The UK Parliament has urged the government to use all legal, regulatory and contractual means to ensure banks do everything they can to minimize taxpayer losses that have emerged in one of the small business assistance programs adopted for the Covid-19 emergency. In a published report, the House of Commons Public Accounts Committee accused the Department of Energy and Industrial Strategy (BES) of being “complacency with its attempts to prevent fraud” in the state-backed loan program. British parliamentarians have said the UK investment bank is “too reliant on credit institutions to reduce taxpayer losses”, although this tool does not incentivize banks to do so. The parliamentarians who drafted the report added that Al-Bais, according to the representatives of the Public Accounting Authority, must have all “legal, regulatory and contractual tools to improve the performance of credit institutions in managing loans and risks for taxpayers.”
The government encouraged banks to lend quickly to small businesses at risk of collapse when the UK forced most businesses to close in May 2020 due to the Covid pandemic. The executive branch has fully guaranteed the debt, a fact that, according to parliamentarians, has incurred costs for the taxpayer. Lending “ultra-fast” has meant business survival has been possible at an “astounding” cost to taxpayers, with £17 billion (€20.1 billion) lost, of which 4.9 billion (€5.8 billion) went to various fraud cases.
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