Public Accounts Committee Finds Assessment of Government Borrowing Unclear at Best
There is a lack of clear measures to assess the value for money of government borrowing and a lack of understanding of foreign investors, as highlighted in a recent report.
Dame Meg Hillier, chair of the Public Accounts Committee (PAC), described the measures to assess the value for money of government borrowing as “nebulous at best.”
A report released by the PAC stated that it is “impossible to know whether government is securing value for money from its borrowing” due to the absence of clear measures.
The report also highlighted the limited information available about the ultimate owners of 25 percent of UK debt held by foreign investors, posing potential risks.
The committee expressed its doubts about the government’s ability to apply lessons learned from past financial crises and the current COVID-19 pandemic. Furthermore, the impending retirement of senior personnel at the government’s borrowing agency adds to the challenges.
Government borrowing occurs mainly through the Debt Management Office (DMO), which sells bonds to large investors, and the National Savings & Investment (NS&I), a state-owned bank offering retail products like Premium Bonds.
Over the past 53 years, governments have borrowed money in all but five years, accumulating a debt of approximately £2.65 trillion as of January.
In its report, the PAC stated that the Treasury’s debt management objective is not directly measurable, making it impossible to determine if the government is achieving value for money through borrowing.
