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<p> </p><p>The tenancy deposit protection schemes are operated by private companies
under service concession agreements with my Department. All the schemes are designed
to be self-financing.</p><p> </p><p> </p><p>The service concession agreement that
was agreed by the previous administration with the custodial tenancy deposit protection
scheme contained a guarantee that the government would meet any shortfall arising
if approved fees were not covered by the interest on deposits held.</p><p> </p><p>
</p><p>As a result of the low interest rates that emerged due to the financial turmoil
in 2008 and 2009, this agreement left the Government—i.e. taxpayers—liable for a shortfall
under that guarantee which was estimated to reach over £30 million by the end of the
contract in 2012.</p><p> </p><p> </p><p>In May 2010, the coalition Government inherited
this unacceptable situation and looming liabilities. As outlined by my Rt. Hon. Friend,
the Member for Welwyn Hatfield (Grant Shapps) on 19 July 2011, Official Report, Column
828W, following extensive negotiations in summer 2010, the guarantee and all associated
liabilities were removed as part of a revised agreement which also incorporated a
payment of £12.7 million and a four-year extension of the original agreement.</p><p>
</p><p>This is the only payment which has been made by Government to any of the tenancy
deposit protection schemes.</p><p> </p>
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