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House of Commons Hansard
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Coronavirus Business Interruption Loan
04 May 2020
Volume 675
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Whether the Government have collated statistics by region on the number of businesses that have had their coronavirus business interruption loan application (a) approved and (b) rejected. [902138]

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What steps his Department is taking to ensure that all firms requiring assistance are able to access the coronavirus business interruption loan scheme. [902152]

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What estimate his Department has made of the number of social enterprises that have received coronavirus business interruption loans. [902148]

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What steps his Department is taking to ensure that all firms requiring assistance are able to access the coronavirus business interruption loan scheme. [902153]

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What discussions he has had with small businesses on the operation of the coronavirus business interruption loan scheme. [902149]

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As of 1 May, over £4.7 billion-worth of loans have been issued under the coronavirus business interruption loan scheme to 29,496 businesses. From today, businesses will be able to access our new bounce-back loans of up to £50,000 by filling in a simple, quick application. Those will be backed by a 100% Government guarantee.

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Since I tabled this question, the Government have taken action in this area, which I welcome, but can the Secretary of State respond to my constituents’ concerns that the application for the business interruption loan scheme is too complicated? Will he develop a simple, standardised application process for businesses looking to access loans above £50,000?

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I welcome the hon. Lady’s acknowledgement that things are starting to work in terms of the CBIL scheme. I have personally had conversations with individual banks, and I will continue to do that. We have also made the scheme more accessible—for instance, extending it to all viable small businesses and removing the forward viability test.

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Businesses such as RG Millward Ltd in my constituency of Derbyshire Dales have been applying for the coronavirus business interruption loan. I welcome my right hon. Friend’s commitment that those loans will be interest-free for 12 months. What is he doing to ensure that businesses such as those in my rural constituency can access these loans from the banks on the most favourable and reasonable terms at this difficult time?

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I thank my hon. Friend for that question. I can tell her that my Department is working very closely with the financial sector to ensure that businesses across the whole UK, including in Derbyshire Dales, are getting the support they need. As a result of the schemes we have announced, through the British Business Bank, businesses can now access Government-backed loans worth anywhere from £2,000 up to £50 million.

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It is estimated that 50% of social enterprises could run out of cash by June without further support, raising concerns that the CBIL scheme is not working for social enterprises. Some of those will be in aviation, which is coming under huge strain. The UK aviation industry could lose around £21 billion-worth of revenue, putting at risk over 600,000 jobs, with 12,000 job cuts likely at British Airways alone, which will hit Feltham and Heston and the surrounding constituencies very hard. When will the Secretary of State bring forward specific support packages for the sectors that are worst hit by covid-19, such as aviation?

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The hon. Lady’s question was in two parts. The first related to social enterprises. CBILS is open to all social enterprises, so long as they make at least 50% of their income from trading, which we believe covers the majority of social enterprises. She raised a wider question about larger companies. As she knows, we have a range of schemes in place, with the bounce-back loan scheme at one end and the corporate finance facility at the other. Where an individual business is not able to access any of those particular schemes, they can come to us, and we will consider the case that they make.

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Many established and previously profitable businesses in East Devon are desperate to access financial support, but they have found the major banks unwilling to lend. I joined many MPs from across Devon in writing to chief executives of major banks, because I feel that they are not living up to the expectations required during this emergency. Does the Secretary of State agree that banks need to step up and put in place enough resources to process these requests urgently, so that businesses in East Devon can get the support they need?

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My hon. Friend raises an important point. As I said in answer to an earlier question, I have been talking to the largest lenders. I spoke to them particularly over the bank holiday weekend, to ensure that they were putting in place sufficient measures and more people to process loan requests quickly. I believe that they have recognised the challenge and are stepping up to it. He will know that we have made changes to the CBIL scheme to make it more accessible, extending it to all viable small businesses, removing the forward viability test, encouraging automated credit checks and, of course, banning all personal guarantees for loans under £250,000.

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I welcome what the Secretary of State just said, but in my area, businesses are still reporting complications with the scheme, which is hampering their speed and eligibility to access the loans. No cap has been placed on the interest rates that can be charged, and some banks in Greater Manchester are offering interest rates of up to 20%. There are also difficulties in getting through to banks to apply. Can the Secretary of State tell me what he is doing to sort this urgently, so that small businesses can access this vital support?

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We are all aligned in our wish to make sure that these loans are getting out to businesses, and I believe that is starting to happen. On interest rates, of course, I have had those discussions on a very granular basis with banks, and they have recognised, on the CBIL scheme, where we are providing an 80% guarantee, that there is a requirement to reflect that in the interest rate. Furthermore, as the hon. Gentleman will know, the interest rate on the bounce-back loans, which have just been announced, is set at 2.5%, and of course the Government have taken care of the first year of interest.

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I welcome Ed Miliband back to the Front Bench.

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Thank you very much, Mr Speaker.

I can tell the Secretary of State that we are committed to working constructively with the Government on all issues, and we welcome the recent changes to the loans system. I have two specific questions about his draft guidelines on workplace safety. We share the desire for a return to work as soon as it is safe, but he will know that firms with more than five employees are obliged by law to carry out risk assessments on safety. First, does he plan to ensure the publication of these risk assessments to give confidence to workers? Secondly, on enforcement of safe working, the Health and Safety Executive is operating on substantially reduced resources. What will he do to ensure that the guidelines are enforced so that all workers can feel safe?

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I also take this opportunity to welcome the right hon. Gentleman to his new role. We have already had two very constructive discussions. I hope that will be the tone of our future interactions. He raises an important point. We both want workers in our country to feel safe and confident that they are returning to a safe workplace. Work on the consultation is ongoing, and obviously I do not want to pre-empt it, but he makes some very important points, and of course he is always welcome to write to me. I will look at what he says very carefully.

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I thank the Secretary of State for that answer, and I hope that he will come to the House to make a fuller statement on these matters at the earliest opportunity.

I want to ask about another aspect of the lifting of the lockdown, which is financial support for businesses and workers. Does he recognise that there will need to be a second phase of financial support for those businesses that will have to stay closed for longer, including an extension of the furlough scheme, with more flexibility for part-time working? Secondly, on the hospitality sector, which he knows is facing very challenging times, can I urge him to look favourably at the proposal, which has the support of over 80 of his own Back Benchers, to extend business support grants to businesses with rateable values of up to £150,000? It would make a difference to tens of thousands of pubs, restaurants and other businesses that are the lifeblood of our communities.

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As the right hon. Gentleman knows, we have provided support for the hospitality, leisure and retail sector. There is a 100% rates holiday for all businesses in that sector, and we are also making £25,000 grants available to them. Under the grant scheme—the £25,000 and £10,000 grants—as of last Monday, £7.5 billion had been paid out. I hope he will welcome that. On the wider measures he talks about, we keep everything under review, and I will look at anything that comes forward.

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I also welcome the right hon. Member for Doncaster North (Edward Miliband) to his new position on the Labour Front Bench.

A recent poll by the Scottish Chambers of Commerce has found that 48% of Scottish companies will run out of cash within three months, with 64% identifying shortcomings in Government support schemes. Does the Minister agree with Sir George Mathewson that, far from helping them to bounce back, these loan schemes will not even allow businesses to survive, and that the only option is to write off the debt and convert these loans urgently into more accessible grants?

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I say to the hon. Gentleman, for whom I have enormous respect, that one has to look at the sum total of what the Government are putting forward. He will know that about 4 million people are being furloughed under the job retention scheme and that support is available through grant schemes, which I talked about in my response to the right hon. Member for Doncaster North (Edward Miliband). Of course it is important that we support businesses, and we will continue to do that.