Ministers face fresh criticism over the UK’s £5m-a-head coronavirus bailout after just 4,200 firms got hold of cash in three weeks.
Business Secretary Alok Sharma admitted “more money needs to go out faster” after small firms complained of hold-ups in the Business Interruption Loan Scheme.
Mr Sharma was forced to overhaul the scheme 10 days after its launch on March 23 when firms complained they were unable to get cash.
Yet more than a week on, and despite reports there have been 300,000 applications, only 4,200 emergency loans have been granted so far.
Mr Sharma insisted the loans so far were worth £800million but told Sky News: “We want to increase the pace”.
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It comes despite Chancellor Rishi Sunak vowing to do “whatever it takes” to keep firms afloat.
Asked whether he was worried about the loan scheme, the Business Secretary said: “Well, of course. “It is not just a question of me being worried – I completely understand the concerns that businesses have.”
As the lockdown drags on, the Cabinet is reportedly dividing into “hawks” who want to end the lockdown to preserve the economy and “doves” who say life must be preserved whatever the cost.
More than 1.2million people have already claimed Universal Credit since the middle of March – and sources told The Sunday Times government officials are estimating four million people could end up unemployed.
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Unemployment in the UK has hovered around a record low and stood at 1.34million (3.9%) in the most recent figures – 515,000 fewer than five years earlier.
But a source told the newspaper: “People will come off furloughing and find out they are being made redundant.
“You could see four million to six million people lose their jobs over the next 12 months.”
The Business Interruption Loan scheme allows Covid-19-hit firms to get up to £5million, interest-free for the first 12 months.
Meanwhile smaller companies can also apply for separate grants of up to £25,000.
But banks, which are in charge of handing out the government-backed loans, have come under heavy fire amid claims of unfair lending tactics.
The government overhauled the scheme on April 2, removing a need to seek credit outside the scheme first and banning banks from seeking personal guarantees.
But critics say the process is snarled up in bureaucracy and the British Business Bank, the state agency tasked with accrediting banks for the scheme, is said to be severely understaffed.
Mr Sharma told Sky News: “I have spent the last couple of days talking directly to some of the largest lenders who are part of this scheme.
(Image: Sky)
“I am very clear to say to them, we need to get money out of the door as soon as possible.
“They understand that and banks know on this occasion why they have to be part of the solution and they want to be part of the solution.”
Former governor of the Bank of England Mervyn King said “something has gone wrong” in response to the low figures.
He said: “I am worried about it because the economy will recover only if we can keep the businesses that existed before this pandemic running”.
He also said it was wrong to have closed bank branches.
