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BBL estimated could cost £27billion in fraud

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By David Ex
09th Jul 2021 11:19

Think I saw that figure mentioned in the news last week. Absolutely staggering and sadly completely predictable.

There may eventually be one or two convictions for fraud but nothing will be recovered and prosecution costs will just add to the losses.

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Replying to David Ex:
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By frankfx
09th Jul 2021 11:08

In that it was entirely predictable, the Chancellor did not feel worth mentioning in any of his speeches or House of Commons deliveries.

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By paul.benny
09th Jul 2021 11:47

The report from the Public Accounts Committee (the original source of the article) says the estimate of losses is £16-27bn.

Whilst it's undoubtedly a lot of money, to put it into context, government spend is about £1000bn annually. These are losses over the 5 year repayment term, so about 0.5% (27/ 5x1000).

Identifying the potential losses now gives an opportunity to try to minimise them, rather than waiting until later when the money is almost certainly lost.

The BBL scheme was put in place exceptionally quickly, and to make sure that funds reached those who needed it, the criteria were light. More stringent checks on the bonafides of applicants, more stringent eligiblity criteria would have reduced the level of fraud. But at the cost of genuine applicants who went under while waiting for a more rigorous and better policed scheme.

Should BBL have been better designed? Undoubtedly
Could it have been better designed at the time given the urgency and difficulties? Debatable

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By sanjay100
09th Jul 2021 13:07

There are a some basic checks that could have made without much effort.

How long has the company been in business and where are the directors based. Attach Full Accounts. Surely you would check the turnover at least.

I am just astounded such elementary errors were made. Where there is free cash people will automatically take it without hesitation. There is no deterrent.

I have come across the following

New start ups without any trading history being given Bounceback loan.
Multiple applications (especially those that were sole trader then incorporated into a Limited company
Business claiming the full 50K when turnover was less than 100K

Good luck to the government when the directors are based overseas.

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Replying to paul.benny:
By ireallyshouldknowthisbut
09th Jul 2021 13:33

@Paul, I think within about 20 minutes of its announcement there was sharp intake of breath here and all the obvious flaws pointed out - the main one being the lenders had no skin in the game. Even a 2-4% liability would have meant proper screening, so the basics of "can I see your last years accounts with the turnover in" etc etc would have got rid of most of the dodgy stuff.

Speeds is not the issue, its a lack of basic financial acumen about the smaller trader.

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Replying to ireallyshouldknowthisbut:
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By paul.benny
09th Jul 2021 14:11

Agree. And with Sanjay's similar point.

The government made shortcuts in decision-making. Even if they had wanted to consult informally, I doubt that Treasury officials had any contacts with people like yourselves that get their hands dirty with real small businesses.

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By Paul Crowley
09th Jul 2021 14:50

The banks should have been capable of basic checks
Only lend on a known bank account with confirmable income

Cold lending was stupid beyond belief. How did that come about?
None of them lend without critical review at any time?
Time to remove the not real banks from the system

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