Businesses that received taxpayer-guaranteed loans to help them survive the pandemic continued to donating tens of thousands of pounds to the Conservative Party, the Guardian can reveal.
Although there is no evidence that low-interest loans were used to directly fund donations, critics say there was no justification for companies to seek taxpayer help. during the pandemic and then continue to make political contributions.
One campaign group said it “smacks of state funding of a political party” and called on companies that have donated to compensate the treasury.
Chancellor Rishi Sunak launched the Coronavirus Business Interruption Loan (CBILS) program in March 2020, offering emergency loans of up to £ 5million to small businesses affected by Covid-19. Loans have been made to over 100,000 businesses.
While loans are organized and made by banks, the government guarantees them and also pays interest and loan fees for the first year. These parts of the £ 27 billion CBILS scheme constitute state aid, according to the government and the European Commission.
The Guardian’s analysis of state aid information released by the commission shows that several companies that were already Conservative donors continued to contribute to the party after receiving taxpayer-guaranteed loans.
Dow Investments, a real estate company founded by Scottish entrepreneur and philanthropist Robert Kilgour, received a £ 1million CBILS loan in August 2020, with a state aid component of £ 106,798 . After receiving the loan, the company continued to make monthly payments to the Curators, with a combined value of £ 37,494.
Kilgour sits on the advisory board of the TaxPayers’ Alliance, an influential right-wing think tank that has risen to prominence by campaigning for cuts in public sector spending. Asked for comment, he said the loan was “fully secured by his real estate assets as an additional financial reserve against the slings and arrows of the very severe business effects of the pandemic.”
Calling this a “very prudent decision,” he added, “Dow Investments currently plans to repay the entire CBILS loan in early 2022.”
Kilgour said Dow’s subsidiary Renaissance Care, a nursing home company, was a private company providing a mostly public service because 67% of its elderly residents were clients of local authorities.
The Department of Business, Energy and Industrial Strategy (BEIS) has also guaranteed a £ 1.5million loan to aerospace parts company Orange Aero, of which £ 162,425 has been classified as state aid. After receiving the loan in August 2020, Orange Aero donated £ 50,000 to the Conservative Party in October of the same year.
Orange Aero chief executive Simon Jeffs said there was no connection between the loans received and the company’s subsequent political donation. “Our business was decimated and we had to be extremely agile and reinvent ourselves to focus on other areas of the aerospace business,” he said. “The CBILS loan was exceptional support, but we also had an exceptional 2018 and kept the profits we made in the business. “
He said the loans were made by banks and would be repaid in full, adding that the company’s political donations were “modest.”
Norwich-based construction firm Bateman Groundworks took out a £ 1.8million loan in August 2020, including part of state aid worth £ 186,120. That same month he donated £ 4,500 to local MP Brandon Lewis, followed by donations of £ 6,000 and £ 12,000.
Its managing director, Richard Bateman, said the loan was “fully secured and secured by both business and personal assets” and said that meant it was “not a secured loan. by taxpayers “. “The loan was in no way used to finance the Conservative Party in general or an individual member of the party,” he said.
Another company that received a CBILS loan was Stonehaven Campaigns, a public relations and consulting firm founded by former rising Scottish Conservative star Peter Lyburn. The company received a loan of £ 500,000 in April 2020, with the state aid component reaching £ 47,100. Since then he has donated £ 1,250 to the Conservative Party each month, worth £ 15,000.
Stonehaven Campaigns declined to comment on the case, but the company made it clear that the loans it received did not fund donation-related expenses.
Tom Brake, director of the Unlock Democracy lobby group, said: “There can be no justification for a business, receiving financial support during the Covid pandemic, to continue to donate to party funds.
“To suggest that somehow donations are completely separate from the overall income of a business is misleading. It looks and smells like public funding of a political party – something you would expect the government to oppose ideologically. The government should ask these companies to reimburse an equivalent amount to the treasury. “
A government spokesperson said the loans “have provided a lifeline for millions of businesses across the UK – helping them survive the pandemic and protecting millions of jobs. We have always been clear that these are loans, not grants. In all cases, the lending decisions have been made by the lenders as a completely separate process from the government and there are strict guidelines that define how the funds from these loans are to be used.
While the decision to lend under the scheme rests with the banks, the government guarantees the loan, with 8% of its value considered state aid. The taxpayer also recovers the cost of interest and borrowing costs for the first year.
When asked if taxpayers’ money had been indirectly used to fund the Conservative Party, the party did not respond to requests for comment.