London Daily

Focus on the big picture.
Thursday, Sep 11, 2025

Taxpayers left with £421m bill after one in 12 firms default on Covid loans

Taxpayers left with £421m bill after one in 12 firms default on Covid loans

About 8% of borrowers – 130,000 firms – have so far failed to repay government-backed emergency loans
Taxpayers have been left to foot a £421m bill to cover soured Covid debts, after one in 12 businesses defaulted on state-backed emergency loans distributed at the height of the pandemic, official figures reveal.

In the first set of figures detailing the performance of government-backed loans offered to struggling firms during the outbreak, the Department for Business, Energy and Industrial Strategy said about 8% of 1.6m borrowers – roughly 130,000 – failed to repay their debts as of March this year.

The bulk of the claims – around £352m – were made for bounce back loans, the popular scheme which accounted for £47bn of the £77bn total lent to businesses through the programme.

High street banks and online lenders, which distributed the loans on behalf of the government, subsequently claimed a combined £421m of taxpayer cash to cover the defaults.

About 18,000 of the 1.5m bounce back loans claimed were flagged for suspected fraud by lenders, though no updated estimates were provided on the potential cost to the government. It has previously been estimated that fraud losses could top £4.9bn, though more recent estimates from PwC, the accountancy firm hired by the government, reduced that figure to £3.5bn.

“We are still early in the life of the schemes and in the lending cycle, so it is too soon to accurately assess levels of fraud and credit losses,” the business department said.

Defaults and fraud estimates, which are collected by the British Business Bank, are expected to change as more debts become due, with many firms having taken advantage of a programme allowing them to extend their loans over 10 years.

Bounce back loans, which were 100% government backed, were distributed by 28 high street banks and other lenders, with applicants able to borrow up to £50,000 each.

Launched in May 2020, the scheme was one of former chancellor, and now Tory leadership candidate, Rishi Sunak’s biggest interventions during the first months of the pandemic, as he attempted to safeguard the economy.

However, critics have claimed that not enough attention was paid to potential fraud, as customers were allowed to self-certify that they met certain criteria in an effort to get more money out the door.

Those concerns eventually led to the resignation of the anti-fraud minister Theodore Agnew in January, who cited the government’s “woeful” efforts to control fraud, and he has since warned banks to be “very careful” before claiming the government guarantee.

Lord Agnew later entered into a battle with digital Starling Bank, after raising questions around its fraud controls, claims the bank has denied. Starling has asked Agnew to withdraw his statement.

Metro Bank, Barclays and Starling Bank have claimed the most money to date on bounce back loans, with the government paying out £122m, £88m and £61m respectively.

However, the proportion of claims relative to their total loans varied, with Metro having claimed an estimated 8.5% of the total, while the amount claimed by Barclays and Starling totalled an estimated 0.8% and 3.8%, respectively.

All three lenders said they were dedicating significant resources to try to recover funds before claiming the state guarantee.

Two lenders – Tide and Capital on Tap – claimed back about a quarter of the total money they each lent to businesses through the bounce back scheme.

Tide said it conducted all appropriate checks and that it was quicker to put in claims than some of its peers. It also said that some of its customers were “younger” and therefore at higher risk of failure. Tide added that the next 12 months would offer a “better picture” of defaults across all lenders.

The government also warned against reading too far into the lender-by-lender data, saying some “may be more advanced than others” in submitting claims, “which could lead to figures being distorted”.

Capital on Tap did not immediately respond to requests for comment.
Newsletter

Related Articles

0:00
0:00
Close
The British legal mafia hit back: Banksy mural of judge beating protester is scrubbed from London court
Surpassing Musk: Larry Ellison becomes the richest man in the world
Embarrassment for Starmer: He fired the ambassador photographed on Epstein’s 'pedophile island'
Manhunt after 'skilled sniper' shot Charlie Kirk. Footage: Suspect running on rooftop during panic
Effective Protest Results: Nepal’s Prime Minister Resigns as Youth-Led Unrest Shakes the Nation
Qatari prime minister says Netanyahu ‘killed any hope’ for Israeli hostages
King Charles and Prince Harry Share First In-Person Moment in 19 Months
Starmer Establishes Economic ‘Budget Board’ to Centralise Policy and Rebuild Business Trust
France Erupts in Mass ‘Block Everything’ Protests on New PM’s First Day
Poland Shoots Down Russian Drones in Airspace Violation During Ukraine Attack
Brazilian police say ex-President Bolsonaro had planned to flee to Argentina seeking asylum
Trinidad Leader Applauds U.S. Naval Strike and Advocates Forceful Action Against Traffickers
Kim Jong Un Oversees Final Test of New High-Thrust Solid-Fuel Rocket Engine
Apple Introduces Ultra-Thin iPhone Air, Enhanced 17 Series and New Health-Focused Wearables
Macron Appoints Sébastien Lecornu as Prime Minister Amid Budget Crisis and Political Turmoil
Supreme Court temporarily allows Trump to pause billions in foreign aid
Charlie Sheen says his father, Martin Sheen, turned him in to the police: 'The greatest betrayal possible'
Vatican hosts first Catholic LGBTQ pilgrimage
Apple Unveils iPhone 17 Series, iPhone Air, Apple Watch 11 and More at 'Awe Dropping' Event
Pig Heads Left Outside Multiple Paris Mosques in Outrage-Inducing Acts
Nvidia’s ‘Wow’ Factor Is Fading. The AI chip giant used to beat Wall Street expectations for earnings by a substantial margin. That trajectory is coming down to earth.
France joins Eurozone’s ‘periphery’ as turmoil deepens, say investors
On the Anniversary of Queen Elizabeth’s Death: Prince Harry Returns to Britain
France Faces New Political Crisis, again, as Prime Minister Bayrou Pushed Out
Murdoch Family Finalises $3.3 Billion Succession Pact, Ensuring Eldest Son’s Leadership
Big Oil Slashes Jobs and Investments Amid Prolonged Low Crude Prices
Court Staff Cover Up Banksy Image of Judge Beating a Protester
Social Media Access Curtailed in Turkey After CHP Calls for Rallies Following Police Blockade of Istanbul Headquarters
Nayib Bukele Points Out Belgian Hypocrisy as Brussels Considers Sending Army into the Streets
Elon Musk Poised to Become First Trillionaire Under Ambitious Tesla Pay Plan
France, at an Impasse, Heads Toward Another Government Collapse
Burning the Minister’s House Helped Protesters to Win Justice: Prabowo Fires Finance Minister in Wake of Indonesia Protests
Brazil Braces for Fallout from Bolsonaro Trial by corrupted judge
The Country That Got Too Rich? Public Spending Dominates Norway Election
Nearly 40 Years Later: Nike Changes the Legendary Slogan Just Do It
Generations Born After 1939 Unlikely to Reach Age One Hundred, New Study Finds
End to a four-year manhunt in New Zealand: the father who abducted his children to the forests was killed, the three siblings were found
Germany Suspends Debt Rules, Funnels €500 Billion Toward Military and Proxy War Strategy
EU Prepares for War
BMW Eyes Growth in China with New All‑Electric Neue Klasse Lineup
Trump Threatens Retaliatory Tariffs After EU Imposes €2.95 Billion Fine on Google
Tesla Board Proposes Unprecedented One-Trillion-Dollar Performance Package for Elon Musk
US Justice Department Launches Criminal Mortgage-Fraud Probe into Federal Reserve Governor Lisa Cook
Escalating Drug Trafficking and Violence in Latin America: A Growing Crisis
US and Taiwanese Defence Officials Held Secret Talks in Alaska
Report: Secret SEAL Team 6 Mission in North Korea Ordered by Trump in 2019 Ended in Failure
Gold Could Reach Nearly $5,000 if Fed Independence Is Undermined, Goldman Sachs Warns
Uruguay, Colombia and Paraguay Secure Places at 2026 World Cup
Florida Murder Case: The Adelson Family, the Killing of Dan Markel, and the Trial of Donna Adelson
Trump Administration Advances Plans to Rebrand Pentagon as Department of War Instead of the Fake Term Department of Defense
×