Letter to Sunak
MP supports call for ‘student loan’ plan for business
Owen Thompson: letter to Chancellor
An SNP MP is supporting a call for government support schemes to be converted to a student loan style system to prevent firms from failing under the weight of repayment burdens.
In a letter to the Chancellor, Owen Thompson has warned that many firms were being pushed to the brink as a result of being unable to meet repayment plans due on loan schemes – including the coronavirus business interruption loan scheme (CBILS).
Mr Thompson has asked Rishi Sunak to explore the student loan idea first proposed in June last year by the Institute of Directors , where repayment kicks in only after the borrower has crossed a certain threshold of income or profitability.
The MP highlighted that in May last year, the Office for Budget Responsibility forecast a likely 10% default rate on the loans. By July, that was updated to 40%, and in September, the Department for Business, Energy and Industrial Strategy’s annual report went even further, estimating losses ranging from 35% to 60%.
Meanwhile, TheCityUK recapitalisation group’s report estimated that up to three million jobs across the UK, and 780,000 SMEs, are at risk if urgent action is not taken to tackle that projected £35 billion of unsustainable debt from Covid loans.
Mr Thompson said: “The UK government’s Covid support schemes should be in place to support businesses through this pandemic, not push them into debt and hardship as we begin to recover from the crisis.
“Time is fast running out and the UK government must now step in and act.”