UK watchdog: £6.6bn taxpayer loss from cancelled projects

Parliament’s spending watchdog found cancelled government projects, including the Rwanda deportation scheme and a planned road tunnel under Stonehenge, wasted billions of pounds of taxpayer money last year.

The Public Accounts Committee (PAC) said about £6.6bn was written off by government departments in the 2024-25 financial year — state spending that failed to achieve its objectives or create value for taxpayers.

The PAC described successive governments’ tendency to cancel projects after spending significant public funds as a “particularly egregious” example of poor value for money.

Committee Deputy Chair Clive Betts, a Labour MP, attributed the high costs to government “complacency,” adding: “Those who work hard to pay their dues should be rightly aggravated by this figure.”

The cross-party group analyzed spending across 17 main government departments with assistance from the National Audit Office, identifying write-offs, unrecovered debts, asset cancellations, and fraud as the largest sources of reported losses.

The Ministry of Defence was among the most wasteful departments, incurring a £1.6bn loss in the 2024-25 tax year through project cancellations. The Treasury attributed this largely to asset retirements and policy changes following the Labour administration’s assumption of power in July 2024.

The Home Office recorded a £290m loss from the Conservatives’ Rwanda deportation scheme, which Labour scrapped, while the Department for Transport lost £472m from canceling eight road projects, including the A303 tunnel under Stonehenge.

Betts said: “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.”

He added: “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.”

James Bowler, the Treasury’s permanent secretary, told the committee that write-offs could occur when there is a change of government and “people have slightly differing objectives.” He added: “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 found that government liabilities from various compensation schemes reached £73.4bn by the end of the last financial year, an increase of £11.8bn from the previous year.

The committee said it did not question the validity of these compensation schemes but was “not clear whether value for money has properly been considered in how these schemes have been designed.”

Material fraud levels were another significant factor behind annual write-offs. The report highlighted the Department for Work and Pensions, where fraud and errors have persisted for 36 years, resulting in £9.3bn in overpayments in its most recent accounts, excluding the state pension.

“The PAC believes 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. Action led by the Treasury should be taken to reduce it,” the report said.

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.”