National Audit Office Press Releases
Investigation into the management of the Libor Fund
The National Audit Office has today published the findings of its investigation into the management of the Libor Fund.
Following an international investigation by financial regulators in 2012 it was revealed that several banks in the US and the EU were manipulating Libor, a benchmark interest rate for inter bank loans, for profit. UK regulators fined the banks £688 million. It was announced that all proceeds would “go to the benefit of the public”.
In 2015 an additional £284 million fine for manipulating foreign exchange markets was added to the Libor Fund, bringing the total amount allocated to the fund to £973 million. Parliament and the media have questioned the transparency of how the money from the fines is being distributed. The NAO investigation sets out how the government has distributed this money.
The key findings of the investigation are as follows:
- Up to September 2017, the government had committed £933 million of the total £973 million.The majority of this money has gone towards Armed Forces and Emergency Services charities. The Treasury and the Ministry of Defence (MoD) have distributed £592 million of the fund to a range of different causes. In April 2015, the then Prime Minister David Cameron pledged £200 million of the fund to support 50,000 apprenticeships. Currently £40 million of the Libor Fund is still held by the Treasury, but has yet to be committed.
- Of the £933 million committed to the fund, £141 million has yet to be distributed but will support the Covenant Fund. The Covenant Fund is a scheme that will make grants up to £10 million per year in perpetuity and is currently funded by the Libor Fund.
- The Government pledged £200 million of the Libor Fund to support 50,000 new apprenticeships but the Department for Education is unable to demonstrate that these have been delivered. The initial pledge to use £200 million of Libor funding to support 50,000 new apprenticeships for unemployed 22-24 year olds was made during the 2015 General Election campaign and committed over 20% of the £973 million fund. However, although the money was used to fund apprenticeships in general, the Government did not report any increase in its already announced 3 million target. The Department for Education, now responsible for apprenticeships, was not directed to use the £200 million to pursue a specific policy to deliver apprenticeships for unemployed 22-24 year olds and cannot demonstrate whether 50,000 new apprenticeships for this group have been provided.
- Of the £592 million distributed through grants, two thirds (£385 million) has been awarded following requests for funding made directly to the Chancellor of the Exchequer from charities, MPs and government departments. The remaining £207 million was spent through competitive application processes managed by the Treasury and MoD.
- So far, 729 grants have been awarded to 639 charities and causes. The average grant was £0.8 million.
- Not all grants from the Libor Fund had terms and conditions attached to them as standard until Autumn Statement 2015. Between October 2012 when the first HM Treasury Libor (HMT Libor) grant was awarded up to and including the summer budget in July 2015, 67 grants totalling £272 million were made by HMT and other departments from the HMT Libor scheme on behalf of the Chancellor. £196 million of the £272 million grants were given out without any terms and conditions attached of which HMT state that £139 million did not require them.
- HM Treasury and the MoD cannot yet confirm that charities spent all grants as intended.Currently the MoD is conducting a retrospective review of all grants awarded since 2012 to ensure that they were spent correctly.
- The government cannot yet demonstrate the impact the Libor grant fund has had as it has not been evaluating the impact of the grant schemes on the charity sector. It has committed to completing an external evaluation by December 2018, by which time over 80% of the fund will have been awarded.
- The MoD is now using a grant from the Libor Fund for a project to help understand the needs of the Armed Forces community. This will inform the distribution of the £141m in the Covenant grant scheme.
Full report: Investigation into the management of the Libor Fund
Notes for Editors
Fines collected by the Financial Conduct Authority (FCA) committed to the Libor fund.
Amount assigned to be granted to charities and good causes by HM Treasury and the Ministry of Defence
Amount given to the Department for Education to spend on 50,000 apprenticeships
Amount remaining from Libor fines yet to be committed through any scheme
Amounted committed to the Covenant Fund from Libor fines that is yet to be spent
1. The NAO conducts investigations to establish the underlying facts in circumstances where concerns have been raised with us, or in response to intelligence that we have gathered through our wider work.
2. Press notices and reports are available from the date of publication on the NAO website. Hard copies can be obtained by using the relevant links on our website.
3. The National Audit Office scrutinises public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Sir Amyas Morse KCB, is an Officer of the House of Commons and leads the NAO. The C&AG certifies the accounts of all government departments and many other public sector bodies. He has statutory authority to examine and report to Parliament on whether departments and the bodies they fund have used their resources efficiently, effectively, and with economy. Our studies evaluate the value for money of public spending, nationally and locally. Our recommendations and reports on good practice help government improve public services. Our work led to audited savings of £734 million in 2016.
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