The Treasury needs to make more of an effort to ensure that taxpayers getting value for money on government borrowing, according to an influential group of MPs.
Government borrowing has ballooned since the early 2000s as a result of a succession of crises, rising from around £300bn in 2003 to as much as £2.5trn last year.
Government institutions are required to minimise the cost of meeting the government’s financing needs, but the Public Accounts Committee warned there were “no directly measurable success criteria” to meet this overarching aim.
As a result, the report said “it is impossible to know whether it is securing value for money from its approach”.
The Treasury has already committed to looking at how international equivalents measure their performance but the MPs recommended that the Treasury should set out how it plans to improve performance measurement going forward.
“It is of course essential that the best possible value is being derived for the taxpayer from borrowing,” Dame Meg Hillier, chair of the Committee said.
“With such huge sums being borrowed the government needs to look at how it can evaluate its performance in managing borrowing,” she continued.
The MPs also raised concerns that the Treasury had not learnt the lessons from the financial crisis and pandemic, when debt issuance rocketed.
The Debt Management Office (DMO) raised £486bn during the pandemic, triple its original financing remit for 2020-21, while the National Savings & Investment (NS&I) raised a record £22.8bn.
Despite this NS&I missed its objective of £35bn while the DMO was aided by the Bank of England’s quantitative easing, which ensured there was a guaranteed buyer of government debt.
The DMO now needs to address the “legacy issues” connected to pandemic-era issuance, with £140bn worth of debt needing to be repaid in 2024-25.
Raising similar sums in future may be more difficult now that the Bank of England is actively selling gilts back onto the market. The report warned that the combination of the Bank selling gilts at the same time as the DMO risked creating “unprecedented challenges”.
“The Treasury, DMO and NS&I should set out…the lessons they have identified and learned from the financial crisis and pandemic, including the process whereby these lessons are captured and the changes that have been made to the borrowing process because of these lessons,” the report said.