The parliament’s spending watchdog has asked the Treasury to look into the “root causes” of why billions of pounds of taxpayers’ money are spent each year on projects that are later ditched.
Seventeen major departments reported £6.6bn in losses during 2024-25 relating to cancelled programmes, unpursued debts and fraud.
These included £1.6bn worth of cancelled projects at the Ministry of Defence, £472m in losses from eight aborted road schemes at the Department for Transport, and the Home Office’s failed £290m Rwanda scheme.
“This was spending that did not achieve its intended objectives or create any value for the taxpayer,” the Public Accounts Committee report on NAO’s financial audit insights for 2024–25 said.
“We consider government’s propensity to cancel projects after significant sums of public money have already been sunk to be particularly egregious examples of poor value for money.”
The government also made special payments totalling over £293m in 2024-25 to cover expenses such as legal costs, compensation or goodwill gestures related to personal injury or damaged property.
However, special payments losses have fallen steadily each year since 2021-22.
The report raised further concerns about the lack of financial skills to deploy large-scale digital transformation projects effectively across government departments.
For example, National Savings and Investments’ digital transformation programme and running costs were estimated at £3bn in 2024, a £1.3bn increase from 2020, with further surges expected.
On the other hand, PAC hailed the Bank of England for delivering its £431m digital programme while “avoiding costs creeping up in an unplanned way”.
PAC’s deputy chair, Clive Betts, said: “We who serve in the public sector, both at the political and official level, are appointed as guardians of taxpayer money.
"At a time of such straitened financial circumstances for so many, we should never, ever be satisfied with time or money wasted at no benefit to the public.
“We must reject the argument that high levels of fraud and waste are simply the cost of doing business in the public sector. They are not – they are the cost of complacency.”
The government currently spends around £1.1 trillion each year. It holds assets of £2.7 trillion and has liabilities of £5 trillion.
Public money losses peaked at £14bn in 2023-24 following the cancellation of the HS2 northern leg at the Department for Transport and write-offs of Covid-19 equipment at the Department of Health & Social Care.
PAC also flagged that overpayments due to fraud and error in the most recent Department for Work and Pensions accounts, excluding the state pension, amounted to £9.3bn. On this specific issue, the report said: “This enormous figure has been accepted for far too long and action led by the Treasury should be taken to reduce it”.
This week, DWP permanent secretary Sir Peter Schofield said the department is on track to hit a target of reducing benefits overpayments.
The report recommends that the Treasury identify lessons from these recent large losses and avoid “such wasted funds” in future investment decisions, while also looking at other countries for examples of best practice of how schemes are designed, funded and administered.
It also calls on the Treasury to improve transparency by helping government bodies meet the target of publishing 70% of accounts before the summer recess.
In response to PAC’s recommendations, a Treasury spokesperson said: “We will never tolerate fraud, error or waste – every pound of taxpayers’ money must be spent with care. That is why this government took the decision to end the Rwanda scheme and cancel unaffordable road projects to protect the public finances.
“As usual, the government will provide a formal and substantive response to the report directly to parliament in due course.”