The UK government has been given the green light to continue withholding the names of companies which have received more than £47billion in total in state-backed Covid loans, after a court ruled in its favour.
The court case had been brought by campaign group Spotlight on Corruption amid fears fraudsters and organized criminals may have exploited government-backed loans to struggling businesses during the pandemic.
Spotlight claimed that this fraud could have been prevented in part through greater transparency, particularly on companies that got bounced loans, which had fewer checks in order to quickly provide funds to companies.
However, the court backed the state-owned British Business Bank (BBB), which administered the loan schemes, and argued the disclosure would breach commercial confidentiality and risk borrowers becoming targets of fraud themselves. .
“We have found, for all schemes, that there is a very strong public interest in preventing harm to commercial interests,” the court ruled Wednesday evening. “It is very clearly not in the public interest to release information that would lead to a very clear risk of borrowers being exposed to targeting by fraudsters.”
While the court recognized there was some value in allowing ‘civil society’ groups such as journalists to help with fraud detection work, by allowing them to scour public disclosures, it said that sufficient control was already underway.
“The extent to which publishing a list of names adds to the detailed assessment and scrutiny by, for example, the National Audit Office and the House of Commons Public Accounts Committee is, in our view, extremely limited,” the court said.
“Although public interest in fraud detection is high, the publication of names was not necessary to facilitate this,” he added.
The latest Business Department estimates suggest taxpayers could be forced to cover at least £2billion in losses due to fraud or error in the popular bounce-back loan system, which involved fewer checks to insure funds were distributed quickly.
The rebound scheme alone totaled £47billion in loans, with the applicant companies involved able to borrow up to £50,000 each. The government is liable for 100% of losses if borrowers do not repay.
The BBB said it welcomed the decision, which followed a three-day hearing in November. “We will continue to focus within the Bank on supporting and helping small businesses grow in the UK now and in the future.”
But Spotlight on Corruption, which does not intend to appeal the ruling, said it was “disappointed that the court’s focus on commercial confidentiality overshadowed broader considerations, particularly given that ‘he recognized the extremely high public interest in transparency and scrutiny of Covid loan schemes’.
The campaign group said it still believed billions of pounds of taxpayers’ funds could have been saved if the government had immediately released the names of borrowers at the start of the pandemic.
“The fraudsters who have used these schemes to snatch billions of pounds from their fellow citizens during a time of national emergency are unlikely to be investigated, let alone convicted,” Spotlight said. “The National Investigation Service has so far made just 49 arrests for bouncing loan scheme fraud and opened investigations worth a total of £160m – a fraction of the amount lost to fraud.
“If we are to prevent public funds from being similarly stolen in future state aid schemes, the government must quickly learn the hard lessons from this debacle,” the campaign group added.