The UK government has scrapped guarantees on nearly £1 billion of bank loans handed out to ailing businesses during the Covid-19 pandemic, leaving lenders on the hook for some of the borrowings that will not be repaid.
Previously unreported figures obtained by Reuters under a Freedom of Information (FOI) request show that the state-owned British Business Bank (BBB) - which administers the loan schemes - has removed state guarantees from 10,786 loans worth a combined £979 million as of Oct. 11, shielding taxpayers from some losses.
While the amount is only a fraction so far of the £77bn of loans issued, the move follows pressure from lawmakers and Britain's public spending watchdog who criticised the programmes for being too lax. The figures could rise further - latest figures show just £17bn have been fully repaid by borrowers as of June 30.
Dozens of lenders took part in the government-backed schemes, including Britain's ‘Big Four’ banks: Barclays, NatWest, Lloyds and HSBC. Barclays and HSBC declined to comment, while the other two were not immediately available.
Britain's emergency lending schemes echoed government finance initiatives deployed worldwide to prop up companies during lengthy lockdowns, but the full costs and who will ultimately foot the various bills is only now becoming clearer.
Public officials have ratcheted up their scrutiny of the schemes to try to ensure better value for money, three sources familiar with the matter told Reuters, just as ministers review strained state finances ahead of a key budget update later this month.
"In unprecedented times, we stepped up to support the country," a spokesperson for the UK's business department said of the loan schemes, adding that where necessary it was working with lenders to remove guarantees to protect taxpayer money.
Bank lobby group UK Finance said lenders were in regular discussions with the BBB, with some removing loans from the guarantee at their own discretion.
Lenders who answered government calls to keep credit flowing to Britain's shell-shocked economy from 2020 did so via three main schemes. The largest and most controversial, the Bounce Back Loan (BBL) scheme, delivered £47bn and was specially designed to help Britain's smallest firms stay afloat.
Participants were requested to streamline their typical credit checks in order to lend up to £50,000 within hours of an application. Under BBL terms, the government assumed 100 per cent of the credit risk.
However, some lenders are finding they cannot claim on that guarantee, the FOI response shows. Following the removal, any financial loss is borne in full by the lender, BBB said.
The guarantees have been removed for a variety of reasons, the BBB said, including due to data corrections, application errors resulting in "duplicate" funds being sent to companies, as well as infringements of scheme rules.
Potential infringements could include evidence of poor treatment of borrowers, one of the sources said. The BBB has the power to offset a proportion of a lender's future claims for repeat infringements, but had not yet done so, the source added.
Mistakes had been identified voluntarily by the lenders themselves, or following discussions with the BBB, according to the FOI response.
All the lenders that participated in the emergency loan schemes have been subject to at least one audit, the BBB said.
The lending schemes have been mired in controversy, as evidence mounts of widespread fraud. A junior government minister, Theodore Agnew, resigned last year in protest, saying efforts to stop fraudulent abuse were "woeful."
The latest overall scheme data, published in September, showed the value of suspected fraud across all the schemes had hit £1.7bn as of June 30, up 43 per cent on the previous estimate in March.
The figures also showed the government had paid out £7.4bn to lenders under the state guarantees.
"Lenders are doing all they can to ensure loans are repaid as well as taking action to tackle fraud," a UK Finance spokesperson said.
Suspected fraud is not necessarily a reason for removing a guarantee, provided the lender is otherwise compliant with scheme rules, another source said.
A second source, who assisted in the design of the scheme and declined to be named, said it should not come as a surprise that loans that banks would ordinarily not consider were hitting problems, adding that lenders voiced reservations at the time.
The BBB had also raised concerns prior to the launch of the BBL scheme. In a letter to the government in May 2020, the BBB warned the scheme was "vulnerable to abuse by individuals and by participants in organised crime."
In a response that month, the government said it had assessed the risks but decided to proceed with its launch, citing "the unprecedented situation facing the country."
Following the initial response condemning the Budget as 'the most damaging for independent retailers in recent memory' from the British Independent Retailers Association (Bira), members have shared their stark reactions to the triple burden of doubled business rates, increased National Insurance, and higher minimum wage costs.
Multiple retailers have calculated specific impacts on their businesses, with costs ranging from £90,000 to £150,000 per year.
"This budget was horrendous for us as a company. Estimated costs to be around £110,000 - £120,000 per year," said Andrew Massey of Masseys DIY in Swadlincote, Derbyshire.
The immediate impact on employment is already evident. Peter Massey of R Massey & Son Ltd, employing 38 staff, said: "We decided last night that we will not replace the next two members of staff that leave. We are also considering what to do with our coffee shop that employs quite a few youngsters."
Kevin Arthur of Pewsey RadioVision in Wiltshire highlighted the broader staffing implications: "The minimum wage rising to £25.5k per year (40hr week) is scandalous. Having to pay this type of salary for your most basic of employees will mean less employees, resentment amongst 'more valuable' staff who believe they are 'worth' far more than a basic employee, and less ability to pay staff bonuses. I am now looking to reduce staff hours, reduce staff numbers, and Christmas bonuses will be curtailed and any other 'perks' reduced."
A store owner in the South West, whose business has traded for over a century, revealed: "Prior to the budget we were looking at taking on a new store and creating 12 new jobs. The colossal impact that Labour has imposed on our business means that not only will this new store not happen, but we will be reviewing our sites and having to make redundancies in order to survive."
William Coe, of Coes in Ipswich, highlighted the challenge facing customer-focused businesses: "We all want the same thing – Growth – however for growth businesses need to make a profit to enable them to invest. With the cost rises put upon them yesterday this gets harder and harder especially for the retail and leisure sectors where the ability to make savings through technology is limited."
John Jones, Managing Partner of Philip Morris Direct in Hereford, warned: "We've been saying for months that the issue for small business is the cumulative effect of so many extra costs. These add up to a level of costs that just aren't sustainable, and I fear there will be a blood bath of small business on the high street."
The impact threatens the very existence of some long-established businesses.
A West Midlands clothing retailer with over 100 years of trading history confirmed they are "closing the doors in the near future," adding that "the cumulative effect of the rate hike, NI increase and the Minimum Living Wage increases mean that already emptying towns will become wastelands."
For smaller independents, the situation is particularly acute. Tracey Clark of Albert's Hardware in Somerset revealed: "I work in excess of 70 hrs a week with little to no personal financial gain. I can't see myself surviving the next six months."
The disparity between high street retailers and online competition was highlighted by several members, with concerns raised about UK-based businesses bearing the cost burden while international competitors selling cheap imported clothing operate with minimal tax liability.
A Greater Manchester fashion retailer emphasised the disconnect between policy makers and small business reality: "They are completely detached from reality. They need someone advising that has lived and breathed a small business. There should at least have been a threshold where businesses below a certain turnover aren't hit by these things."
The impact extends beyond retail to related sectors.
A West Midlands builders' merchant warned of broader economic consequences. The owner said: "The Government has put the boot in to small business. We are paying for everything. Farmers are in real trouble now and the economy will suffer. They went round telling businesses rates were unfair and would sort it out, then just put them up. They lied to us all and now jobs will go and inflation will rise."
Many retailers expressed frustration at what they see as broken promises. A Birmingham-based jewellery store owner said: "High Streets are the cash cow for Governments and when most have disappeared, they will scratch their heads and wonder why."
The combined impact of these measures threatens not just individual businesses but entire local economies. With many retailers already reporting worse trading conditions - Bira's recent survey showed 46% reported worse trading in early 2024 compared to 2023 - these additional costs could prove the final straw for many independent businesses.
Andrew Goodacre, CEO of Bira said: "For some, the Budget has forced immediate operational decisions. Several retailers mentioned reviewing staffing levels, reconsidering expansion plans, and in some cases, accelerating closure plans. The impact on future generations is particularly concerning, with multiple family businesses questioning their long-term viability."
A Midlands hardware store owner summed up the common challenge: "This will make trading near impossible with wage increases and the business rates, and no one wants to pay any more for goods."
Brocks at Rockwell Green, a Premier-branded convenience store near Wellington, Somerset is on the market as owners Simon and Rachel Brock are now looking to retire - after running the store for nearly 25 years.
Selling a wide range of products and everyday essentials, the store is “well-established and popular” among both the local communities.
“It has been a pleasure running the store for the last 23 years and serving the local community. It has been a tough decision to sell but we felt now was the best time to retire,” Simon said.
Specialist business property adviser Christie & Co has been instructed to market the property, which also features a variety of storage spaces, offices and independently accessed three-bedroom accommodation.
Matthew McFarlane, business agent at Christie & Co who is managing the sale, commented: “This is a fabulous store and property, offering a large sales area, great storeroom and residential accommodation. The sales figures are very strong which represents an excellent opportunity for corporate buyers or established multi operators.”
Wrexham Lager Beer Co Ltd, the oldest lager brewery still existing in Britain that has been brewing in Wales since 1882, has announced Rob McElhenney and Ryan Reynolds as new co-owners of the company alongside the Roberts family.
The acquisition was made by Red Dragon Ventures, a joint venture formed by The R.R. McReynolds Company, majority owner of Wrexham AFC, and the Allyn family of Skaneateles, New York. Red Dragon Ventures was created to drive growth in the Wrexham community and Wrexham AFC.
This transaction represents another landmark deal for the Welsh town and will considerably scale up Wrexham Lager’s infrastructure and international production, distribution, and marketing efforts.
“As co-chairmen of Wrexham AFC we have learned a lot,” said Rob McElhenney and Ryan Reynolds. “The connection between club and community, the intricacies of the offsides rule and the occasional need for beer – especially after finance meetings. Wrexham Lager has a 140-year-old recipe and a storied history and we’re excited to help write its next chapter.”
The Roberts family, who have owned and operated the business since 2011, will maintain an active role within the business, continuing to oversee quality control across all markets, local brewery operations, and community engagement projects.
Recently appointed chief executive James Wright will continue to lead the business after already overseeing rapid UK growth, as well as international expansion into Australia, Japan, and Scandinavia. Distribution in the US and Canada is set to go live in the coming months.
“This is a brand with great heritage – the oldest lager brewery in Great Britain, once enjoyed across the world,” Wright said. “So, to have Rob and Ryan onboard as we embark on international expansion is huge for us. They have been doing wonders for the town of Wrexham and strongly share our passion for once again seeing Wrexham Lager enjoyed in all the far-flung corners of the globe.”
Wrexham Lager Beer Co currently produces the 4% ABV Wrexham Lager, 5% ABV Wrexham Lager Export, and recently introduced 4.6% ABV Pilsener. The 4% Wrexham Lager is produced using an original recipe from 140 years ago that was once available in the world-famous Harrods luxury department store in London, as well as chosen as the only lager to be served on the White Star Line’s Titanic.
Ten global beverage companies have joined forces under a new industry-wide consortium, called REfresh Alliance, which is designed to help accelerate renewable energy adoption across the industry’s supply chain.
The new initiative invites additional companies from across the beverage industry to pool and scale their resources to remove barriers to renewable energy adoption in the supply chain, provide education on best market practices and support the industry’s transition to Net Zero.
Companies currently part of the REfresh Alliance include: Bacardi, Carlsberg Group, Constellation Brands, Diageo, Heineken, Molson Coors Beverage Company, Pernod Ricard, The Coca-Cola Company and Whyte & Mackay.
The programme is managed by leading energy solution provider, Enel X. Through its Advisory Services division, Enel X connects the participants with renewable energy providers and supports renewable energy transactions, aiming to accelerate renewable energy adoption.
The programe also features a dedicated educational platform to help program participants prepare for renewable energy adoption.
Scope 3 emissions, which are not directly produced by a company but from its supply chain, often account for approximately 90 per cent of a beverage company’s carbon footprint. As suppliers continue to face a number of barriers to decarbonisation, REfresh has already engaged with more than 300 suppliers to discuss their involvement in the programme as it aims to support their adoption of renewable energy solutions.
“We have long recognised the need for industry collaboration to deliver the most impact and to accelerate the transition across our supply chains,” Ralf Peters, chief procurement officer of Coca-Cola Europacific Partners (CCEP), and chairman, Coca-Cola Cross Enterprise Procurement Group (CEPG), said.
“I know from my experience across the Coca-Cola system that supporting our supply partners is a key part of our sustainability action – and that encouraging them to transition to renewables is one of the most impactful things we can do to help decarbonise their businesses, and to do the same in ours.”
Hervé Le Faou, chief procurement officer of Heineken, said: “Scope 3 emissions are one of the biggest challenges that the industry faces in delivering on our Net Zero ambitions. We must work together to identify areas of our supply chains where we can pool our resources to accelerate this transition for our suppliers. We look forward to working with other beverage companies to achieve this and accelerate the decarbonization of our industry.”
Jane Liang, chief procurement officer of Diageo, said: “The climate crisis is the most pressing issue of our time and the transition to Net Zero is becoming increasingly important. However, there is only so much we can do as individual businesses. The REfresh Alliance will drive collective action within the industry to accelerate the adoption of renewable energy. We are calling on all companies and suppliers within the industry to join us and support the industry in its transition to Net Zero.”
REfresh intends to initially launch in the mature renewable energy markets of Europe and North America, where it will be able to use existing networks to accelerate impact in support of the industry’s decarbonization efforts. As it continues to grow, the consortium will look to expand to other markets and welcome businesses from across the beverage industry to join it in supporting suppliers in their decarbonization journeys.
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Single-use disposable vapes are displayed for sale on October 27, 2024 in London, England
Vape industry bodies have raised concerns over chancellor Rachel Reeves’ budget announcement introducing a flat-rate excise duty on vaping products, saying it could hurt public health and increase financial pressures on consumers.
The new excise tax, set to begin on October 1, 2026, will add £2.20 per 10ml of vaping liquid, with additional VAT. This rate replaces the previous government’s proposed tiered tax structure, which many in the industry had criticised.
The Independent British Vape Trade Association (IBVTA) welcomed the shift from a tiered structure but voiced strong concerns about the overall impact on vapers, particularly those on lower incomes.
“The government has already proposed regulation that will ban single use products, which despite helping many adult smokers access vaping, have via irresponsible retailers been disproportionately accessible to children,” said IBVTA chair Marcus Saxton.
“It would seem a little questionable then to increase the cost of vaping, especially given there are still around six million adult smokers for who you’re trying to give every opportunity to make the transition to less harmful products.”
Saxton warned that higher costs could hinder the progress made by public services utilising vapes within their smoking cessation services, adding, “The IBVTA do not believe that any excise tax should be applied to products supplied via these services.”
The UK Vaping Industry Association (UKVIA) voiced even sharper criticism, highlighting the potential for the new excise tax to become an economic burden on adult vapers.
John Dunne, UKVIA’s director general, noted that the additional £2.64 per 10ml of e-liquid (inclusive of VAT) could result in a 267 per cent price hike for some e-liquids, a change that he described as “a kick in the teeth for former adult smokers who have switched to vaping to quit their habits.”
Dunne cautioned that the new excise rate would be “the highest in Europe,” and warned that it could deter adult smokers from considering vapes as a smoking cessation tool.
“Some 3 million adults are former smokers thanks to vaping, which is strongly evidenced as the most effective way to quit conventional cigarettes, saving the NHS millions of pounds in treating patients with smoking related conditions. This announcement today deters adult smokers from considering vapes as a method to give up their habits, and hits the lowest paid,” said Dunne.
He criticised the government’s approach, calling it a “revenue grab from former smokers” and noted the inconsistency with reduced VAT rates applied to other nicotine replacement therapies.
“It would also make more sense for vapes to be taxed at a lower VAT rate, which is the case for other nicotine replacement therapies, which have proven to be considerably less successful than vapes in helping smokers quit,” he said.
The budget also announced a consultation on new compliance measures, including vaping duty stamps and supply chain controls to combat illicit production of nicotine products. This consultation, open until December 11, 2024, aims to limit illegal manufacturing while ensuring the new duty’s effective enforcement.