UK government urged to take 'tough approach' to Premiership loans

The Government must take a tough approach to clawing back taxpayers’ money loaned to rugby union teams and other sports clubs during the COVID-19 pandemic, a select committee report has said.

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 issued last December that it did not expect to recover up to £29million of the £41.6m it had loaned to three Premiership clubs – London Irish, Wasps and Worcester – after they became insolvent.

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It also said it would lose out on a further £11m in interest payments connected to those loans.

Now, DCMS has been accused of being “overly optimistic” about the returns it expects on the remaining loans of over £400m in a report published by the Public Accounts Committee (PAC) on Wednesday.

“(DCMS) expects repayment of all outstanding loans, but is unclear about the actions it would take for borrowers in financial difficulties,” the PAC report stated.

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 urged DCMS to revise its expected repayment levels and insolvency rates by December 2025 “to reflect its experience once all borrowers have started making repayments”.

The PAC report also recommended DCMS “should demonstrate a tough approach on behalf of taxpayers to managing those borrowers in trouble, including when considering these borrowers for any future additional financial support, such as grant funding or further loans from the Department”.

The report identified “severe weaknesses” in how the loan book 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.”

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”.

The report also accused DCMS of allowing a gap to arise in its accountability to Parliament over the rugby union loans because of a conflict of interest.

The report said the department’s Permanent Secretary Susannah Storey – whose husband is a managing director at CVC Capital Partners which owns a stake in Premiership Rugby – had declared the conflict of interest properly.

However, it said the conflict meant the committee was unable to question her directly about the rugby loans, the area where 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.

DCMS has been contacted for comment on the report.