The government does not have to disclose which companies received Covid Bounce Back Loans despite concerns over widespread fraud in the scheme, a judge has ruled.
The government lent £47 billion under the scheme, which was launched in April 2020 by Rishi Sunak when he was chancellor, and provided up to £50,000 through high street banks. According to the latest government estimates, 7.5 per cent of the money will be lost to fraud.
Spotlight on Corruption, a transparency campaign group, took legal action after the British Business Bank, which managed the scheme, declined to publish data on which companies received the taxpayer cash after a freedom of information request, arguing that publication could damage the commercial interests of recipients.
The campaign group also asked for disclosure around three other schemes: the Coronavirus Large Business Interruption Loan Scheme (CLBILS) for big companies, CBILS, for smaller firms, which provided state-backed loans of up to £5 million, and the venture capital focused Future Fund, which has been criticised for using state cash to back higher risk investment prospects.
Spotlight argued that transparency about the recipients of the money could allow questionable and fraudulent claims to be identified, helping to prevent and detect misuse of public funds. It also pointed out that equivalent records had been published in the United States in relation to its own Covid state-support schemes.
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A Times investigation revealed in April that the loans had in some cases been used to fund gambling sprees, home improvements, cars and watches. There were even attempts to smuggle cash from the loans out of the country.
The Commons public accounts committee has said that it is not convinced the government had done all it could to prevent fraud. Lord Agnew of Oulton, a Treasury minister, resigned at the dispatch box in protest at the scheme’s shortcomings.
In a decision by the first-tier information tribunal, Judge Sophie Buckley found that “overall we take the view that the extremely high public interest in transparency and scrutiny of these schemes is substantially met by other measures which had either taken place or were to take place.”
She said that the public interest in the fraud detection work was outweighed by the risk that named recipients could themselves be targeted by fraudsters.
George Havenhand, senior legal researcher at Spotlight on Corruption, said: “Whilst we accept this decision, we are disappointed that the tribunal’s emphasis on commercial confidentiality overshadowed wider considerations, particularly given that it recognised the extremely high public interest in transparency and scrutiny of the Covid loan schemes.
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“These losses could have been avoided if the names had been published in 2020, as we and other civil society organisations recommended at the time. We do not agree with the tribunal’s view that publication would not have led to a significant increase in discovery of fraudulent and suspect claims,” he continued.
A British Business Bank spokesman said: “We welcome today’s decision by the tribunal. We will continue our focus within the bank on supporting and helping to grow smaller businesses in the UK now, and in the future.”
