Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Energy and Industrial Strategy, what methodology his Department used to calculate the default estimates for the (a) Coronavirus Business Interruption Loan Scheme and (b) Bounce Back Loan Scheme.
The BEIS 2019-20 Annual Report and Accounts published on 30 September 2020 contained initial estimates of expected credit losses across the Covid-19 loan schemes. These initial indicative loss ranges were based on historic losses observed in prior programmes which most closely resemble the current Covid-19 interventions.
Since these estimates were reported, the Department has been working with the British Business Bank to develop analytical and forward-looking expected credit loss models that are compliant with International Financial Reporting Standards (IFRS 9) and will provide a more sophisticated approach to forecasting future expected credit losses.
Revised estimates of expected credit losses will be included in the Department’s 2020-21 Annual Report and Accounts, to be published in due course.