Treasury’s new bailout plan to save UK plc

CHANCELLOR Rishi Sunak has signed off a new bailout plan codenamed Project Birch to save some of Britain’s biggest companies from the Covid-19 fallout.

The Treasury says ‘strategically important’ firms struggling to get help elsewhere can apply for bespoke loans.

The open-ended scheme means many more of Britain’s best-known firms will now be able to access billions of loans backed by the taxpayer.

Officials are in talks with Jaguar Land Rover, which is seeking more than £1billion, airline Loganair and Tata Steel, owner of the Port Talbot works in Wales. The loans will be prioritised for firms where failure would ‘disproportionately harm the economy’ either by hitting jobs or key industries such as steel, airlines or defence.

The initiative will fill the gap between the Coronavirus Business Interruption Loans (CBILS) and the Bank of England loan scheme, which is only available to investment-grade companies.

It comes amid growing pressure from senior business figures for the Treasury to consider taking an equity stake to avoid companies drowning in debt.

The plan, which could be delivered as the UK’s first ever sovereign wealth fund, such as those in Norway or Saudi Arabia, are seen as a way of delivering the Prime Minister’s aim to ‘level up’ the regions.

Lord O’Neill, a former Treasury minister, has suggested £25billion could be invested in stakes of key companies to protect Britain’s international success stories.

But Treasury insiders said loans would be the first port of call and that taking stakes in businesses would be a ‘last resort’. It is estimated the value of Governmentbacked loans to companies could climb above £100billion, placing businesses under huge strain as the UK emerges from recession. It has already reached £40billion in the first two months of the bailout measures.

The bailouts will be the first action of its type since the financial crisis, when the Treasury took a stake in banks. It was seen as the only way to inject cash into the banking sector but the Government still owns part of the Royal Bank of Scotland.