Labour has called on the Government to act urgently to fix its Covid loan schemes as new analysis shows almost 70,000 businesses in the North West have low or no confidence that they will survive the next three months, putting 322,000 jobs at risk.
Labour’s Shadow Chancellor Anneliese Dodds has called on Government to ease the debt burden on business, secure the economy and help “unshackle the recovery” by converting the Bounce Back Loan Scheme into a ‘student-loan style’ arrangement, so that businesses only have to start repayments when they are making money.
A year on from the launch of the Bounce Back Loan (BBL) scheme for small companies, Labour is urging the Chancellor to ease the debt burden facing businesses and “get the economy firing on all cylinders again”. Small businesses in the North West have taken out a total of £4,512,329,695 in BBLs since the scheme was launched.
Across the UK as a whole, businesses are currently weighed down by more than £75 billion of Covid debt arising from BBLs and similar schemes aimed at larger firms. And without further Government action, the Office for Budget Responsibility (OBR) estimates that over a third (£27.2 billion) of the total value of these loans will never be repaid, meaning a huge cost to the taxpayer as well as the loss of jobs and livelihoods.
Yet Chancellor Rishi Sunak has not heeded Labour’s calls and instead pushed ahead with his ‘Pay As You Grow’ scheme, which allows firms to delay or spread out their BBL repayments but is not linked to profitability at all. The Chancellor’s scheme made very little difference to the amount that the OBR assumes will never be repaid.
Anneliese Dodds MP, Labour’s Shadow Chancellor, said:
“We need to get the economy firing on all cylinders again, but that won’t happen with 70,000 businesses in the North West bogged down by debt and the Government mired in sleaze.
“The Chancellor should act to protect thousands of jobs by making his loan schemes smarter so that companies only have to start repaying when they’re making a profit.
“Instead of ‘pushing’ his officials to fix Covid loan scheme arrangements for David Cameron’s Greensill Capital, Rishi Sunak should unshackle the recovery by helping those ordinary businesses who really need his help but don’t have his phone number.”
