Ditched government projects lost taxpayer £6.6bn last year, watchdog says

Cancelled government projects such as the Rwanda deportation scheme and the road tunnel under Stonehenge are wasting billions of pounds of taxpayer money a year, parliament’s spending watchdog has found.

About £6.6bn was written off by government departments last year alone – state spending that did not achieve its intended objectives or create any value for the taxpayer, the public accounts committee said.

The PAC said successive governments’ propensity to cancel projects after spending significant sums of public money was a “particularly egregious” example of poor value.

The committee’s deputy chair, the Labour MP Clive Betts, said the high costs were a sign of government “complacency”, adding: “Those who work hard to pay their dues should be rightly aggravated by this figure.”

The cross-party group of MPs analysed spending across the 17 main government departments, with help from the National Audit Office, and found the most significant reported losses related to write-offs and debts no longer being pursued, departments cancelling or retiring assets, and fraud.

The Ministry of Defence was one of the most wasteful departments, incurring a £1.6bn loss in the 2024-25 tax year through cancelling projects. The Treasury said this was largely owing to retiring assets or changes in government policy with the shift to a Labour administration in July 2024.

Similarly, the Home Office registered a loss of £290m for the Conservatives’ Rwanda deportation scheme that Labour dumped, while the Department for Transport incurred a £472m loss from cancelling eight road projects, including the planned 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 permanent secretary at the Treasury, told the committee that write-offs could happen if there was a change in 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 the money the government owed in various compensation schemes had reached £73.4bn by the end of the last financial year, an £11.8bn increase on the previous year.

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

Material levels of fraud were another significant factor behind the amounts written off each year, it found. The report pointed to the Department for Work and Pensions, where fraud and errors have persisted for 36 years and stood at £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.”