Government wrote off nearly £7bn worth of taxpayer money last year, with £293.5m spent on ‘special payments outside normal activities’.

The influential Public Accounts Committee has released its second report on the work of the National Audit Office (NAO).

Amounts written off in 2024-25 by the 17 main departmental groups were assessed, with £6.6bn was written off in total.

There was said to be an ‘egregiously poor value for public money’, with spending that ‘did not achieve its intended objectives or create any value for the taxpayer.’

The report stated: ‘We are concerned that the 17 departmental groups had to write off close to £7bn in total during 2024–25 for spending that did not achieve intended objectives.’

The worst three offenders highlighted included the Ministry of Defence (MoD), which incurred a £1.6bn loss in 2024-25 through ‘cancelling projects due to changes in government policy and retiring assets from use.’

In second place was the Home Office, which incurred a £290m loss related to ‘cancelling the Migration and Economic Development Partnership Agreement with Rwanda’.

The Department for Transport (DfT) came in third place, incurring a £472m loss relating to the cancellation of ‘eight road schemes, including the planned A303 tunnel under Stonehenge.’

DfT losses were highlighted as a ‘particularly egregious example of poor value for money for the taxpayer.’

‘The main departments responsible should be informed by the Treasury that they expect considerable improvements in the future,’ the report said.

The Treasury was recommended to ‘analyse the root causes of recent large reported losses, to identify what lessons can be learned and avoid such wasted funds in future investment decisions.’

Also highlighted was how these 17 departments spent £293.5m on ‘special payments outside of their normal courses of business’, during 2024–25.

These ‘special payments’, were said to be made for reasons such as for ‘adverse legal costs’, ‘compensation’, or ‘goodwill gestures related to personal injury or damaged property’.

‘It is possible some of this expenditure may have been in the public interest, however it may also indicate where bodies did not exercise proper control or oversight on spending,’ stated the report.

For losses due to fraud, both the Department of Work & Pensions (DWP) and HMRC had, ‘ongoing qualifications due to material levels of fraud and error’, which have ‘persisted for 36 and 20 years respectively’.

The report stated: ‘HMT (Treasury) suggested that fraud and error were almost inherent to the systems of organisations such as DWP and HMRC due to the nature of their activities.’

‘We are not at all persuaded that such high levels of fraud and error can or should be regarded as inherent features of these organisations’ systems,’ the report said in response.

Clive Betts MP, deputy chair of the Public Accounts Committee, 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.

‘Those who work hard to pay their dues should be rightly aggravated by this figure.’

On the level of fraud found at the DWP and HMRC, Betts said: ‘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.’

Pictured: Clive Betts MP, deputy chair of the Public Accounts Committee