The collapse of Wasps, Worcester and London Irish could cost the British taxpayer almost £30 million in unpaid Covid loans, a new report has revealed, while the government has been warned to monitor Premiership clubs who are “teetering on the edge”.

There is said to be concern within government about the ability of the remaining Premiership clubs to be able to pay back the remainder of the £123.8 million worth of loans that were paid out by the Department of Culture, Media and Sport to provide financial support during the pandemic.

The report, compiled by the National Audit Office, reveals that London Irish (£11.8 million), Wasps (£14.1 million) and Worcester Warriors (£15.7 million) received a total £41.6 million in loans but does not expect to recover up to £29 million of that total, while the taxpayer will also miss out on a further £11 million on interest payments.

DCMS lent out a total of £474 million to 120 borrowers from the sports and culture sectors during the pandemic, with rugby union receiving the lion’s share, including a total of 64 per cent of the sports loans given out – 26 per cent of the total loan book value.

The report stated that as of October, DCMS had received insolvency payments of £9.8 million from Worcester and £300,000 from Wasps. The report said that DCMS was still in “discussion with administrators over further insolvency settlements and expects to receive a further £7.3 million to £11.1 million from all the loan book insolvencies so far”.

“The government stepped in to lend just shy of half a billion pounds to the sports and culture sectors during the pandemic, saving many organisations from near-certain failure,” said Sir Geoffrey Clifton-Brown MP, chair of the Committee of Public Accounts, in response to the report.

“Although progress has been made in recovering initial repayments, it is concerning that up to £29 million of taxpayer money could be lost from borrowers who have since gone under.

“DCMS should continue to keep a close eye on English rugby union clubs that have been teetering on the edge.

“Given the public money at stake, the department has more to do to show it has a long-term plan for managing and recovering loans across the sectors.”

The report reveals that a total of nine borrowers were behind on their repayments, three of which “are over £1 million” behind their repayment schedule, although it does not disclose their identities. Reasons for defaulting were said to include “worse than expected financial performance, insufficient cash flow, and delays in securing sponsorship”.

The borrowers have been set a deadline of September next year to have made their first loan repayment.

There is understood to be frustration in some quarters that taxpayers’ money was used to bail out England’s top clubs, given that private equity firm CVC, which has assets of £191 billion, holds a 27 per cent share in the Premiership Rugby.

Premiership clubs ‘fully committed to repaying all taxpayer money’

A Premiership Rugby spokesperson said: “Since the pandemic the clubs and Premiership Rugby have worked hard to move back into a period of growth and stability, which is well underway.

“Premiership Rugby strengthened its financial regulation and governance with the formation of an independent Financial Monitoring Panel, which was set up with the help of former Government and financial advisors.

“Our clubs are fully committed to repaying all taxpayer money and we continue to work closely with DCMS, for whom we are thankful for their on-going support.”

The Rugby Football Union also received £10.2 million as secondary loans that went out to 91 grassroots clubs, all of whom are meeting their repayment schedules. It is understood that £4.9 million went to the Championship clubs.

The report adds that DCMS has had to increase “its engagement with, and oversight of, loans to rugby union clubs given their ongoing financial difficulties”. This included the appointment of two independent advisors to help both Premiership Rugby and the RFU to “stabilise the sport”.

A DCMS spokesperson said: “As the NAO rightly recognises, the department stepped in to provide financial support to sporting and cultural organisations during the pandemic. This helped organisations that needed it most.

“To date, we have recovered the vast majority of repayments due, and we will see all borrowers begin their repayments by this time next year.

“We will continue to work closely with borrower organisations to ensure the taxpayer funded covid loans are repaid.”