It is a pleasure to speak after my hon. Friend Andrew Griffith, and an even greater pleasure to speak after my hon. Friends the Members for South Ribble (Katherine Fletcher) and for Sedgefield (Paul Howell), who made wonderful maiden speeches. It is great to hear those regional voices. They are from the north and for the north, and they will add to the compelling case to rebalance this country by further investment in the north. It is great to hear them make that case.
I will focus most of my comments on clause 12, but I welcome all measures in the Bill, particularly the aid to the hospitality sector. I have some fine hostelries in my constituency, including, I have to say, the world’s best restaurant, as identified by TripAdvisor—the Black Swan at Oldstead. It is a wonderful place, about four miles from my house, and is run by celebrity chef Tommy Banks, a local person from a local family. It has a wonderful back story. There are many, many good restaurants through my patch, and they will get lots of support through the Bill.
Clause 12 talks about bounce back loans, which have been a huge success of the Government’s and an excellent scheme that many businesses have taken advantage of; I think about a million businesses have secured a bounce back loan. The scheme gets money out the door as quickly as possible to businesses in need. It is fair to say that because of the length and depth of this crisis, not every business will get through this recession. This is the third recession that I have been involved in with my business, and it is no doubt the most difficult.
It is absolutely right that we have suspended the provisions of the Consumer Credit Act to get that money out the door quickly, so that lenders did not have the responsibility of ensuring that businesses were creditworthy for the amounts of money they were taking. The worry is what happens down the line. I am the co-chair of the all-party group on fair business banking, which has spent much of the last decade trying to fight for justice for lots of businesses that were badly treated in 2008 and post 2008. We desperately want to make sure that that does not happen again.
It was great to hear the Secretary of State confirm in his opening remarks that although the Consumer Credit Act provisions have been suspended in terms of credit worthiness, they have not been suspended in terms of collection, which should mean that lenders show forbearance if things go wrong. Inevitably, some businesses will need help to get through this, and, sadly, some businesses will simply fail, but we have to ensure that those businesses are treated fairly through the process. For our larger banks, which are regulated firms, there is now the senior managers regime, which has a requirement to treat customers fairly through the process and a requirement to stick to the Lending Standards Board standards of lending practice for business customers. That is good, because there are checks and balances that we can apply to the bigger banks.
I sound a note of caution, though. Quite a few lenders are distributing loans through this scheme that are not regulated firms, so they do not come under that regime. Additionally, I believe that some of them are not even accountable to the Financial Ombudsman Service, so if there is a dispute there is not a means of alternative dispute resolution. We have to ensure that the message goes out loud and clear to lenders that have distributed money through these schemes that they must treat customers fairly through that process if things go wrong and ensure that any restructuring gives that business every chance of staying in business and getting through this crisis.
The loan scheme has been a huge success. One of the big successes in the SME lending market over the last few years has been the emergence of FinTech sector alternative lenders, which is breaking the stranglehold of the big four banks. Some 80% of SME lending is controlled by the big four banks, and we want to see much more choice for SMEs in their borrowing decisions. The British Business Bank has authorised about 80 lenders for the CBIL scheme and about 20 lenders for the bounce back loan scheme. The difficulty is that it is not just about getting authorisation; it is also about getting access to funds. The big banks, being deposit takers, get access to something called the term funding scheme. They can borrow money from the Bank of England at 0.1%, so if they are lending money at 2.5%, 3% or 4% through the CBIL scheme, that still makes commercial sense, and they have access to moneys.
Non-bank lenders—FinTech companies such as Funding Circle, Tide and iwoca—and lots of lenders in the asset finance space do not get access to the term funding scheme. They are relying on borrowing from their normal sources—wholesale markets—and they cannot borrow as cheaply. The Government loan guarantee also specifically excludes situations where money is being borrowed from third parties. That puts these lenders in a very difficult situation. Tide had secured £500 million to distribute to UK businesses through an EU wholesale funder, but it could not provide that money because of the lack of guarantee for that lending. The Treasury is aware of that, and we need to deal with it, to ensure that the choice of finance provision is as wide as possible for our SMEs. The other way to deal with this is for the banks that can access the term funding scheme to simply on-lend to non-bank lenders, but that is not working currently. This is a work in progress, and we need to deal with it.
As a number of Members have said, bounce back loans are relatively easy to get, whereas CBILs are much more difficult to get. It is possible to move from one to the other—a company can get a bounce back loan quickly and then upgrade to a CBIL of a higher amount, to pay off the original loan. That is right and proper, but lots of businesses are not managing to get CBILs because the criteria are stricter. One reason behind that is that there are restrictions on state aid, one of which is that undertakings in difficulty cannot be supported through those schemes at the moment. The EU has said that it will drop that requirement, which is good—it is an EU requirement, and we are still bound by that currently—but we need to implement that quickly, so that more businesses can get access to the CBIL scheme and borrow as they need more money. That aside, this is an excellent Bill. I will be supporting it if we go through the Division Lobbies, and I very much welcome it.