Politics

Banks warned it is 'completely unacceptable' not to loan to small businesses


Banks have been warned that it is ‘completely unacceptable’ to fail to lend to businesses hit by coronavirus.

Business Secretary Alok Sharma warned financial institutions that they must pass on government backed loans to small companies.

“It would be completely unacceptable if any banks were unfairly refusing funds to good businesses in financial difficulty,” he said.

“Just as the taxpayer stepped in to help the banks back in 2008, we will work with the banks to do everything they can to repay that favour and support businesses and people of the UK in their time of need.”

When asked what the Government’s exit strategy was when it came to the lockdown, Mr Sharma urged caution.

He warned that there could be a “dangerous second peak” in terms of cases and deaths if people stopped following the restrictions.

Mr Sharma held this afternoon's press conference
Mr Sharma held this afternoon’s press conference

Mr Sharma said £12 billion in grants for businesses was now with local authorities and urged them to pay it out “as quickly as possible”.

“On Saturday, I said we had provided funds to councils in England to provide grants to small businesses,” he said.

“As of today, these local authorities have received more than £12 billion.

“This afternoon I held a call with hundreds of local authorities across England and made clear this money must reach businesses as quickly as possible.

“I know businesses across England have already started to receive these grants.”

The Business Secretary also took a moment to thank companies for their role in the coronavirus struggle.

He said: “I want to convey my heartfelt thanks to all of those businesses up and down the country that are working to keep the economy going.”

Mr Sharma was joined at the press conference by Public Health England director for health protection and medical director Professor Yvonne Doyle
Mr Sharma was joined at the press conference by Public Health England director for health protection and medical director Professor Yvonne Doyle

Mr Sharma also came under slight fire for the number of coronavirus tests that have been carried out on front-line medical staff.

He said increasing testing capacity is the Government’s “top priority” and that 10,000 tests per day was being done.

Public Health England director for health protection and medical director, Professor Yvonne Doyle, added that that plan was to go to 25,000 a day “and we’re confident we can achieve that”.

Mr Sharma spoke out after businesses were left high and dry by the government’s coronavirus support package.

Research today warned up to a million businesses could be a few weeks from collapse because of problems accessing cash.

The Corporate Finance Network of accountants claimed 18% of clients were unlikely to survive four weeks of lockdown.

And as many as 42% of small firms could go bust if the lockdown lasts for four months or more.

The warning came despite a £22billion high street rescue package from Chancellor Rishi Sunak formally launching today.

Business Secretary Alok Sharma
Business Secretary Alok Sharma

From this morning, eligible firms in retail, hospitality and leisure could access one-off grants of either £10,000 or £25,000.

Yet the grants have been overshadowed by problems with the separate Business Interruption Loan scheme – which allows Covid-19-hit firms to get up to £5million.

Banks are accused of demanding personal guarantees from business owners, while others try to apply high interest rates once the interest rate-free first year is over.

Despite claims the cash has been held up by red tape, a Treasury spokesman insisted: “Hundreds of these loans have gone out”.

The Business Interruption Loan scheme - which allows Covid-19-hit firms to get up to £5million - has had teething problems
The Business Interruption Loan scheme – which allows Covid-19-hit firms to get up to £5million – has had teething problems

The spokesman said it was untrue that funds would not be received for weeks. “Cash has very much gone out the door,” he added.

But government officials are understood to be resigned to the fact some jobs and firms will fall through the cracks and be lost.

The government has also resisted calls to close a loophole that has denied thousands of workers 80% of their pay.

Any full- or part-time worker can have 80% of their wage paid by the state, up to £2,500 a month, under a groundbreaking “furlough” scheme.

But the scheme does not apply to people who started a new job after the cut-off date of February 28.

Instead, the only way for them to be “furloughed” is to be rehired to their previous job and then be put on the scheme.

To prevent fraud, officials decided to capture people’s earnings in February – the most recent full month – to work out how much they are owed through the scheme.

Tony MacDonald (pictured with wife Logan) missed out on coronavirus furlough pay by two days due to a government loophole.
Tony MacDonald (pictured with wife Logan) missed out on coronavirus furlough pay by two days due to a government loophole.

Tony MacDonald, 31, who missed the cut-off date by two days, said the decision was “so disappointing”.

He told the Mirror: “The new guidelines said your old employer can take you back but mine isn’t budging on that.

“They’re struggling enough as it is at the moment.

“To take someone on who wasn’t wanting to be with the company anyway – it doesn’t make financial sense to them.”

Away from the business world it has been another awful day in Britain’s struggle against the coronavirus.

The UK’s coronavirus death toll has surged again, rising by a record 563 in the past 24 hours to a total of 2,352.

Today’s figures include people who died in hospitals, but not those who passed away in their homes without being officially diagnosed with Covid-19.

The figures are correct as of 5pm yesterday, and mark a sharp increase on the 1,789 total previously reported by the Department of Health.

The coronavirus death toll has risen by its largest one day total
The coronavirus death toll has risen by its largest one day total

At lunchtime today First Minister Nicola Sturgeon confirmed that the Scottish death toll had increased by 16 to a total of 76 in the last 24 hours.

She added that the country’s confirmed Covid-19 cases has now reached 2,310 – up 317.

The death total in Wales is now 98 with an increase of 29 in the last 24 hours.

The target for 10,000 tests a day was again missed with 9,793 tests performed.

A total of 4,324 of those were positive.

In yesterday’s press conference Michael Gove, Chancellor of the Duchy of Lancaster, announced that ‘thousands’ of new ventilators would be delivered over the weekend.

Michael Gove delivered the briefing this evening
Michael Gove delivered the briefing this evening

They will be up and running in NHS hospitals from the start of next week, he said.

Mr Gove said: “I can announce that this weekend the first of thousands of new ventilator devices will roll off the production line and be delivered to the NHS next week.

“From there, they will be rapidly distributed to the frontline.”

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It comes after the government faced repeated criticism about the number of ventilators available to the NHS.

There are 8000 ventilators in place and another 8000 off-the-shelf ventilators on order – but Downing Street last week admitted many of these will not arrive for months.

On top of these 16,000 are other orders placed with firms like Dyson – but Downing Street today said none of these had yet passed testing.





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