A new report from the Public Accounts Committee (PAC) reveals that cancelled government projects cost British taxpayers approximately £6.6 billion last year alone. The spending watchdog highlighted that successive governments have a tendency to scrap initiatives after already investing substantial sums, describing this as a particularly egregious example of poor value for money.
Key Findings from the Report
The cross-party committee analysed spending across 17 major government departments with assistance from the National Audit Office. The most significant losses stemmed from write-offs, unrecovered debts, cancelled or retired assets, and fraud.
Ministry of Defence
The Ministry of Defence (MoD) was identified as one of the most wasteful departments, incurring a £1.6 billion loss in the 2024-25 tax year through project cancellations. The Treasury attributed this largely to asset retirements and policy changes following the transition to a Labour government in July 2024.
Home Office and Rwanda Scheme
The Home Office recorded a £290 million loss from the Conservatives' Rwanda deportation scheme, which Labour promptly abandoned. This scheme aimed to deport asylum seekers to Rwanda but faced legal challenges and was ultimately scrapped.
Department for Transport
The Department for Transport wrote off £472 million after cancelling eight road projects, including the planned A303 tunnel under Stonehenge. This long-debated infrastructure project was intended to ease congestion but was deemed unaffordable by the new government.
Committee Concerns
Clive Betts, Labour MP and deputy chair of the PAC, expressed concern over the scale of waste. He stated, "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. Yet here our report finds £6.6bn last year simply boiled off into the atmosphere as a loss, the victim of cancelled projects or changed priorities."
Betts added that high levels of fraud and waste should not be seen as inevitable costs of public sector operations. "They are not – they are the cost of complacency," he said.
Government Response
James Bowler, the Treasury's permanent secretary, acknowledged that write-offs can occur when governments change and priorities shift. He noted, "There is a value for money trade-off in this, because it is not necessarily the right answer that once you have said 'Go' you must always complete it."
The report also highlighted that government compensation scheme liabilities reached £73.4 billion by the end of the last financial year, an increase of £11.8 billion. While the committee did not question the validity of these schemes, it raised concerns about whether value for money had been properly considered in their design.
Fraud and Errors
Fraud and errors were another major factor behind write-offs. The Department for Work and Pensions reported £9.3 billion in overpayments due to fraud and errors persisting for 36 years, excluding state pension. The PAC stated, "This enormous figure has been accepted for far too long, and is not at all persuaded that such high levels can or should be regarded as inherent features of government systems."
A Treasury spokesperson responded, "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." The government is expected to provide a formal response to Parliament in due course.
