Source · Select Committees · Public Accounts Committee
Recommendation 4
4
Accepted
Revisit loan repayment estimates and demonstrate tough management of troubled borrowers.
Conclusion
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.
Government Response 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.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. committed to taking all necessary steps to safeguard taxpayers’ money. This principle has consistently guided the department’s decisions, which have focused on maximising financial returns to the Exchequer. With regard to future additional financial support, after a strict and thorough assurance process, grants are typically awarded to support specific projects or activities; therefore, the CRF and SSP schemes have been kept separate from other grants intended to deliver a public benefit in line with their respective funding purposes. The department has no current plans to provide further direct loans to sport and culture organisations or the sector more widely. The loans previously issued were a pragmatic response to exceptional circumstances.