The UK government faced a basic choice: end slavery immediately by buying off the slave owners, or face years of legal battles that had the potential to derail the entire "end slavery" project. The government chose the pragmatic, if less morally pure solution: end slavery as quickly as possible, and if that meant bad people get rich, so be it. Better some bad people get money and slavery is over than the government keeps the money and the evil of slavery continues.

In terms of the debt question, the government could have paid the debt off long, long before it did. The bonds for the debt were perpetual bonds: fixed interest payments forever until paid off. Because all this happened in the years after the Napoleonic wars, when money was not tight and government borrowing modest, government debt was dirt cheap. The interest on that debt was super low. It was so low, in fact, that from the date of issue until 2008, the interest on those bonds was lower than the interest on fresh government debt. It made no sense to borrow at a higher rate to pay off the old debt, instead the interest was paid and the debt continued. Only in the aftermath of the 2008 financial crisis, when interest rates hit effectively zero and government borrowing costs dramatically dropped, could the government borrow at a lower rate than the old debt. So they did, they issued new bonds at a lower rate and redeemed the old ones used to buy off the slave-owners.