Recommendations & Conclusions
12 items
2
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department’s management of its contract with PwC has been poor. The Department originally appointed PwC to advise on options for the management of its loans. After PwC identified the need for a managed service provider, the Department appointed PwC to this position after a competition, with a contract running …
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The Department’s management of its contract with PwC has been poor. The Department originally appointed PwC to advise on options for the management of its loans. After PwC identified the need for a managed service provider, the Department appointed PwC to this position after a competition, with a contract running to March 2025. The Department subsequently expanded PwC’s brief to include the delivery of an integrated loan management system, paying an extra £900,000 for this. However, the system was delivered in June 2024, 15 months later than originally planned. It also did not provide full functionality required, with loan agents having to maintain their own spreadsheets that the system was meant to replace. 4 The Department has had to enter into another contract with PwC and pay an extra £300,000 to get the additional functionality required. It expects this to be in place by September 2025 at the latest. recommendation The Department should ensure that PwC delivers the full additional functionality required to the loan management system before September 2025 at the very latest and for no more than £300,000, and should begin preparations now for the approaching end of PwC’s original contract.
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Government response AI summary
The government states that PwC delivered the full additional functionality for the loan management system in March 2025 for under £300,000. They have extended PwC's original contract for a year for business continuity and a strategic review will inform the future requirement for a Managed …
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HM Treasury
3
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department does not yet know which options for the loan book’s future management would provide best value for the taxpayer in the long term. The costs of managing the loan book to date have been significant, at about £17 million over three years. The Department has not forecast the …
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The Department does not yet know which options for the loan book’s future management would provide best value for the taxpayer in the long term. The costs of managing the loan book to date have been significant, at about £17 million over three years. The Department has not forecast the costs of running the loan book beyond the current Spending Review period (2025–26). As a result, it cannot identify when the cost of the current arrangements for managing the loans in–house would start to exceed the level of repayments received and these arrangements would therefore cease to provide value for money. Nor has the Department undertaken a review of its options for the future of the loan book since
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Government response AI summary
The government states it will undertake a strategic review of the loan book programme, to be completed this financial year (2025-26), to re-assess its strategic options, including a sale or partial sale, once all borrower repayment holidays end in September 2025.
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HM Treasury
4
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department is being overly optimistic in the management of its loan book in the face of continuing uncertainty over future repayments. The Department, as at October 2024 had received less in repayments than was due, the level of insolvencies among its borrowers had been higher than it forecast, and …
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The Department is being overly optimistic in the management of its loan book in the face of continuing uncertainty over future repayments. The Department, as at October 2024 had received less in repayments than was due, the level of insolvencies among its borrowers had been higher than it forecast, and over half of borrowers remained on a repayment holiday. Despite this, the Department continues to be optimistic in its expectations over the future levels of loan repayments and insolvencies. It expects repayment of all outstanding loans, but is unclear about the actions it would take for borrowers in financial difficulties. The Department stresses the need to take account of its policy objective of maintaining the viability 5 of the sectors where it has made loans when considering such actions, and any final decisions will be taken by ministers on a case–by–case basis. The Department also considers the level of potential fraud to date, of £2.2 million, to be relatively low, compared to other COVID–19 schemes. recommendation a. The Department should revisit its estimates of expected repayment levels and insolvency rates by December 2025 to reflect its experience once all borrowers have started to make repayments b. The Department should demonstrate a tough approach on behalf of taxpayers to managing those borrowers in trouble, including when considering these borrowers for any future additional financial support, such as grant funding or further loans from the Department.
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Government response AI summary
The government agrees to safeguard taxpayers' money and maximise financial returns, stating it has no current plans to provide further direct loans to sport and culture organizations. They reiterate that grants are awarded for specific projects.
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HM Treasury
5
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department is displaying an inconsistent approach to its engagement with professional sports. The majority of the Department’s loans to sport bodies went to professional sport. For example, 57% (£124 million) of the Department’s sports loans went to top–tier, professional rugby union clubs in the Premiership Rugby League. The Department …
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The Department is displaying an inconsistent approach to its engagement with professional sports. The majority of the Department’s loans to sport bodies went to professional sport. For example, 57% (£124 million) of the Department’s sports loans went to top–tier, professional rugby union clubs in the Premiership Rugby League. The Department insists that these clubs were financially viable when it awarded the loans, despite public reports at the time to the contrary and the subsequent insolvency of three of the clubs by June 2023, owing the Department £41.6 million. The Department says it took a common approach when lending to borrowers in different sports, but, in our view, its subsequent actions display different approaches in practice. It has appointed consultants and engaged with the Rugby Football Union, the Premier Rugby League and CVC Capital Partners on the future of rugby union. In contrast, the Department was less certain about the extent of engagement by itself and Sport England with professional basketball over proposed structural changes to the game that could put at risk repayment of the last outstanding loans from four of the 11 professional clubs that received loans. When the Department did provide us with more information, it was clear to us that it has been less engaged with basketball than with professional rugby union. recommendation The Department should work with Sport England to compile a strategy for engaging with borrowers in future in order to ensure that they engage consistently and fairly with different sports as more borrowers start to repay their loans. 6
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Government response AI summary
The government is developing a comprehensive borrower engagement plan that will build on existing strategies and be guided by core principles to ensure consistent and fair engagement with different sports and borrowers.
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HM Treasury
1
Conclusion
20th Report - DCMS management of COVID-…
Accepted
On the basis of a report by the Comptroller and Auditor General, we took evidence from the Department for Culture, Media and Sport (the Department) on the management of its COVID–19 loan book.1
Government response AI summary
The government will undertake a strategic review of its loan book management in the current financial year, including an external evaluation and consideration of alternative management options.
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HM Treasury
9
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department did not employ a specialist loan management company. It told us that it adopted a hybrid approach, with separate loan agents for culture and sport and a managed service provider, to the management of its loan book in line with a recommendation from PwC.10 The Department also said …
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The Department did not employ a specialist loan management company. It told us that it adopted a hybrid approach, with separate loan agents for culture and sport and a managed service provider, to the management of its loan book in line with a recommendation from PwC.10 The Department also said that the insights its loan agents had on those bodies in receipt of a loan had been invaluable in helping it to understand the borrowers,11 and that the range of professional services available from PwC includes loan management and insolvency.12. However, the two loan agents had initially set up separate loan management systems, which subsequently required integration.13 The Department also acknowledged that there was a tension for both itself and its loan agents between its primary objective for the loan book of maximising the financial returns to the Exchequer, and the policy objective of maintaining the viability of the culture and sports sectors, which it had sought to address with clear protocols for decision–making.14 Management of PwC contract
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Government response AI summary
The government agrees to undertake a strategic review of its loan book management by March 2026 including an external evaluation of the efficiency and effectiveness of the current operating model, and will consider alternative management options.
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HM Treasury
10
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department originally commissioned PwC in 2022 to assess the different options for the long–term management of its loan book. In line with PwC’s advice, the Department decided to retain management of the loan book in–house, with day–to–day management through the loan agents, supplemented by appointing a managed service provider.15 …
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The Department originally commissioned PwC in 2022 to assess the different options for the long–term management of its loan book. In line with PwC’s advice, the Department decided to retain management of the loan book in–house, with day–to–day management through the loan agents, supplemented by appointing a managed service provider.15 7 Qq 3–7, 13, 21, 52, 83; C&AG’s Report, paras 11, 2.2 and 2.10 8 C&AG’s Report, paras 3, 9, 1.15 and 2.3 9 Qq 54, 55, 60; C&AG’s Report, paras 10 and 1.16 10 Qq 53, 54, 57 11 Q 43 12 Q 55; Letter from DCMS Permanent Secretary, 25 February 2025 13 Q 63; C&AG’s Report, para 2.7 14 Qq 3, 14–16, 20, 21, 27 15 Letter from DCMS Permanent Secretary, 25 February 2025; C&AG’s Report, paras 1.16 and 3.5 10 The Department subsequently appointed PwC as the managed service provider in February 2023, with a contract running to March 2025, with an optional extension period of up to an additional two years. PwC’s contract included, among other things, its development of a data collection and storage platform to help support management of the loan book.16 The Department subsequently decided to increase the scope of PwC’s work in October 2023, asking PwC to develop a loan management system. As well as supporting the collection and storage of borrowers’ data, it intended the system to build on existing work by Sport England and be rolled out to Arts Council England, to provide a better reporting experience for borrowers, and to include data analysis functions for the loan agents, producing a risk rating and dashboard for each borrower.17. This increase in scope contributed to an increase in the value of PWC’s contract of £900,000 (47%), from £1.9 million to £2.8 million.18
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Government response AI summary
The department took steps to ensure it had a robust model in place, and has received 97% of the repayments scheduled at the date of the NAO report.
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HM Treasury
11
Conclusion
20th Report - DCMS management of COVID-…
Accepted
We observed that the above arrangements appeared favourable to PwC and that it was not unheard of for government to appoint consultants to implement the advice they have given and for the scope of such implementation work, and therefore its costs, to increase subsequently. The Department pointed out that it …
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We observed that the above arrangements appeared favourable to PwC and that it was not unheard of for government to appoint consultants to implement the advice they have given and for the scope of such implementation work, and therefore its costs, to increase subsequently. The Department pointed out that it had originally appointed PwC as the managed service provider after an open procurement which PwC had won after meeting the required criteria.19 It, not PwC, had then increased the scope of the work, as it wanted the system to have greater functionality as this was integral to its ability to manage the loan book in a professional way.20 It also said that it was not sure that it could have procured a bespoke, off–the–shelf loan management system for this loan book.21 The Department assured us that, while the intellectual property rights to the underlying software system were owned by Singlify, delivery of the loan management system had been set up in such a way that it could procure a different party to provide the system in future.22
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Government response AI summary
The full Loan Management System (LMS) Version 2 (V2) functionality was implemented in March 2025 for under £300,000 and the original PwC contract has been extended to preserve business continuity.
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HM Treasury
12
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department planned to have the original data platform in place in March 2023. However, the loan management system only went live in June 2024, 15 months later than originally planned. The Department’s decision to increase the scope of PwC’s work to develop the system contributed to it taking longer …
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The Department planned to have the original data platform in place in March 2023. However, the loan management system only went live in June 2024, 15 months later than originally planned. The Department’s decision to increase the scope of PwC’s work to develop the system contributed to it taking longer to deliver.23 It launched the system in June 2024 on the basis that it had in place the key operational functionality needed. However, Arts 16 Letter from DCMS Permanent Secretary, 25 February 2025; C&AG’s Report, paras 10 and 2.7 17 Qq 59, 61–63; C&AG’s Report, paras 10 and 2.7 18 Q 62; C&AG’s Report, paras 10 and 2.7 19 Qq 56–58, 61, 64; C&AG’s Report, para 1.16; 20 Qq 53, 64, 69 21 Q 68 22 Qq 61, 72, 84; Letter from DCMS Permanent Secretary, 25 February 2025 23 Q 53; C&AG’s Report, paras 10 and 2.8 11 Council England was concerned that the system was not providing the full functionality needed, with loan agents having to maintain their own spreadsheets that the system was meant to replace.24 In response, the Department told us that it was sometimes the case that there was a learning and testing period when new systems are launched, and that there should not be the need now for the kind of duplication involved in maintaining separate spreadsheets.25
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Government response AI summary
The full Loan Management System (LMS) Version 2 (V2) functionality was implemented in March 2025 for under £300,000 and the original PwC contract has been extended to preserve business continuity.
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HM Treasury
13
Conclusion
20th Report - DCMS management of COVID-…
Accepted
The Department recognised, at the time of the system going live, that it had to resolve a small number of issues to ensure the system was operating as intended, and it planned further improvements to functionality around, for example, automatic reprofiling.26 It told us that it had entered into another …
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The Department recognised, at the time of the system going live, that it had to resolve a small number of issues to ensure the system was operating as intended, and it planned further improvements to functionality around, for example, automatic reprofiling.26 It told us that it had entered into another contract with PwC to get this additional functionality at an extra cost of £300,000. It assured us that delivery of this functionality was underway and it was very confident that this would be in place well before September 2025 at which point all borrowers will be repaying their loans.27 Future options for managing the loan book
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Government response AI summary
The full Loan Management System (LMS) Version 2 (V2) functionality was implemented in March 2025 for under £300,000 and the original PwC contract has been extended to preserve business continuity.
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HM Treasury
16
Conclusion
20th Report - DCMS management of COVID-…
Accepted
By October 2024, 45% of solvent borrowers had made at least one repayment on their loans, with the remaining 55% yet to make a repayment. The 45% had paid the Department £40.9 million in total, less than the £42.1 million it had scheduled to receive by then (97%).39 However, nine …
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By October 2024, 45% of solvent borrowers had made at least one repayment on their loans, with the remaining 55% yet to make a repayment. The 45% had paid the Department £40.9 million in total, less than the £42.1 million it had scheduled to receive by then (97%).39 However, nine borrowers, two on the culture side and seven on the sports side, had also become insolvent, with loans totalling £46.1 million, almost 10% of the total loans awarded of £474 million. These nine insolvencies represented 7.5% of all borrowers against the Department’s expectations in December 2022 of 5% of borrowers failing in the first three years, with up to 14% failing by ten years. The Department also expects that it will not recover between £25 million and £29 million in the capital value of these loans and will miss out on a further £11 million of future interest.40
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Government response AI summary
The department makes annual adjustments to reflect borrowers' circumstances and recognises an expected credit loss, and will revisit its strategic repayment forecasts after the repayment holiday ends in September 2025, undertaking further cost, repayment and insolvency modelling through the department’s strategic review.
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HM Treasury
19
Recommendation
20th Report - DCMS management of COVID-…
Accepted
As at December 2024, the Department had identified two possible incidents of fraud among its borrowers, relating to loans valued at £2.2 million.47 It told us that it considered the level of fraud in its COVID–19 loans to be relatively low, compared to other COVID–19 schemes, but that it was …
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As at December 2024, the Department had identified two possible incidents of fraud among its borrowers, relating to loans valued at £2.2 million.47 It told us that it considered the level of fraud in its COVID–19 loans to be relatively low, compared to other COVID–19 schemes, but that it was in no way complacent about, and was very focused on, this fraud risk.48 Engagement with professional sport
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Government response AI summary
The government agrees to develop a comprehensive borrower engagement plan by November 2025 that builds on existing strategies, guided by core principles and medium-term strategies that link key borrower and loan characteristics to appropriate engagement methods.
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HM Treasury