Source · Select Committees · Public Accounts Committee
Recommendation 3
3
Accepted
Department lacks understanding of long-term value for money for loan book management options.
Conclusion
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
Government Response 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.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. department commissioned external advice on its strategic options in 2022, which determined the operating model that provided the greatest value for money for the taxpayer. At that point in time, a sale was not a viable option, including due to the lack of repayment history available to the department. The department set out a plan in the original business case to revisit its strategic options regarding the loan book when the programme had reached steady state. As all borrower repayment holidays come to an end in September 2025 and the programme is more mature, with a strong repayment record, the department will be undertaking a review of the programme to re-assess its strategic options. The strategic review of the loan book programme, to be completed this financial year (2025-26), will assess the department’s strategic options including, but not limited to, a sale or partial sale of the loan book. The review, and its recommendations, will set the strategic direction for the future of the loan book.