 million. Some 78 suspects have been dealt with to date, with 49 arrests made. Meanwhile, Insolvency Service activity on BBLS fraud has so far resulted in 242 director disqualifications, 101 bankruptcy restrictions and 1 criminal prosecution. This enforcement activity is in addition to recovery work being undertaken by lenders as part of their obligations under the BBLS guarantee agreement.

At spring statement 2022, the Government announced an additional £48.8 million of funding over three years to tackle public sector fraud. This included further investment of £13.2 million in NATIS, effectively doubling their capacity to investigate BBLS fraud, and £10.9 million to enhance the Bank’s counter-fraud and assurance work programme.

£28.3 billion: the outstanding balance of total drawn loans making payments on schedule

£4.7 billion: the amount that has been fully repaid by borrowers

£3.2 billion: the outstanding balance of loans in arrears that haven’t yet progressed to defaulted

£1.4 billion: the outstanding balance of loans defaulted that haven’t yet progressed to claimed

£2.6 billion: the outstanding balance of loans claimed that haven’t yet progressed to settled

£1.2 billion: the total settled amount (the amount paid out to lenders under the BBLS guarantee agreement)

£1.1 billion: the total drawn value flagged by lenders as suspected fraud

The values stated above will not add up to the total drawn values as set out in column 1 of table 3 (Detailed loan status by lender). That is because the above figures do not take account of events which can reduce outstanding balances—for example: partial repayments of a loan, certain recoveries received in respect of a loan, and amounts written off loans by lenders.

To aid the reader’s understanding of the data, the terms used in this publication are defined at the end.

All businesses remain responsible for repaying their loans under BBLS and are fully liable for the debt.

It is important to recognise that it is still relatively early in the life of the scheme, and therefore it is too soon to definitively assess the performance of the BBLS scheme as a whole. Data being collected from accredited scheme lenders is subject to refinement, addition, and correction over time. Please see “Limitations and further considerations” for further background.

The attachment can be viewed online at: http://www.parliament.uk/business/publications/written-questions-answers-statements/written-statement/Commons/2022-09-05/HCWS292

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