Background to the report

Between October 2020 and March 2022, the Department for Culture, Media & Sport (DCMS) lent £474 million to 120 borrowers operating in the culture and sports sectors to help them survive the COVID-19 pandemic.

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The loans were issued by DCMS through three schemes: the Culture Recovery Fund; the Sport Winter Survival Package, which became the Sport Survival Package; and the Rugby Football League Loan Scheme. In October 2021, DCMS decided to bring the schemes together in one loan book.

This is the first time that DCMS has managed a significant loan book. From the start, it appointed two of its arm’s-length bodies, Arts Council England and Sport England, as its loan agents with responsibilities for day-to-day monitoring and management of the schemes, including relationships with borrowers. Decision‑making rests with DCMS.

Scope of the report

This report looks at whether DCMS is delivering value for money through its management of the loan book. It examines:

  • whether DCMS established an appropriate management approach for its COVID-19 loan book
  • whether DCMS has been effective in managing the loan book so far
  • whether DCMS is well placed to manage the loan book for the future

DCMS’s decision to use loan funding alongside grant funding in the original support packages and whether this was the right way to support the sectors – and the individual award decisions – are not within the scope of the report.

Video summary

The report’s director, Louise Bladen, provides an overview.

Conclusions

DCMS decided to provide loans to the culture and sports sectors in extremely demanding circumstances and these helped many organisations survive the immediate threat of the pandemic.

After being slower than originally planned to develop its loan book operating model, DCMS has been setting up the structures, governance and operational arrangements that will help it manage its loan book more effectively over the longer term.

So far, DCMS has achieved 97% of the repayments it had scheduled by October 2024, with just under half of the 120 borrowers now repaying their loans. Eleven borrowers have also repaid their loans in full ahead of schedule and exited the loan book.

There have nonetheless been some significant defaults. DCMS will not recover between £25 million and £29 million in the capital value of the loans, and the taxpayer will miss out on a further £11 million of future interest. DCMS has, however, reduced its losses owing to £10 million from insolvency settlements.

There remains a high degree of uncertainty over how much of the loan book will be repaid. Building on the progress it has made, DCMS now has an opportunity to develop its plans for the medium and longer term to improve the effectiveness of its approach to managing the loan book.

Doing so would enable DCMS to determine the cost-effectiveness of managing its loan book in its current form and provide it with the tools it needs to adapt its approach or change course as needed.

Given all borrowers should be repaying by September 2025, DCMS must prioritise putting in place measures to track costs and its performance and determine its plan to protect future returns.

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Publication details

Press release

View press release (18 Dec 2024)

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