Source · Select Committees · Public Accounts Committee
Recommendation 14
14
Deferred
Department conducted minimal analysis of future loan management costs beyond March 2025
Conclusion
The Department has conducted minimal analysis of the costs of managing the loans over their lifetime, with no assessment of the factors that might increase costs or reduce income. It forecast that it would spend £17.3 million over the three years to March 2025, which we calculated would already represent 22% of its total expected income from interest on its loans.28 Beyond that, it expects its one–off costs to fall after the introduction of its loan management system and its ongoing management costs to come down, with overall costs lower from 2025–26.29 However, the Department had only carried out detailed forecasts of the costs of running the loan for the current Spending Review period ending in 2024–25, and had not estimated its costs beyond March 2025.30 The Department informed us that it had now been given its spending settlement to March 2026. It therefore has an expectation of the costs of running the scheme in 2025–26, and was in the process of undertaking its business planning for this year.31
Government Response Summary
The department will be undertaking a review of the programme to re-assess its strategic options, which will assess options including a sale or partial sale of the loan book.
Government Response
Deferred
HM Government
Deferred
3.1 The government agrees with the Committee’s recommendation. Target implementation date: March 2026 3.2 The department continues to keep its long-term strategic options under review. The 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. 3.3 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.