Greensill access to Covid loans: five key questions for Chancellor as Recovery Loan Scheme launches
Labour has called on Chancellor Rishi Sunak to urgently explain why he granted Greensill Capital access to a government-backed Covid loan scheme even though the Treasury knew it was exempt from safeguards imposed on other banks.
In a letter to Sunak, Labour’s Shadow Chancellor Anneliese Dodds calls for urgent answers to five key questions ahead of the launch of the Recovery Loan Scheme, the Government’s latest Covid loan scheme.
The letter also asks if the Chancellor will “commit to opening a full, transparent and thorough investigation into the chain of events that saw Greensill awarded lucrative supply chain contracts, the freedom of Whitehall and the right to lend millions of pounds of government-backed Covid loans”.
The questions are:
- What input was received from outside Government into the design of the CLBIL scheme?
- Which Government department was responsible for formulating the criteria for lenders to be accredited under the CLBILs scheme?
- Were any concerns communicated within HM Treasury or between HM Treasury and the British Business Bank upon Greensill Capital’s accreditation as an approved CLBILS lender?
- What other lenders who are not regulated by the Bank of England or the Financial Conduct Authority were accredited under the CLBILs scheme, or under the new Recovery Loan Scheme launching today?
- When was HM Treasury informed that the British Business Bank had opened an internal investigation into the decision to accredit Greensill Capital as a CLBILs lender?
The collapsed lending firm was the only financial technology firm approved to administer the Coronavirus Large Business Interruption Loan Scheme last June.
It was not regulated by the Financial Conduct Authority or the Bank of England. The Treasury has admitted that it was aware Greensill was not subject to the capital adequacy and stress tests that applied to other lenders on the scheme to protect public money.
Anneliese Dodds MP, said:
“The Treasury knew the rules that protect public money used to back bank-run lending schemes didn’t apply to Greensill.
“Despite this, the Chancellor granted it the right to lend millions of pounds in government-backed Covid loans.
“The public will be appalled to hear how much of their money may have been put at risk by the Conservatives’ cosy connections to Greensill Capital.
“That’s why we need a full, transparent and thorough investigation into this affair.”