The government has come under fire for its lack of transparency relating to future fund data.
Darren Jones, chair of the business, energy and industrial strategy committee, has criticised responses from business secretary Alok Sharma regarding the government scheme, which provides convertible loans to early stage, high-growth firms.
Jones had called for answers after it emerged that the British Business Bank (BBB) had raised concerns around government loan schemes, warning that the future fund may not be good value for money and too focused on the South East of England.
As part of his response, Sharma said the government publishes detailed information monthly on the number of companies receiving investment through the future fund, although this does not include information on individual businesses as it is confidential.
“I am still not satisfied by the government’s explanation as to why it isn’t publishing the data of which companies have received what funding, including through the future fund, given taxpayers could end up as shareholders of a whole portfolio of start-up businesses,” Jones said.
“It’s also disappointing that the secretary of state has resisted calls to set conditions on how public funds can be used, including by companies owned by private equity firms which could pay off the debt used to buy them using taxpayer guarantees, allowing private equity owners to cash in while, in some cases, they sit on mountains of cash.
“If private equity firms are receiving this public money then there should be some conditionality around their commitment to protecting jobs and helping UK businesses get through this pandemic.”
Sharma said that it became clear as soon as the fund launched in May that it “was a well-targeted intervention that responded to the needs of the market”.
He added the BBB has implemented a robust monitoring system for the portfolio of investments.
Jones has also raised concerns around the 100 per cent government-backed bounce back loan scheme, as the BBB had warned it could be used fraudulently.
Sharma said that lenders delivering funds under the scheme conduct fraud checks but deploying funds quickly was a priority.
“Given the urgency of providing financial support to small businesses impacted by the pandemic and lockdown measures, it was necessary to introduce a more streamlined process to ensure that loan applications could be approved as quickly as possible,” he said in the letter.
“The government took the view that the need to secure peoples’ jobs and keep businesses alive outweighed the risk of forgoing some of the usual checks.”
Sharma said that the government has been working with the BBB to set up the Fraud Prevention Collaboration Working Group and processes to further detect and prevent fraud.
“Concerns had been raised, not least by the BBB, about the vulnerability to fraud and abuse of some of the government’s support,” Jones said.
“Estimates suggest that several billions of pounds of taxpayer money could be lost.
“The chancellor’s latest relaunch of his winter economic programme was welcome, but it does raise questions again about the protections and conditions being put in place to ensure public money supports those businesses and workers that need it.
“Ministers must learn lessons from the earlier rounds of support before wasting more taxpayer money.”