Banks fail to deliver

In his Budget just a few weeks ago, Rishi Sunak deployed a rhetorical device to reinforce the Treasury’s determination to protect businesses during the coronavirus pandemic. “This Government delivers on its promises and gets things done,” he said, repeating the last phrase at least half-a-dozen times. As it turned out, the Budget measures were nowhere near enough to shore up commerce once Boris Johnson decided to close down much of the economy. A week later, Mr Sunak returned to make a televised announcement of schemes valued at some £300 billion which he said gave “every British citizen… all the tools you need to get through this”. Yet it is now apparent that however beneficent Mr Sunak’s intentions, the delivery has fallen woefully short of the promises.

Companies that were told they could apply for Government-backed loans worth up to £5 million merely by turning up at their local bank are finding that while some branches are open, many are closed. Phones are not answered and emails do not elicit a response. Those who do get through are asked to put their homes and other personal wealth on the line as collateral for the loan.

Businesses employing millions of people are teetering on the brink of insolvency, desperately in need of the funds that were pledged but which they cannot access. This may be the fault of the banks, but they say they are just following the rules laid down by the Government. However, culpability is irrelevant to the owners of small and medium-size firms about to go under. They want action now.

Alok Sharma, the Business Secretary, said the banks had been urged to respond positively, but it will take more than that. Why are any branches closed? Supermarkets are still open. Provided they observe social distancing measures, what is preventing bank branches from doing the same?

Banks need to step up their act. The Government should also set out in clear terms the circumstances in which banks can turn down applications for what are supposed to be statebacked loans, with thousands of owners who do make contact reporting rejection. The alternative is that as many as one million small businesses may not be around when we come through this pandemic.

There is a troubling pattern developing whereby ministers reassure the country that action is taking place, as Mr Sharma did again last night, when everyone can see for themselves that it is not true. This can only corrode the trust of people who are dutifully accepting authoritarian controls on their movements because they assume the Government is protecting their livelihoods, as it promised.