Finance Bill

Peter Bone Excerpts

2nd reading & 2nd reading: House of Commons & Programme motion & Programme motion: House of Commons & Ways and Means resolution
Monday 27th April 2020 Commons Chamber

[Mr Peter Bone (Wellingborough) (Con) [V]]

It is a great pleasure to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). She made a wide-ranging speech, and I would not want to comment on one aspect of it.

I very much welcome the Finance Bill and the efforts that the Government have made during the pandemic to support the economy and businesses, but the same cannot be said for the major banks. They have failed to act in the national interest. Their response to the national emergency has been marked by indifference, greed and self-interest. I have had many complaints from my constituents about the attitude of the banks. Let us look at just one example.

A director of a small business contacted me last week. He has built his business up over a decade and he directly employs a handful of people, as well as using a number of subcontractors. He said, “Of course we are feeling the impact of a covid-19 lockdown, and without financial help we will have to make redundancies. Should furlough payments come through, we will be able to make salary payments, which is life-saving for our business. However, cashflow has dried up, with outstanding debtors holding back funds, so I applied to my bank for a CBIL. It took three weeks, with three telephone calls, before I was given the application details. I have since applied and chased up for a response after a further seven days. I had applied for £30,000 on the understanding that I could pay off the loan early, as I am optimistic that our turnover will return, putting us back in profit. The £30,000 will help us ride out the uncertainty and keep our suppliers paid and their businesses stable. Without it, we will not survive. These funds are needed now.

The response from my bank has been far from dynamic, and even if my loan is approved, it may be too late. If the Government are paying 12 months’ interest and securing 80% of the loan, why are the banks taking such a long time to get the funds out to businesses?”

My constituent poses a very good question. Why has it taken the banks so long to provide support to small and medium-sized businesses when the Government are guaranteeing 80% of loans and paying all the fees and interest in the first year? Nationally, the banks have lent £2.8 billion through the scheme to 16,600 firms, yet more than 36,000 firms have applied for loans—an acceptance rate of just 48%—whereas in Germany, £7.4 billion has been lent and the approval rate has been 98%.

Businesses do not go bust because they make a loss; they go bust because they run out of cash. The business interruption loan scheme has been running for seven weeks, yet the banks are failing to get the money to businesses. Today’s announcement by the Chancellor of a bounce-back loan will help my constituent, but I hope he will consider making all the loans 100% guaranteed.

Some people may ask, “Should the banks act in the national interest?” Of course, there is a moral reason why they should do so, but the banks do not seem to have any morals. Yet during the banking crisis, the taxpayer injected £137 billion in loans and capital into the banking system, plus hundreds of billions of pounds of guarantees. The banks still owe the taxpayer £27 billion. Taxpayers saved the banks, now the banks have a duty to help save the country.