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The UK government spent £80bn supporting businesses through COVID-19 loans

   NEWS / 07 Jul 2021

Published: 07 July 2021
Location: London, UK

By Suzanne Evans, Director, Political Insight


The UK government spent £80bn supporting businesses through COVID-19 loans, according to the final official calculations. The Treasury said yesterday that banks had extended 1.6m loans to businesses under government-backed support schemes such as Bounce Back loans, Coronavirus Large Business Interruption Loans, and the Future Fund. The first loan schemes were opened in March 2020 and closed on 31 March 2021. Lenders participating in the programmes had until the end of May to finish processing applications. 100% state-backed Bounce Back loans made up the majority of lending – more than £47bn – in a scheme allowing small businesses to borrow up to £50,000 with minimal checks. £26bn was provided via Coronavirus Business Interruption Loans and over £5bn worth of Coronavirus Large Business Interruption Loans were offered. A further £1.12bn of funding has been provided to 1,140 high growth firms through the Future Fund. This total does not include wage subsidies provided by the government through the furlough scheme. The Treasury has spent over £65bn paying people's wages under that scheme.
 
The National Audit Office (NAO) has said that The Department for Business (BEIS) showed an "unusual" level of interest in Greensill Capital as the now collapsed finance firm sought accreditation for emergency lending schemes during the pandemic. The BBC reports that the NAO found BEIS emailed eight times for updates on Greensill's application. The government said there was no suggestion ministers or officials made efforts to influence the decision. A spokesperson added department officials requested updates on Greensill's accreditation process so that it could "assess whether jobs were at risk at Liberty Steel and its supply chain". Greensill made seven loans totalling £350m to companies owned by Sanjeev Gupta's business empire, GFG Alliance, which included Liberty Steel, the UK's third-largest steel manufacturer which employs 3,000 people. The NAO's investigation follows a lobbying row, in which former prime minister David Cameron sent messages to the Chancellor's private phone to ask for help for the lender, where he worked as an adviser. The firm was run by Lex Greensill - a former unpaid adviser to the ex-PM during his time in No 10.
 
The UK construction sector grew at its strongest rate in 24 years in June. The IHS Markit and CIPS UK construction purchasing managers index hit 66.3 in June, up from 64.2 in May. PMIs are given on a scale of 0 to 100, with anything above 50 signalling growth. However, the industry is beset with
tailbacks in delivery times, raw materials shortages, and rising costs across the sector. “A staggering 86% of respondents reported paying more for their goods in June," said Duncan Brock, group director at the Chartered Institute of Procurement & Supply, which helped compile the data. Three quarters of firms reported longer lead times from suppliers and June was the worst month for supplier delays since the survey began 24 years ago.
 
House prices dipped 0.5% in June as the stamp duty holiday began to be phased out, according to the Halifax. Prices rose 8.8% over the year, leaving average prices still more than £21,000 higher, following a broadly unprecedented period of gains.
 
Car giant Stellantis is to invest £100m building electric vans at its Ellesmere Port plant in Cheshire. The company, formed out of the merger earlier this year of France's PSA with Fiat Chrysler, said the plant will be its first to solely produce battery-electric models for its Vauxhall, Opel, Peugeot and Citroen brands. The vans will be sold both domestically and overseas, with production due to start in 2022. The Financial Times reported that the deal was secured after months of "intense" talks with ministers and includes around £30m of government support. The investment will protect 1000 jobs at the plant.
 
Two of the world's biggest airlines will trial fast-track lanes at Heathrow airport for fully-vaccinated arrivals, the BBC reports. Under the scheme passengers from some countries will be able to upload their vaccination status before boarding. The trial by British Airways and Virgin Atlantic comes as the aviation industry calls for quarantine-free travel to the UK from lower-risk amber list countries. Transport Secretary Grant Shapps is set to announce such a scheme this week.
 
British Airways has settled a legal claim over a major data breach that affected 420,000 customers and staff in 2018. Names, addresses and card payment details were leaked and led to the Information Commissioner’s Office (ICO) handing out its largest ever fine at £20 million. The ICO initially threatened to fine BA £183 million for the breach under GDPR rules, but this was reduced to when the airline pointed out it was in financial difficulty due to the Covid-19 pandemic. Law firm Pogust, Goodhead, Mousinho, Bianchini and Martins said the settlement was reached following mediation with BA and the terms are confidential. However the deal struck will see claimants paid out and the airline has apologised directly to those involved.
 
The EU has given the green light to pharmaceutical giant AstraZeneca's $39bn (£28.2bn) takeover of rare disease specialist Alexion. In a statement released yesterday morning, AstraZeneca said clearance from the European Commission marked "an important step towards completion".
 
The Guardian reports that Sainsbury’s is warning of gaps on shelves because supplies of some products including salads, beers and soft drinks are running low because of shortages of lorry drivers and an uptick in staff forced to self-isolate because of covid-19. Supplies of some non-food items have also been hit by global supply chain challenges caused by shortages of shipping containers, interruptions at factories and a shortfall in computer chips caused by surging demand for electronic equipment. Simon Roberts, the Sainsbury’s chief executive, said demand for soft drinks, beer and barbecue foods had all been stronger than expected in recent weeks as families continue to eat more at home and friends gather around their television sets to watch the Euro 2020 football tournament.
 
Reuters reports that pub operator Wetherspoon is planning to seek debt waivers from its lenders for the next financial year, as sales continue to slump despite pandemic restrictions easing. Bar and food sales slipped 49% between 12th April and 16th May, when outdoor dining was permitted albeit with some restrictions, while sales were still down 14.6% between 17th May and 4th July when pubs were fully open. The chain slumped into a first-half loss in March and has had to let go hundreds of employees and raise money to get through the crisis. It currently has most of its 860 pubs open but has reiterated that it expects to make a loss for the year ending July 25. It expects its net debt to fall to £833m by the end of this financial year, down from £865m as of July 4 2020. The company recently announced it plans to open 18 new pubs and upgrade 57 others and will invest roughly £750m on similar projects in the next 10 years.
 
The advertising watchdog, the ASA, has banned an advert by brewer Brewdog for misleading claims. An Instagram post for its Clean & Press Hard Seltzer said: "Due to advertising regulations we cannot claim this drink is healthy," but continued with a reference to a low-calorie claim. Brewdog said the ad was "tongue-in-cheek" but agreed not to use it again. Brewdog was also reported to the ASA last week for claiming a competition prize was solid gold and worth £15,000, when it wasn’t, being only gold plated.
 
Customers are fed up with being told they are getting poor service "because of Covid", according to research by the UK Institute of Customer Service, which says firms are accused of using the pandemic as an excuse for long waits on the telephone or late deliveries. The number of complaints about poor service in the last six months was at its highest level since 2009, according to the institute's survey of 10,000 people. The sectors with the biggest issues were transport, local public services - such as GP surgeries, councils and police services, and telecommunications, the survey suggested. A quarter of those asked said that some organisations had used Covid as an excuse for poor service.
 
Daimler and Jaguar Land Rover have become the latest carmakers to warn sales will be further affected by the global semiconductor shortage, with the latter flagging deliveries in the second quarter will be 50% worse than initially thought. Bloomberg reports that a shortage of automotive chips began late last year as consumer demand for personal devices soared amid pandemic lockdowns, and the problem has persisted through 2021, raising concerns of the issue spilling over into next year. The dearth is threatening to slash $110 billion in sales from the car industry, consulting firm AlixPartners forecast in May, and has forced auto manufacturers to overhaul the way they get the electronic components that have become critical to contemporary vehicle design.
 
Online estate agent Purplebricks has pledged to repay seller fees if they fail to find a buyer as part of a new pricing strategy to boost market share. The firm told PA Media the money back guarantee will launch nationwide this month after a successful trial in the North West. However, Purplebricks’ full-year results showed its market share fell to 4.6% from 5.1% the previous year. It swung to a £3.6 million pre-tax profit for the year to April 30 against losses of £9.2 million the previous year. Revenues jumped 13% to £90.9 million, with total fee income jumping 22% to £87.1 million and new instructions up 14% as Britain’s property market has boomed due to changing buyer demands in the pandemic and the stamp duty holiday.
 
Audio-edit software Audacity has denied accusations its new privacy policy has transformed it into "possible spyware". The open-source free tool, with 100 million users worldwide, is popular with podcast and music editors. Its updated policy says data can be shared with its Russia-based infrastructure company, WSM, as well as regional law enforcement. There has consequently
been anger among users and technology website Fosspost said: "One would not expect an offline desktop application to be collecting such data, phoning home and then handing that data to governments around the world whenever they see fit".
 
Shell is reportedly planning to quit its California-based joint venture with fellow oil giant ExxonMobil as it looks to accelerate its transition away from fossil fuels. Four sources told Reuters that the FTSE blue chip had informed Exxon that it intended to exit subsidiary Aera Energy, in which it holds a 52 percent stake. The firm did not respond to a request for comment.
 
The Pentagon is scrapping a multibillion-dollar cloud computing contract, which sparked a row between Microsoft and AmazonThe US Department of Defense said the $10bn contract no longer met its current needs due to the "shifting technology environment". Microsoft was awarded the contract, but Amazon claimed President Trump had influenced the decision. Amazon and Microsoft will both have the opportunity to bid for a new contract.


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