National Audit Office Press Releases
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HM Treasury Resource Accounts 2011-12

The National Audit Office has yesterday given an update on the financial support provided by the Treasury to the UK banking sector – how much support has been provided, how much is still outstanding and how much it is costing the taxpayer.

Since 2007, the Treasury has made a series of large financial interventions to support the financial stability of UK banking. These interventions supported three broad aims: to protect depositors; to maintain liquidity and capital for UK banks through the period of market closures; and to encourage banks to lend to creditworthy borrowers.

To remove the support, the guarantees will be withdrawn, the loans repaid and, eventually, the shares returned to private ownership. As at March 2012, the total outstanding support stood at £228 billion (down from the total a year before of £456 billion and a peak of £1.2 trillion). Of the £228 billion, £109 billion constitutes outstanding guarantee commitments and £119 billion was provided as cash.

In return for providing the support, the Treasury has charged fees and interest of £14 billion to 31 March 2012. Most of the income has been from fees charged on the financial guarantee schemes and has included large one-off payments such as the fee paid by Lloyd’s for the Asset Protection Scheme. Unless the shares in RBS and Lloyd’s Banking Group start paying substantial dividends, the Government as a whole will start to make annual cash losses on the support once the cost of borrowing the money used to purchase the shares and provide the loans is taken into account.

Yesterday's report, which is published as part of HM Treasury’s departmental financial statements, notes that the income provided by fees and interest is less than would be expected from a normal market investment and has not compensated the taxpayer for the degree of risk accepted by taxpayers in providing the support. Once the opportunity cost and risks are factored in, the schemes have represented a transfer of at least £5 billion from taxpayers to the financial sector. This can be regarded as part of the cost of preserving financial stability in the crisis and, as the NAO reported in 2009, had the support not been provided, the potential costs would have been difficult to envision.

The Treasury has invested £66 billion in shares in RBS and Lloyds to provide the banks with sufficient capital. The shares are held in the accounts at their market value, which has fallen by more than £18 billion over the year, and by more than £32 billion since the government's original investment. Although the Government remains committed to returning the banks to private ownership, UK Financial Investments Ltd has warned that, until economic and regulatory uncertainties subside, it will be difficult to deliver value for money from a sale of the shares.

Notes for Editors

Total support and fees


Guarantee commitments


Cash outlay


Total support


Total support - peak




Total outstanding support  - 31 March 2011




Total outstanding support - 31 March 2012





Total cash received as at 31 March 2011 (£bn)

Cash received in 2011-12


Total cash received as at 31 March 2012 (£bn)

Fees and income from cash support




Fees and income from guarantees




Total fees




Estimated finance cost1





1. Finance cost stated to nearest £1 billion.

Source: National Audit Office analysis of HM Treasury Resource Accounts

  1. Press notices and reports are available from the date of publication on the NAO website, which is at Hard copies can be obtained from The Stationery Office on 0845 702 3474.
  2. The National Audit Office scrutinizes public spending for Parliament and is independent of government. The Comptroller and Auditor General (C&AG), Amyas Morse, is an Officer of the House of Commons and leads the NAO, which employs some 860 staff. 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, and our work led to audited savings of more than £1 billion in 2011.

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