Former Prime Minister Rishi Sunak has issued a stark defence of the government's multi-billion-pound pandemic business support, warning that the UK was on the brink of a widespread business 'Armageddon' without rapid intervention.
'Existential' Threat to UK Economy
Giving evidence for a second day at the UK Covid-19 Inquiry, the ex-Chancellor detailed the terrifying economic landscape in the early weeks of the crisis. He revealed that data from the British Chambers of Commerce indicated half of all small and medium-sized businesses had less than a month's cash in the bank. "It felt existential," Sunak stated, describing the period as one where the imperative was to act "at scale and at pace" to prevent catastrophic losses.
He argued that the alternative to launching schemes like furlough and the Bounce Back Loan Scheme (BBLS) would have been unthinkable. "You were facing widespread business Armageddon," Sunak told the inquiry. He cited independent evaluations suggesting the interventions saved up to 500,000 businesses and 3 million jobs.
Defending the Speed and Risk of Loans
Mr Sunak was questioned intensely about the design of the Bounce Back Loan Scheme, which has since been heavily criticised for its vulnerability to fraud. He remained unapologetic, stating he would make the exact same choices again given the circumstances.
"I could tell you certainly nobody was waving their hands saying 'no, no slow it down, more checks, more form-filling'," he said. The former Chancellor insisted the government was 'eyes wide open' about the fraud risks but judged the danger of mass business collapse to be far greater. "The risks were unequivocally worth it," he asserted.
The Legacy of Pandemic Spending
Sunak's testimony underscores the immense pressure on policymakers during the unprecedented crisis. He emphasised that time was the ultimate luxury the government did not possess. "If a business runs out of cash, and it goes bankrupt, it goes bankrupt. That's that," he said, explaining the need for lightning-fast financial support.
While the long-term cost of fraud and debt from the schemes remains a significant issue for the public finances, Sunak's core argument to the inquiry was one of necessity. His defence positions the economic response as a calculated, if risky, rescue mission that averted an even deeper national catastrophe.
