THE GOVERNMENT has been told by a select committee that they must take a tough approach to clawing back taxpayers’ money loaned to rugby union teams during the covid-19 pandemic.
The Department for Digital, Culture, Media and Sport (DCMS) loaned £474million in total to 120 organisations in the sport and culture sectors to help them survive the impact of the pandemic, with £123.8m of that loaned to Premiership Rugby clubs.
DCMS admitted in a National Audit Office report last December that it did not expect to recover up to £29 million of the £41.6 million it had loaned to Premiership clubs that have now become insolvent – including Worcester Warriors alongside London Irish and Wasps.
They also admitted that they would lose out on a further £11m in interest payments connected to those loans.
DCMS have now been accused of being “overly optimistic” about the returns it expects on remaining loans of over £400 million in a report published by the Public Accounts Committee (PAC) on Wednesday.
DCMS has been contacted for comment on the report.
“[DCMS] expects repayment of all outstanding loans, but is unclear about the actions it would take for borrowers in financial difficulties,” stated the report.
The report said DCMS had received less than was due by October last year, and that the level of insolvencies among borrowers was higher than had been forecast. It has urged DCMS to revise its expected repayment levels and insolvency rates by December 2025.
The report identified “severe weaknesses” in how loans had been managed from the outset, adding: “There remains a high degree of uncertainty over how much of the loan book will ever be repaid.”
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DCMS was urged to review its options for managing the loan book, including selling it to “give the Government cash immediately and eliminate future running costs”.
Finally, the report also accused DCMS of allowing a gap to arise in its accountability to Parliament over rugby union loans, due to a conflict of interest as the department’s secretary Susannah Storey’s husband is a managing director at CVC Capital Partners, who own a stake in Premiership Rugby.
Despite properly declaring the conflict of interest, it meant the committee could not question her directly about rugby loans – the area which the report said DCMS was most “heavily exposed” in terms of both the amount of loans it had made and the financial health of the sport.
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