DCMS fear rugby future as £30m in taxpayer loans expected to be written off
The government could be forced to write off nearly £30m of taxpayers’ money loaned to sports bodies, clubs and the arts during the Covid-19 pandemic.
The figures, revealed today by the National Audit Office, provide a stark update on the £474m aid package provided by the Department of Culture, Media and Sport.
Rugby union was the biggest beneficiary with £139m, while £24.2m to rugby league, £25.1m to horse racing and betting, and £14.3m to tennis.
Football received just £13.4m, with other sports also receiving a mix of grants and funding.
But the National Audit Office has sounded the alarm for rugby union, which saw three clubs go under since the loans were issued.
Loans written off
Worcester Warriors, Wasps and London Irish received 90 per cent of the £46.1m issued to clubs and companies which are now insolvent. So far, £29m is expected to be written off due to insolvencies.
Sir Geoffrey Clifton-Brown MP, Chair of the Committee of Public Accounts, said: “Although progress has been made in recovering initial repayments, it is concerning that up to £29m of taxpayer money could be lost from borrowers who have since gone under.
“DCMS should continue to keep a close eye on English rugby union clubs that have been teetering on the edge. Given the public money at stake, the department has more to do to show it has a long-term plan for managing and recovering loans across the sectors.”
The report states that Worcester Warriors received £15.7m with only £9.8m recovered thus far while Wasps received £14.1m with £300,000 recovered to date.
DCMS “expects to receive further £7.2m to £11.1m from all the loan book insolvencies so far… between 39 per cent and 48 per cent of the amount loaned”.
Rugby in the spotlight
The National Audit Office report adds: “DCMS has had to increase its engagement with and oversight of loans to rugby union given ongoing financial challenges for the sport.
“Recognising the failures of some clubs and the wider financial challenges facing rugby union including those stemming from the pandemic, in June 2023, the government appointed two independent advisors to help the Rugby Football Union and the Premiership Rugby League stabilise the future of the sport.
“Acknowledging its ongoing role as a key stakeholder, DCMS is closely monitoring the remaining Premiership clubs to identify any which may be behind on their repayments and facing financial difficulties. In doing so DCMS is monitoring the risk it faces to protect its investment on behalf of taxpayers.”
Additionally, in what will be of concern to the taxpayer, the report states that two cases of possible fraud have been identified amongst the borrowers.
“From the outset of the loan schemes, DCMS recognised they were a significant area of fraud risk given the high insolvency risk of some borrowers,” the NAO report stated. “As at December 2024, DCMS had identified two possible incidents of fraud among its borrowers, relating to loans valued at £2.2 million.
“Both cases are still under investigation, with the potential fraudulent exposure being lower than the value of the loans. While DCMS carried out fraud risk assessments when it issued the original loans, it has yet to finalise an updated assessment for the repayment period of the loans.”
Committed to repaying all taxpayer money
Gareth Davies, head of the NAO, said: “With all borrowers scheduled to start repaying next year, and ongoing risks to future recoveries, government should strengthen its longer-term plan for protecting taxpayers’ exposure.”
A Premiership Rugby spokesperson said: “Since the pandemic the clubs and Premiership Rugby have worked hard to move back into a period of growth and stability, which is well underway.
“Premiership Rugby strengthened its financial regulation and governance with the formation of an independent Financial Monitoring Panel, which was set up with the help of former Government and financial advisors.
“Our clubs are fully committed to repaying all taxpayer money and we continue to work closely with DCMS, for whom we are thankful for their on-going support.”