We have heard from Members already this afternoon about many of the issues raised in the motion. I particularly welcome the fact that it talks about flexibility in repaying some of the Government’s loan schemes. Many businesses have already begun to repay debt accrued in the covid loan schemes, such as the coronavirus business interruption loan scheme, but while interest might be covered by the Government loans for the first year, repaying the capital is already presenting many businesses with a challenge, on top of those that we have heard about from Brexit and the pandemic. As early as June 2020, reports were warning of the tens of billions of pounds of toxic debt that the Government loan schemes could generate.
Clearly we will all be living with the consequences of the economic fallout of the pandemic for many years to come, so surely the Government can recognise that their decision to roll out loans instead of grants was a bit naive. Businesses already being hit hard had to take out loans, but they were never going to be in a position to bounce back straight into profit while having to repay them. Government loans have had an even tougher impact on those already hit hard, particularly the excluded, as others have mentioned, who have not had any support so far. Some were only able to get loans. By their very nature, those who borrowed were often the least likely to be able to repay.
I am sure that many on the Government Benches will claim that that is simply the effect of the free market, but these are businesses that were healthy before covid. When the pandemic hit, it was beyond their control. Leaving many at the whim of the market simply is not an option. That is why we needed to look to different options, and certainly I have called on the Government to look at these loans in a different way, perhaps with a pay-as-you-earn style of repayment, so that as businesses start to rebuild their incomes, we could taper or tier the repayments in a way that made them far more affordable, better supported those businesses and got the Government’s money back.
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