Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Deferred
Loan agents initially lacked expertise, prompting appointment of specialist provider.
Conclusion
During 2020, the Department had appointed two of its arm’s–length bodies, Arts Council England and Sport England, as its loan agents for the day–to–day monitoring and management of the loans, including relationships with borrowers. However, both Arts Council England and Sport England were new to loan management on this scale and were initially short on loan–specific expertise, such as knowledge of loan restructuring and the use of digital technology to identify problem cases.8 The Department told us that it had subsequently appointed PwC as the managed service provider for its loan book in February 2023 as it required additional specialist help.9
Government Response Summary
The department will be undertaking a strategic review of its loan book management this financial year, including an external evaluation of the current operating model and alternative management options.
Government Response
Deferred
HM Government
Deferred
1.1 The government agrees with the Committee’s recommendation. Target implementation date: March 2026 1.2 DCMS’s Loan Book management refers to loans issued to selected organisations as part of the broader Culture Recovery Fund (CRF) and Sport Survival Package (SSP) COVID- 19 interventions. These packages were originally designed to ensure no sport or cultural organisation would go insolvent as a result of COVID-19 restrictions, with loans awarded to organisations able to demonstrate eligibility and financial need. The loan terms included a repayment holiday, allowing organisations time to recover before repayments commenced. 15 This time also allowed the department to enhance its capability and capacity to manage the loan book. 1.3 The Loan Book Management programme has two clear objectives, which are followed by all delivery partners. The financial objective is always considered first: • Maximising financial return to the Exchequer (the “financial objective”); whilst • Balancing the department's long-standing and enduring interest in protecting the long-term sustainability of the country's sporting and cultural sectors and the benefits they generate (the “policy objective”). 1.4 The department took steps to ensure it had a robust model in place, having analysed a range of options and taken external advice. This has ensured that the department has received 97% of the repayments scheduled at the date of the NAO report, which demonstrates the positive performance of the department’s loan book management approach. 1.5 The department will be undertaking a strategic review of its loan book management in this financial year. This will involve a review of the efficiency and effectiveness of the current operating model, including an external evaluation. The review will consider alternative management options and is further referenced in the department’s response to recommendation 3.