The acceleration in company registrations is coupled with mass unemployment in the labour market. Since March 2020, the number of PAYE employees has fallen by approximately 782,000, according to the Office for National Statistics, who also report 34.6% fewer job vacancies than a year ago.
The Public Accounts Committee (PAC) suspects Covid-related fraud is playing a major role in the uplift in registrations. The latest figures show that lenders have rejected 26,933 bounce-back loan applications over concerns they could be fraudulent, preventing criminals from stealing £1.1 billion of taxpayers money via the Bounce Back Loan scheme.
The report comes following a fresh wave of funding released to high street banks from the government yesterday, allowing firms to ‘top-up’ their original loans if they received less than 25% of their estimated turnover the first time around.The top-up scheme, alongside many high street banks, has received heavy criticism from business owners on Twitter. Rules from the British Business Bank prohibit banks from allowing businesses to update the estimated revenue figures entered on the spring applications, even if clear evidence from HMRC is provided.