Managing government borrowing

Public Accounts Committee Closed Inquiry
Opened: 12 Sep 2023 Closed: 3 May 2024 Parliament page
Government debt has risen over time, following support provided for the banking sector during the 2007-08 financial crisis, and measures to protect the economy and public health during the pandemic. The Committee reported in 2018 that high levels of Government debt left little room for manoeuvre in public spending, with … Read more
6 Recommendations
17 Conclusions
1 Report
1 Oral session
1 Event
Activity timeline 4 events
3 May
2024
Report published
5 Mar
2024
Report published
7 Dec
2023
Oral evidence
7 Dec
2023
Formal meeting (oral evidence session) · The Thatcher Room, Portcullis House
Oral evidence sessions 1 session
7 Dec 2023
View on parliament.uk
Managing government borrowing; Pre-panel: Managing government borrowing
Dax Harkins · National Savings and Investments James Bowler CB · HM Treasury Richard Hughes · Office for Budget Responsibility Sir Robert Stheeman · Debt Management Office
Title HC No. Published Items Response
Fifteenth Report - Managing government borrowing HC 74 5 Mar 2024 23 Responded
Recommendations & Conclusions
23 results
2 Recommendation Accepted
Fifteenth Report - Managing govern…
Set out plan for building and retaining essential skills across Treasury, DMO and NS&I.
We are concerned that the Treasury, DMO and NS&I will not have the necessary skills, experience, and institutional knowledge needed to overcome the challenges they face now, and in the years to come. The DMO and NS&I are both specialist … Read more
Government Response
The government agreed, stating the recommendation is implemented. NS&I plans to upskill its workforce by insourcing IT and service integration skills and growing commercial expertise, while the DMO has a developed resourcing strategy including succession planning.
HM Treasury
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3 Conclusion Acknowledged
Fifteenth Report - Managing govern…
Outline steps to address information gaps for identifying unlawful activity in gilt sales.
The Treasury and the DMO lack the information needed to better identify unlawful activity and understand the risks posed by overseas investors, potentially reducing the value for money from future gilt sales. In May 2023, the Competition and Markets Authority … Read more
Government Response
The government agreed but stated it currently lacks visibility of underlying gilt owners. It committed to reviewing sovereign bond ownership data from other countries to learn from their approaches, rather than detailing immediate steps to address information gaps or change gilt selling processes.
HM Treasury
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4 Recommendation Acknowledged
Fifteenth Report - Managing govern…
Set out key milestones and contingency plans to prevent further Rainbow Programme delays.
We are concerned that significant problems with NS&I’s procurement of its Rainbow Programme could leave limited flexibility or room for further delays. During the COVID-19 pandemic, the Treasury required NS&I to raise £35 billion from retail savers – more than … Read more
Government Response
The government agreed, stating NS&I is working to formulate an integrated transition plan with key project milestones for its Rainbow Programme, which will be shared with the Committee when finalised. Expected costs for extending the Atos contract would be agreed upon extension, and contingency plans are commercially sensitive.
HM Treasury
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5 Recommendation Accepted
Fifteenth Report - Managing govern…
Set out lessons learned from financial crisis and pandemic for government borrowing.
We are not convinced that the Treasury, DMO and NS&I have adequately captured the lessons learned during the financial crisis and pandemic to prepare them to deal with the challenges to come. Government borrowed vast amounts during both the financial … Read more
Government Response
The government agreed, stating lessons from crises have improved preparedness, citing the Professionalising Crisis Management project and the development of crisis manuals. It noted the DMO's annual remit-setting acts as a lessons-learned process and NS&I's transformation programme is addressing operational lessons from the pandemic.
HM Treasury
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1 Conclusion Accepted
Fifteenth Report - Managing govern…
Committee took evidence on government borrowing management from Treasury, DMO, NS&I, and OBR.
On the basis of a report by the Comptroller and Auditor General, we took evidence from HM Treasury (the Treasury), the Debt Management Office (DMO), National Savings & Investments (NS&I) and the Office for Budget Responsibility (OBR) on the management … Read more
Government Response
The government agreed to an implied recommendation regarding performance reporting, stating it will examine international best practice, assess prospective quantitative and qualitative measures, and will write to the Committee once this analysis is concluded.
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6 Conclusion Deferred
Fifteenth Report - Managing govern…
NS&I lacks a suitable alternative to its discontinued Value Indicator performance metric.
To deliver its remit, NS&I must balance the interests of savers by offering a fair return, and the interests of the taxpayer by minimising finance costs. At the same time, it must also maintain an appropriate competitive position in the … Read more
Government Response
The government agrees with the implicit recommendation to improve performance measurement. It commits to examining international best practice and assessing quantitative and qualitative measures by Spring 2025, and will write to the Committee upon conclusion of this analysis.
HM Treasury
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7 Recommendation Accepted
Fifteenth Report - Managing govern…
Government's debt management objective lacks measurable success criteria and performance indicators.
In light of the government’s debt management objective being high-level and the lack of measurable success criteria or indicators to assess whether the objective was being met, the NAO recommended that the Treasury should consider ways to align and extend … Read more
Government Response
The government accepts the recommendation and commits to examining international best practice, assessing quantitative and qualitative measures, and systematically reporting performance by Spring 2025 to improve debt management objective measurement.
HM Treasury
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8 Recommendation Deferred
Fifteenth Report - Managing govern…
CMA provisionally found major banks broke competition laws affecting DMO gilt auctions.
In May 2023, the Competition and Markets Authority (CMA) provisionally found that five major banks broke competition laws on UK gilts. Each bank allegedly unlawfully shared competitively sensitive information relating to the buying and selling of UK government gilts. The … Read more
Government Response
The government accepts the implicit recommendation and commits to writing to the Committee with the requested information within two months of the CMA's investigation concluding, but the target implementation date is TBD due to the CMA's open-ended timeline.
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9 Conclusion Deferred
Fifteenth Report - Managing govern…
DMO cannot police GEMM behaviour effectively, making no changes despite manipulation risks.
The DMO stressed that it expected all GEMMs to “adhere 100%” to all regulations and the applicable laws, but because the DMO is not itself a regulator it cannot police the behaviour of the GEMMs. It added that GEMMs, which … Read more
Government Response
The government agrees with the implicit recommendation and commits that HMT and DMO will write to the Committee with information within two months of the Competition and Market Authority’s investigation conclusion, deferring any further actions until then.
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10 Conclusion Deferred
Fifteenth Report - Managing govern…
OBR highlights need for more information on overseas UK gilt ownership for risk management.
We asked the OBR whether any improvements could be made to government’s borrowing processes. The OBR expressed a desire for more information on the owners of UK gilts held overseas, which it said represented arounds 25% of all UK debt … Read more
Government Response
The government claims the recommendation is implemented, stating it currently lacks visibility of beneficial gilt owners. However, it commits to reviewing sovereign bond ownership data from other countries to learn from their approaches.
HM Treasury
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11 Conclusion Deferred
Fifteenth Report - Managing govern…
Treasury and DMO lack accurate data on ultimate beneficial owners of overseas gilts.
We asked the Treasury how much it knew about the owners of UK debt held overseas. The Treasury recognised that it did not have a “very accurate picture” because gilts were a “traded commodity” and may be sold on. The … Read more
Government Response
The government claims the recommendation is implemented, stating it currently lacks visibility of beneficial gilt owners. However, it commits to reviewing sovereign bond ownership data from other countries to learn from their approaches.
HM Treasury
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12 Conclusion Accepted
Fifteenth Report - Managing govern…
Government borrowed vast sums during pandemic, DMO successfully met significantly increased remit.
Government borrowed vast amounts during both the financial crisis and the COVID-19 pandemic. The Treasury, on behalf of government, required the DMO to raise £486 billion during the pandemic, triple the original remit for 2020–21, while NS&I had a record … Read more
Government Response
The government states the recommendation is implemented, detailing how it has captured lessons learned from previous crises, established a Professionalising Crisis Management project, and committed to learning from the pandemic response. It also notes NS&I's transformation programme will improve systems scalability.
HM Treasury
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13 Conclusion Accepted
Fifteenth Report - Managing govern…
Bank of England unwound quantitative easing, selling gilts simultaneously with DMO.
In November 2022, the Bank of England started to actively unwind its QE programme, a process also known as quantitative tightening, meaning for the first time it was selling gilts at the same time as the DMO. In the 12 … Read more
Government Response
The government states the recommendation is implemented, detailing how it has captured lessons learned from previous crises, established a Professionalising Crisis Management project, and committed to learning from the pandemic response. It also notes NS&I's transformation programme will improve systems scalability.
HM Treasury
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14 Conclusion Accepted
Fifteenth Report - Managing govern…
Historically high gilt supply from quantitative tightening creates market absorption and pricing challenges.
We asked the DMO what risks quantitative tightening will create for government borrowing. The DMO told us that in 2023–24, the net supply of gilts was “at a historical high”, which was a challenge for the market in terms of … Read more
Government Response
The government claims the recommendation is already implemented, citing ongoing initiatives like the Professionalising Crisis Management project, the annual DMO remit setting process, and NS&I's transformation programme as existing efforts to improve preparedness and learn lessons from past crises.
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15 Conclusion Not Addressed
Fifteenth Report - Managing govern…
Treasury facing substantial losses from QE indemnification, impacting government debt control.
The Treasury indemnifies the activities of the Bank of England’s Asset Purchase Facility. This means that the Treasury receives any profits from QE but is also liable for any losses. The OBR told us that until very recently, QE was … Read more
Government Response
Although the committee's item was a conclusion, the government's response states it agrees with and has implemented a 'recommendation'. The response discusses general improvements in crisis management preparedness and NS&I's system transformation, but it does not directly address the observation about the £126 billion net loss from QE impacting the government’s objective for getting 'debt under control'.
HM Treasury
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16 Conclusion Deferred
Fifteenth Report - Managing govern…
Government gilt redemptions peaking in 2024-25, challenging DMO's cash management function.
Not only does the government face growing pressure to borrow more in the future, but it also needs to ensure it can repay its current debts. The DMO issues gilts of varying length, ranging from one to more than 50 … Read more
Government Response
The government agrees with the implicit recommendation to improve performance measurement. It commits to examining international best practice and assessing quantitative and qualitative measures by Spring 2025, and will write to the Committee upon conclusion of this analysis.
HM Treasury
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17 Conclusion Acknowledged
Fifteenth Report - Managing govern…
Mini-budget significantly increased borrowing costs and prompted OBR forecast agreement update.
We asked the Treasury about the impact of the announcement of the government’s September 2022 Growth Plan (or “mini-budget”) on the cost of government borrowing. The Treasury explained that in the aftermath of the mini-budget, it required the DMO to … Read more
Government Response
The government acknowledges the committee's findings regarding the mini-budget's market impact, stating it is committed to learning lessons from previous crisis episodes and has established projects to enhance preparedness for future financial stability events.
HM Treasury
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18 Conclusion Acknowledged
Fifteenth Report - Managing govern…
NS&I's single provider model limited pandemic borrowing, prompting Rainbow Programme for scalability.
In 2020–21, during the pandemic, the Treasury required NS&I to raise £35 billion from retail savers, which was nearly a sixfold increase in its original remit for that year. Since 2003–04, NS&I has only raised more than £15 billion on … Read more
Government Response
The government acknowledges the committee's observations on NS&I's pandemic performance, stating it is learning lessons from crisis episodes and NS&I’s transformation programme will deliver the necessary systems scalability and robustness.
HM Treasury
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19 Conclusion Acknowledged
Fifteenth Report - Managing govern…
Rainbow Programme behind schedule due to non-compliant bids in digital experience procurement process.
However, the Rainbow Programme is already behind schedule. NS&I’s contract with Atos was due to expire in 2024, but delays to the Rainbow Programme resulted in NS&I extending the contract until April 2025. We asked NS&I about the reasons for … Read more
Government Response
The government acknowledges the committee's findings on the Rainbow Programme delays, stating it is working with new providers to formulate an integrated transition plan and improve governance, which it will share with the Committee upon completion.
HM Treasury
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20 Conclusion Accepted
Fifteenth Report - Managing govern…
Rainbow Programme suppliers lack integrated delivery plan despite procurement completion milestone.
NS&I told us it had now successfully completed all the procurement stages and secured all the suppliers for the Rainbow Programme, meaning it was moving into the delivery phase. Despite meeting this milestone, NS&I still described the Rainbow Programme as … Read more
Government Response
The government states it agrees with and has implemented the 'recommendation', even though the original item was a conclusion. It confirms NS&I is actively working with its suppliers to formulate an integrated transition plan, which will be shared with the Committee, and is seeking a further contractual extension with Atos for contingency.
HM Treasury
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21 Conclusion Accepted
Fifteenth Report - Managing govern…
Treasury faces challenges maintaining debt management expertise due to staff turnover levels.
Government borrowing is a complex process, requiring substantial experience and judgement.38 The DMO explained that it was set up as a “specialist organisation” with staff that have very specific skills which are “not normally found in the Treasury”. It added … Read more
Government Response
The government states it agrees with and has implemented the 'recommendation', despite the original item being a conclusion. It details plans for NS&I to upskill staff and grow expertise, the DMO's resourcing strategy, and several HM Treasury initiatives to improve staff retention and address skill shortages, including a recent pay uplift and grade restructuring.
HM Treasury
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22 Conclusion Accepted
Fifteenth Report - Managing govern…
DMO faces significant leadership transition with long-serving CEO and other key members retiring.
The DMO is entering a period of transition, with the current Chief Executive Officer (CEO) due to retire at the end of June 2024 after being in post for over 20 years. We noted that an advert had been placed … Read more
Government Response
The government states the recommendation is implemented, highlighting ongoing plans by NS&I to upskill, the DMO's developed resourcing strategy, and HM Treasury's recent pay uplift for staff to address retention and skills shortages.
HM Treasury
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23 Recommendation Accepted
Fifteenth Report - Managing govern…
NS&I upskilling workforce and receiving support to reduce reliance on consultants.
We asked NS&I whether it was working collaboratively with other parts of government to overcome some of the issues being faced on its Rainbow Programme. NS&I told us that it was receiving support from the Cabinet Office on “various complex … Read more
Government Response
The government claims the recommendation is already implemented, detailing NS&I's plans to upskill and insource IT skills, the DMO's resourcing strategy, and HMT's recent grade de-merger to address skills shortages and retention.
HM Treasury
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Government Response AI assessment · 23 of 6 classified
Accepted 11
Acknowledged 5
Deferred 6
Not Addressed 1
Total 6 recs + 17 conclusions