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MPs today condemn Whitehall for failing to recover over £400 million in loans given mainly to sports clubs to survive the shutdown during the Covid pandemic five years ago.
The Department for Culture, Media and Sport lent £474 million to 120 sporting and cultural bodies between 2020 and 2024, but so far only £41 million has been paid back. On top of this, nine organisations went bust, leaving £46 million irrecoverable, and some 60 organisations have still to pay any money back.
MPs on the Public Accounts Committee say there have been severe weaknesses from the start in the Department’s arrangements for managing its loan book. The Department did not draw enough on expertise across government when setting up its loan schemes.
It has subsequently improved its governance, procedures and capabilities for managing these loans, but there are still too many parties involved in managing them- the Department itself, Sport England and Arts Council England as its loan agents, and accountancy firm PwC as its managed service provider. As a result, the cost of managing the loans has already run to £17m.
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Conflict of Interest
The report highlights the huge sum – £124 million or 57 per cent of all sports loans – given to help professional rugby clubs.
It has been unable to question Susannah Storey, the permanent secretary of the department since 2023, about this because of her declared conflict of interest over her husband playing a major role in financing professional rugby union clubs. She had recused herself from all discussions on the loans to rugby clubs after she was appointed.
She declares he is a managing partner and shareholder of CVC Capital Partners – a private equity firm registered in Luxembourg – which has invested £200 million in the Premiership Rugby League in 2019 to keep them going and holds directorships with Premier Rugby, Six Nations Rugby and the United Rugby Championship.
During this period, three Premiership league rugby clubs, London Irish loaned £11.8 million, Wasps loaned £14.1 million, and Worcester Warriors loaned £15.7 million, had become insolvent, accounting for over £41 million of the irrecoverable money. Another seven clubs are being financed by their owners but are technically in the red, according to evidence given to MPs.
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Sir Geoffrey Clifton-Brown MP, Tory Chair of the Committee, said:
“Cultural and sporting events came to an abrupt and shocking halt during lockdown, by law. In such circumstances, it is of course right that Government came forward with necessary support to ensure the long-term future of foundational elements of our national life.
“But such support was contingent on the unprecedented nature of a global crisis, not to provide a lifetime guarantee to institutions like rugby union, which may be experiencing financial difficulties five years later.
“DCMS is inherently conflicted in the management of its COVID loan-book. As a lender, its priority will be to secure best value for the taxpayer from these loans. As a Department, its priority is to do everything in its power to support a sector which has become its debtor.
“This is before one even considers the direct conflict for DCMS’ Permanent Secretary with regard to rugby union, the sub-optimal handling of which struck this Committee as odd. DCMS has shown that while it has tried its best at acting in the role of a specialist loan provider, it should stick to what it knows. The Department should be considering all options for the long-term future of these loans, including their outright sale.”
A DCMS spokesperson told Byline Times:
“This Government will always protect taxpayers’ money and we are committed to recovering funds paid out under the previous administration. We have recovered 97% of repayments due and we are set to see all borrowers begin their repayments by later this year.
“Ministers and the Department continue to actively engage with the Chief Executives of the Rugby Football Union, Premiership Rugby and Championship Rugby to support the ongoing sustainability of the sport.
“We will take time to consider the full contents of the report and will respond in due course.”