The government cannot prove that millions of pounds from the “public benefit” Libor Fund was used as promised

 
Lucy White
BRITAIN-EU-POLITICS
Former chancellor George Osborne said in 2012 that Libor fines would be used for the public good (Source: Getty)

An investigation into how the government spent millions of pounds gathered from bank fines and ring-fenced for “the benefit of the public” has raised questions over its use.

The Libor Fund contained £973m, consisting of penalties paid by banks which were found to have been manipulating Libor (a benchmark interest rate for inter-bank loans).

Read more: Libor explained: How a little known benchmark rate rocked the City of London

Then-chancellor George Osborne announced in 2012 that all of this would be used for the public benefit. But the lack of transparency around this prompted the National Audit Office (NAO) to investigate how the pot of cash was being spent.

The results of that investigation, released today, have revealed that the government cannot prove whether a significant chunk of the money spent has been used as promised.

Apprenticeships

“The government pledged £200m 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 NAO's report stated.

Former Prime Minister David Cameron made this pledge as part of a General Election campaign in 2015 specifically to create apprenticeships for 20-24 year olds.

Although the money was used to fund apprenticeships in general, the government did not report an increase in its already announced 3m apprenticeship target and cannot prove whether any new apprenticeships were provided for 20-24 year olds.

Read more: The Libor trials: Where we are now and how it could have been very different

Grants

An additional £592m has been distributed through grants, with £385m of this being awarded following requests directly to the chancellor from charities, MPs and government departments.

The remaining £207 was handed out through a competitive application process managed by the Treasury and the Ministry of Defence (MoD).

So far, 729 grants with an average size of £0.8m have been awarded to 639 charities and causes.

But the NAO investigation found that the Treasury and the MoD “cannot yet confirm that charities spent all grants as intended”, adding that the MoD was undertaking a “retrospective review”.

The government has also committed to completing an external evaluation of the impact of its grant schemes on the charity sector.

What happened to the rest?

Up to now, the government had spent £933m of the total £973m. The vast majority of this, according to the NAO, has gone to armed forces and emergency services charities.

Another £141m has been committed to the Armed Forces Covenant Fund, which aims to support current and former members of the forces.

Just £40m of the Libor Fund is left to be spent.

Read more: Questions remain over Libor claims involving the Bank of England and Barclays after BBC Panorama documentary