The Association of Accounting Technicians (AAT) has called on the chancellor to write-off Coronavirus Bounce Back Loans to help Britain’s economic recovery.
The Bounce Back Loan Scheme (BBLS) has so far provided £38bn of finance through more than a million loans to UK-based small businesses. On Thursday, the chancellor also announced the Pay as You Grow scheme – extending the time BBLS repayments need to be made from six to ten years.
AAT has said while it agrees with the chancellor’s reasoning that now is not the time to be worried about repaying loans, it believes he should go further and write-off the multi-billion pound loans to SMEs.
The AAT’s proposal follows a similar call from former Conservative Chancellor George Osborne, who in June this year told the Treasury Select Committee that debt forgiveness would be unpopular with Treasury officials but was the “best way forward”.
The AAT added it comes as some banks predicted that up to 50% of BBLS borrowers will default. Although banks are responsible for any debt collection, the 100% Government guarantee means the taxpayer will pick up the bill for any failure to repay.
Phil Hall, AAT head of Public Affairs and Public Policy, said: “Extending the repayment period doesn’t solve anything, it just defers the problem. In contrast, writing the debt off for small businesses would provide a much-needed boost for the SME sector, enable a speedier recovery, more growth, more investment and in the long term benefit the taxpayer overall.
“AAT recognises that such a move would not prove popular with everyone, but economic reality needs to take precedence in situations like this.”