• Saturday, March 02, 2024

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Suspected fraud on Covid loans climbs in value

The government has paid out £8.5 bn to lenders under state guarantees so far, while £18.7 bn has been fully repaid by borrowers

(Representational image: iStock)

By: Chandrashekar Bhat

THE value of suspected fraud flagged by lenders across emergency state-backed loans granted to struggling businesses in the Covid-19 pandemic has increased by seven per cent to £1.8 billion, government figures showed on Tuesday (28).

Banks handed out a total of £77 bn of state-backed funds to support companies hit by pandemic lockdowns, but the prevalence of scams has attracted criticism.

The fraud estimate as of September 30 this year compares with a previous estimate of £1.69 bn at the end of June.

The government also published data on loans stripped of state guarantees for the first time, confirming a Reuters’ exclusive earlier this month based on data obtained under a Freedom of Information request.

The removals put banks on the hook for any unpaid borrowings on those loans – which would otherwise be guaranteed to be between 80-100 per cent of the value by the government – and shields taxpayers from some losses.

Guarantees had been removed from 10,786 loans worth a combined £979 million as of October 11, the government said.

In total, the government has paid out £8.5 bn to lenders under state guarantees so far, while £18.7 bn has been fully repaid by borrowers.

A further £27.5 bn of outstanding balances are being repaid on schedule, while £2.2 bn is in arrears, £670m in default, and £730m claimed by lenders under guarantees but not yet settled.

The government also disclosed for the first time that £18.8 bn worth of the overall balance on the loan schemes had been reduced, mainly through partial repayments by borrowers.

(Reuters)

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