Recommendations & Conclusions
54 items
1
Conclusion
Eighth Report: Economic impact of coron…
Accepted
In the first half of this year the UK suffered its worst recession in modern history. The latest GDP figures suggest a bounce back has begun. But the path of the economy does not only depend on the course of the virus and Government restrictions or lockdowns, but on how …
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In the first half of this year the UK suffered its worst recession in modern history. The latest GDP figures suggest a bounce back has begun. But the path of the economy does not only depend on the course of the virus and Government restrictions or lockdowns, but on how the population views the risk from the virus and their job security, and how that in turn impacts on consumer and business confidence. Combatting the virus is an economic as well as a health priority.
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Government response AI summary
The government acknowledges the committee's observation by outlining the extensive ongoing support packages, including extending the Coronavirus Job Retention Scheme and various loan schemes, stating that protecting jobs and livelihoods has been its economic priority.
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HM Treasury
2
Conclusion
Eighth Report: Economic impact of coron…
Accepted
Consumption is returning following the lifting of Government restrictions. However, continued consumer caution around re-engaging with the economy, the prospect of more localised outbreaks and a second wave are dampening a full recovery to pre- pandemic levels of consumer spending. The Government has to contain the virus as best it …
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Consumption is returning following the lifting of Government restrictions. However, continued consumer caution around re-engaging with the economy, the prospect of more localised outbreaks and a second wave are dampening a full recovery to pre- pandemic levels of consumer spending. The Government has to contain the virus as best it can, but at the same time it has to boost consumer confidence and job security without causing the virus to spread—this is a difficult balancing act. The outlook for the economy remains exceptionally uncertain. Some level of economic scarring is now almost certain.
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Government response AI summary
The government acknowledges the report and details its ongoing economic priority to protect jobs and livelihoods through over £200 billion in support. It outlines extensions to schemes like the Coronavirus Job Retention Scheme until March 2021 and various loan schemes until January 2021, along with …
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HM Treasury
3
Recommendation
Eighth Report: Economic impact of coron…
Acknowledged
The Chancellor was right to begin stimulating consumption at the time of the Chancellor’s Plan for Jobs, especially in the hospitality and tourism sector, to ensure these businesses, often reliant on summer months, did not start cutting jobs. However the Eat Out to Help Out Scheme has now ended and …
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The Chancellor was right to begin stimulating consumption at the time of the Chancellor’s Plan for Jobs, especially in the hospitality and tourism sector, to ensure these businesses, often reliant on summer months, did not start cutting jobs. However the Eat Out to Help Out Scheme has now ended and the continued VAT cut on hospitality and leisure may not be enough to encourage consumers to continue to spend as the threat of the virus continues and they face rising job insecurity. The Chancellor needs to consider whether additional measures to stimulate consumption are warranted at the next fiscal event. (Paragraph 42) Avoiding long term unemployment
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Government response AI summary
The government acknowledged the need to consider additional measures, stating it is continuing to monitor consumer spending trends and that its economic response will evolve and adapt as needed, without committing to specific new actions.
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HM Treasury
4
Conclusion
Eighth Report: Economic impact of coron…
Accepted
We believe the Chancellor was right to start measures to combat long term unemployment in July. Rising unemployment becoming structural and permanent is a critical risk arising from the crisis.
Government response AI summary
The government highlighted the successful implementation of the Kickstart scheme, detailing the vital role of almost 500 registered gateway organisations in assisting smaller employers. They committed to continuing to respond and adapt the scheme to ensure maximum impact for employers and young people.
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HM Treasury
5
Recommendation
Eighth Report: Economic impact of coron…
Acknowledged
As the crisis moves beyond full lock-down, it is important to effectively target assistance to those businesses and individuals who need it. The ability of labour to move from sector to sector will not be a painless process and will be dependent on the growth of sectors matching the shrinkage …
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As the crisis moves beyond full lock-down, it is important to effectively target assistance to those businesses and individuals who need it. The ability of labour to move from sector to sector will not be a painless process and will be dependent on the growth of sectors matching the shrinkage of sectors. The Government should set out how it will manage the transition to mitigate the crisis and prevent exacerbating further inequalities that undermine the “levelling up” agenda.
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Government response AI summary
The government acknowledges its commitment to levelling up, citing ongoing work like establishing a Public Value Framework, developing priority outcomes, reviewing the Green Book, and relocating civil service roles, but does not specifically detail a plan for managing the transition to mitigate the crisis and …
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HM Treasury
6
Recommendation
Eighth Report: Economic impact of coron…
Accepted
A large proportion of businesses in sectors such as hospitality and leisure that are suffering most from social distancing may still have a viable long-term future at the end of October. It is not clear to us that the Job Retention Bonus, which all businesses are eligible for, is value …
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A large proportion of businesses in sectors such as hospitality and leisure that are suffering most from social distancing may still have a viable long-term future at the end of October. It is not clear to us that the Job Retention Bonus, which all businesses are eligible for, is value for money, given that most of the funds will be spent on workers who would be retained anyway. The Chancellor needs to carefully consider whether a targeted extension of the CJRS and/or other targeted support measures might be required and to explain his conclusion. (Paragraph 60) Economic impact of coronavirus: the challenges of recovery 55
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Government response AI summary
The government extended the Coronavirus Job Retention Scheme until March 2021 and introduced new targeted grants of up to £3,000 per month for businesses forced to close due to new restrictions. They also provided backdated grants for hospitality/leisure sectors and £1.1 billion funding to local …
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HM Treasury
7
Recommendation
Eighth Report: Economic impact of coron…
Accepted
It is vital that workers made redundant have the opportunity to reskill. We heard evidence that the poor reputation of schemes in the 1980s actually reduced participants’ employment prospects. Even though the Treasury is unlikely to be responsible for delivering vocational or reskilling schemes, given the role of these schemes …
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It is vital that workers made redundant have the opportunity to reskill. We heard evidence that the poor reputation of schemes in the 1980s actually reduced participants’ employment prospects. Even though the Treasury is unlikely to be responsible for delivering vocational or reskilling schemes, given the role of these schemes in reducing long term unemployment, we recommend that the Treasury ensures that their quality and reputation is monitored. We recommend an evaluation of these schemes every six months afterwards to assess whether they genuinely increase job prospects.
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Government response AI summary
The government agreed with the recommendation to monitor and evaluate reskilling schemes, committing to establish a framework for gathering evidence and evaluating programmes as part of the Spending Review process.
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HM Treasury
8
Conclusion
Eighth Report: Economic impact of coron…
Accepted
The Government also needs to make sure that the requirement for employers interested in offering fewer than 30 Kickstart roles to apply through a representative organisation does not make the scheme inaccessible to SMEs and charities.
Government response AI summary
The government highlights that gateway organisations are already in place and play a vital role in making the Kickstart scheme accessible to smaller employers, with DWP having implemented a new registration system. They state a commitment to continue adapting the scheme for maximum impact.
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HM Treasury
9
Recommendation
Eighth Report: Economic impact of coron…
Acknowledged
The crisis has hit different groups of people unequally. It is also likely that the differences in hours of paid work carried out between men and women observed during the lockdown may lead to a widening of the gender pay gap, especially if the differences in hours worked persist in …
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The crisis has hit different groups of people unequally. It is also likely that the differences in hours of paid work carried out between men and women observed during the lockdown may lead to a widening of the gender pay gap, especially if the differences in hours worked persist in the months ahead. We recommend that the Treasury publishes an updated version of its distributional analysis in the Plan for Jobs in the next fiscal event, alongside an equality impact analysis of how the recession is impacting different groups (e.g. gender, race, region and socioeconomic status) and the extent to which Government measures are mitigating falls in incomes for those hardest hit. This analysis should also include a breakdown of how unemployment rates of these different groups have been impacted by the crisis.
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Government response AI summary
The government states it will "consider" publishing an updated distributional analysis at an appropriate point but outlines challenges in producing it for wider characteristics. For the request to include unemployment rates, they note that the Office for National Statistics already publishes this data by various …
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HM Treasury
10
Recommendation
Eighth Report: Economic impact of coron…
Accepted in Part
The Government has raised Universal Credit and made it easier to access. However these changes are time-limited for a year. The Government should consider extending the measures increasing the generosity and accessibility of Universal Credit put in place in March 2020. The Government should also conduct a study to examine …
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The Government has raised Universal Credit and made it easier to access. However these changes are time-limited for a year. The Government should consider extending the measures increasing the generosity and accessibility of Universal Credit put in place in March 2020. The Government should also conduct a study to examine the adequacy of and eligibility for sick pay, given that poor levels of statutory sick pay will make it harder for workers to isolate when needed. (Paragraph 80) Corporate debt
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Government response AI summary
The government states that the £20 increase in Universal Credit will continue until April 2021, partially addressing the call for extended generosity. However, it only references existing enhanced Statutory Sick Pay provisions rather than committing to conducting a study on its adequacy and eligibility.
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HM Treasury
11
Conclusion
Eighth Report: Economic impact of coron…
Accepted
It remains unclear how the Government expects businesses to pay back loans in the future. The crisis and the lockdown of the economy meant that businesses have largely forgone revenue which many are unlikely to make up in the future and revenue is also likely to be suppressed in some …
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It remains unclear how the Government expects businesses to pay back loans in the future. The crisis and the lockdown of the economy meant that businesses have largely forgone revenue which many are unlikely to make up in the future and revenue is also likely to be suppressed in some sectors for some time.
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Government response AI summary
The government responded by detailing the Pay as you Grow initiative, which offers businesses flexibility in repaying Bounce Back Loans, including extended repayment terms up to 10 years, interest-only options, or payment pauses.
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HM Treasury
12
Recommendation
Eighth Report: Economic impact of coron…
Rejected
We are concerned that there may be a significant lack of capacity and willingness for the private sector to step in to provide solutions for corporate indebtedness especially amongst small and medium-sized enterprises (SMEs). Viable SMEs struggling with debt will prolong the recession and so the Government must develop solutions …
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We are concerned that there may be a significant lack of capacity and willingness for the private sector to step in to provide solutions for corporate indebtedness especially amongst small and medium-sized enterprises (SMEs). Viable SMEs struggling with debt will prolong the recession and so the Government must develop solutions for ensuring the recapitalising of their balance sheets. The Government must outline a plan for this within the next three months. It should think creatively (as it has around other support measures) and consider a wide range of potential interventions, such as contingent tax liability or student loan type structures in relation to debt for SMEs, where repayments are conditional on them demonstrating appropriate financial health. TheCityUK has already carried out a comprehensive review on the recapitalisation of businesses, which should provide a starting-point for the Treasury’s work. (Paragraph 101) 56 Economic impact of coronavirus: the challenges of recovery
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Government response AI summary
The government rejects the recommendation to outline a plan for recapitalising SME balance sheets, stating that accredited lenders, not the government, are best placed to support borrowers with government-guaranteed loans. They have considered the proposed interventions but maintain their view.
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HM Treasury
13
Recommendation
Eighth Report: Economic impact of coron…
Deferred
The Treasury should evaluate whether there needs to be a new state body or a remodelling of the British Business Bank, to provide loans at speed in a crisis if required, and to also play a part in recapitalising businesses including investing strategically in large businesses. (Paragraph 110) Longer term …
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The Treasury should evaluate whether there needs to be a new state body or a remodelling of the British Business Bank, to provide loans at speed in a crisis if required, and to also play a part in recapitalising businesses including investing strategically in large businesses. (Paragraph 110) Longer term challenges
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Government response AI summary
The government notes the British Business Bank's key role in the COVID-19 response and states it will consider lessons learned from this experience to inform future recovery phases. It also describes existing mechanisms for supporting strategically important companies.
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HM Treasury
14
Conclusion
Eighth Report: Economic impact of coron…
Deferred
One legacy of the crisis will be a sharp rise in the level of public debt and, possibly, an ongoing rise in borrowing. This has been and will be necessary to contain the economic damage from Coronavirus and does not raise immediate debt sustainability concerns. However, it will make the …
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One legacy of the crisis will be a sharp rise in the level of public debt and, possibly, an ongoing rise in borrowing. This has been and will be necessary to contain the economic damage from Coronavirus and does not raise immediate debt sustainability concerns. However, it will make the job of stabilising the public finances in the long term more difficult.
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Government response AI summary
The government acknowledges the need to ensure the long-term health of public finances but defers setting out a detailed roadmap or revised fiscal framework until "in due course," as the economic and fiscal outlook becomes clearer.
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HM Treasury
15
Recommendation
Eighth Report: Economic impact of coron…
Deferred
The Chancellor should, at the next fiscal event, set out an initial roadmap of how he intends to place Government finances on a sustainable footing. The milestones on that roadmap will need to be flexible—tax increases imposed too early are like to stifle economic recovery. A reassurance that the Government …
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The Chancellor should, at the next fiscal event, set out an initial roadmap of how he intends to place Government finances on a sustainable footing. The milestones on that roadmap will need to be flexible—tax increases imposed too early are like to stifle economic recovery. A reassurance that the Government intends to take steps to ensure fiscal sustainability in future will underpin market confidence and reduce uncertainty for households and businesses that may fear immediate tax rises.
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Government response AI summary
The government acknowledges the need to ensure the long-term health of public finances but defers setting out a detailed roadmap or revised fiscal framework until "in due course," as the economic and fiscal outlook becomes clearer.
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HM Treasury
16
Recommendation
Eighth Report: Economic impact of coron…
Accepted
In order to prevent “levelling up” becoming an empty slogan, the Government should produce a strategy underpinning it that defines clear objectives and includes the indicators it will use to gauge success at the next fiscal event. The Government needs to clarify whether it is planning to close the productivity …
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In order to prevent “levelling up” becoming an empty slogan, the Government should produce a strategy underpinning it that defines clear objectives and includes the indicators it will use to gauge success at the next fiscal event. The Government needs to clarify whether it is planning to close the productivity gap, the income gap, the gap in health outcomes, the gap in educational outcomes or all of these. It also needs to define the strategies it will use to close different imbalances: strategies to close productivity gaps may well be different to those aimed to close income gaps or those gaps in health outcomes.
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Government response AI summary
The government is committed to levelling up and is currently developing a new Public Value Framework to link departmental spending to outcomes, defining medium- to long-term priority outcomes and metrics for success, as announced at Budget 2020. They are also reviewing the Green Book and …
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HM Treasury
17
Conclusion
Eighth Report: Economic impact of coron…
Deferred
We welcome initiatives by the ONS to improve the quality of its regional data, for instance by producing quarterly regional GDP figures. The Treasury publishing regional data in its March Budget is also a good first step towards increasing the profile of regional data. Such data will be vital in …
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We welcome initiatives by the ONS to improve the quality of its regional data, for instance by producing quarterly regional GDP figures. The Treasury publishing regional data in its March Budget is also a good first step towards increasing the profile of regional data. Such data will be vital in the wake of the crisis to assess the impact on different regions and sectors. While the OBR’s and Bank’s remits are primarily national, showing regional variations can enrich users’ understanding of the economy and enable policy makers to better understand the differentiated impact of the coronavirus on various regions and sectors of the UK economy and how best to implement and measure the Government’s “levelling up” strategy.
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Government response AI summary
The government clarifies that the OBR's mandate is primarily national, as defined by the Budget Responsibility and National Audit Act 2011, though it undertakes some sub-national work. This implies that a broader role in monitoring "levelling up" is outside its remit.
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HM Treasury
18
Recommendation
Eighth Report: Economic impact of coron…
Not Addressed
The Treasury and the OBR should consider raising the profile of regional data in their publications. We also recommend that the Bank of England develop their datasets from their Regional Agents network and Decision Maker panel and endeavour to highlight disparities in regions in their publications. We recommend that the …
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The Treasury and the OBR should consider raising the profile of regional data in their publications. We also recommend that the Bank of England develop their datasets from their Regional Agents network and Decision Maker panel and endeavour to highlight disparities in regions in their publications. We recommend that the Treasury also review the remits of both the OBR and Bank in the next year to see whether they need changing to reflect the Government’s “levelling up” agenda.
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Government response AI summary
The government response copies the recommendation text but only addresses the Bank of England's part, stating the Bank will consider whether more regional data could be published. It does not address the recommendations for the Treasury and OBR to raise the profile of regional data …
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HM Treasury
19
Recommendation
Eighth Report: Economic impact of coron…
Accepted
We call on the Government to throw its diplomatic weight behind the global community in investing in public health systems in developing countries; ensuring that testing, treatment and a vaccine when developed is made as widely available Economic impact of coronavirus: the challenges of recovery 57 as possible to emerging …
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We call on the Government to throw its diplomatic weight behind the global community in investing in public health systems in developing countries; ensuring that testing, treatment and a vaccine when developed is made as widely available Economic impact of coronavirus: the challenges of recovery 57 as possible to emerging economies. The Government should also consider increasing the resources available to the International Monetary Fund, should it be needed to maintain countries’ international financing in the event of renewed market turbulence or further waves of the virus. (Paragraph 153) Overall approach
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Government response AI summary
The government confirms support for vulnerable countries with over £1 billion aid, championed the Debt Service Suspension Initiative, committed £150 million to the IMF's CCRT, pledged a £2.2 billion loan to the PRGT, and committed £1 billion for global COVID-19 vaccine access for low and …
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HM Treasury
20
Recommendation
Eighth Report: Economic impact of coron…
Not Addressed
Local authorities are critical in responding to local outbreaks effectively. In the forthcoming Spending Review or budget process, local government spending must not be treated as a residual and must be costed based on the submissions put forward by local authorities.
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Local authorities are critical in responding to local outbreaks effectively. In the forthcoming Spending Review or budget process, local government spending must not be treated as a residual and must be costed based on the submissions put forward by local authorities.
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Government response AI summary
The government response provides a general update on its economic support measures during the pandemic, including extensions to the Coronavirus Job Retention Scheme and business loan schemes, but does not address the specific recommendation regarding local government spending and its costing in future reviews.
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HM Treasury
21
Recommendation
Eighth Report: Economic impact of coron…
Not Addressed
The Government should as soon as possible set out in a public document the type of support available to local authorities in the event of a localised lock-down and how it will work with local authorities to support local businesses.
Government response AI summary
The government provided a general update on national support packages, including the extension of the CJRS and various loan schemes, following new national restrictions. However, it did not specifically set out a public document on support available to local authorities in localised lockdowns or explain …
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HM Treasury
22
Conclusion
Eighth Report: Economic impact of coron…
Not Addressed
It is too simplistic to say that a compulsory lockdown is a trade-off between the people’s health and the economy. The very presence of the virus, and how people respond to it regardless of what the Government mandates, has an economic impact. And lockdowns don’t just affect the economy—they have …
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It is too simplistic to say that a compulsory lockdown is a trade-off between the people’s health and the economy. The very presence of the virus, and how people respond to it regardless of what the Government mandates, has an economic impact. And lockdowns don’t just affect the economy—they have health implications as well, positive and negative, beyond just combatting coronavirus.
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Government response AI summary
The government response details its general economic support package during the pandemic, including extensions to the Coronavirus Job Retention Scheme and loan schemes, but does not engage with the committee's nuanced observation on the trade-offs and impacts of lockdowns.
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HM Treasury
23
Recommendation
Eighth Report: Economic impact of coron…
Not Addressed
When it imposes and removes social restrictions, the Government needs to be as clear as possible that a) there are harms in restrictions and there is a trade-off between these harms and the harms of the virus spreading; and b) how they have made that balance, recognising this is going …
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When it imposes and removes social restrictions, the Government needs to be as clear as possible that a) there are harms in restrictions and there is a trade-off between these harms and the harms of the virus spreading; and b) how they have made that balance, recognising this is going to be a matter of judgment.
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Government response AI summary
The government response details its general economic support measures, including extensions to the Coronavirus Job Retention Scheme and business loan schemes, but does not address the recommendation about being clearer on the harms and trade-offs of social restrictions and how decisions are balanced.
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HM Treasury
24
Conclusion
Eighth Report: Economic impact of coron…
Not Addressed
It is notable that the synchronisation of the OBR’s analysis and the Government’s announcements appears to have been challenged in the crisis. The OBR scenario analysis undertaken in the Fiscal Sustainability Report did not include the Government’s measures in its Plan for Jobs announced just a week before. This could …
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It is notable that the synchronisation of the OBR’s analysis and the Government’s announcements appears to have been challenged in the crisis. The OBR scenario analysis undertaken in the Fiscal Sustainability Report did not include the Government’s measures in its Plan for Jobs announced just a week before. This could be because the crisis requires a rapid policy response, which means that it was not always possible to inform the OBR of policy announcements in the normal working timetable.
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Government response AI summary
The government's response did not address the committee's observation regarding the synchronisation challenges between OBR analysis and government announcements during the crisis. Instead, it discussed the OBR's mandate and the risks of expanding its responsibilities.
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HM Treasury
25
Recommendation
Eighth Report: Economic impact of coron…
Acknowledged
We suggest that by the next fiscal event the Treasury clarifies its relationship with the OBR, in particular what the process is for declaring a Treasury announcement to be a fiscal event requiring an OBR economic and fiscal forecast.
Government response AI summary
The government acknowledged the recommendation, describing the existing independent role of the OBR in forecasting and their joint macroeconomic model, but did not commit to new clarification on the process for declaring a fiscal event.
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HM Treasury
26
Recommendation
Eighth Report: Economic impact of coron…
Rejected
The Treasury’s macroeconomic forecasting ability appears to have eroded since the formation of the OBR. The Treasury needs to maintain sufficient forecasting capacity outside the OBR so that it can ensure that it can adapt policy responses rapidly to an urgent situation. In its response to this report, the Treasury …
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The Treasury’s macroeconomic forecasting ability appears to have eroded since the formation of the OBR. The Treasury needs to maintain sufficient forecasting capacity outside the OBR so that it can ensure that it can adapt policy responses rapidly to an urgent situation. In its response to this report, the Treasury should explain in detail its short-term macroeconomic forecasting capabilities, and how macroeconomic forecasting analysis has informed the design, scope and scale of its interventions during the crisis.
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Government response AI summary
The government rejected the recommendation, stating that the Treasury does not produce its own macroeconomic forecasts and instead relies on independent forecasts from the OBR, Bank of England, ONS data, and external sources for policy advice.
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HM Treasury
27
Conclusion
Eighth Report: Economic impact of coron…
Acknowledged
We are concerned about the implications of the pandemic for insurance, given that businesses will need the confidence that insurance cover provides if they are to resume normal activities. (Paragraph 184) 58 Economic impact of coronavirus: the challenges of recovery
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We are concerned about the implications of the pandemic for insurance, given that businesses will need the confidence that insurance cover provides if they are to resume normal activities. (Paragraph 184) 58 Economic impact of coronavirus: the challenges of recovery
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Government response AI summary
The government acknowledged concerns about pandemic insurance cover, stating HM Treasury is working closely with insurers, trade bodies, and regulators to understand how the sector can help businesses and to learn lessons for potential future pandemics, while monitoring solvency.
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HM Treasury
28
Recommendation
Eighth Report: Economic impact of coron…
Accepted
The Treasury should consider whether Government intervention is required to support the insurance industry in finding a solution for pandemic insurance cover; and whether such support would be an effective use of public money. We also recommend that the Treasury investigates whether it needs to mitigate the risk of insolvencies …
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The Treasury should consider whether Government intervention is required to support the insurance industry in finding a solution for pandemic insurance cover; and whether such support would be an effective use of public money. We also recommend that the Treasury investigates whether it needs to mitigate the risk of insolvencies in the insurance sector, should the Court’s ruling find in favour of policyholders.
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Government response AI summary
The Treasury is actively working with insurers and regulators to understand future pandemic insurance needs and to learn lessons. It also remains in close contact with the Prudential Regulation Authority to monitor the solvency of the insurance sector and will take all necessary steps to …
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HM Treasury
29
Recommendation
Eighth Report: Economic impact of coron…
The Government must be willing to be flexible, even on manifesto commitments, in response to the crisis. Lifting the Triple Lock on pensions next year is a sensible proposal and should be carefully considered.
HM Treasury
30
Recommendation
Eighth Report: Economic impact of coron…
Acknowledged
One of the clear strengths of the Treasury’s response in the initial stages of the crisis has been its willingness to listen and adjust its policies in response to feedback. However, we are disappointed in its refusal to implement recommendations from our first Report and hope that this does not …
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One of the clear strengths of the Treasury’s response in the initial stages of the crisis has been its willingness to listen and adjust its policies in response to feedback. However, we are disappointed in its refusal to implement recommendations from our first Report and hope that this does not indicate growing intransigence going forward. The continued uncertainty about the virus and the impact on economic recovery means that the Chancellor must show continued flexibility in his measures. (Paragraph 193) Economic impact of coronavirus: the challenges of recovery 59
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Government response AI summary
The government states it remains alert and ready to adapt its approach, continuing to monitor trends and ensuring its economic response evolves to provide necessary support, aligning with the call for continued flexibility.
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HM Treasury
1
Conclusion
Eleventh Report - Economic impact of co…
Acknowledged
Though the structure of the UK economy makes it potentially more vulnerable to the present shock, the Committee notes that comparisons with other countries’ GDP may also be affected by differing measurement methodologies. We therefore caution against over-reliance on the UK’s GDP performance in comparison to other countries, as a …
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Though the structure of the UK economy makes it potentially more vulnerable to the present shock, the Committee notes that comparisons with other countries’ GDP may also be affected by differing measurement methodologies. We therefore caution against over-reliance on the UK’s GDP performance in comparison to other countries, as a measure of the impact of coronavirus on the economy.
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Government response AI summary
The government acknowledged the committee's caution regarding over-reliance on GDP comparisons by stating that the Budget featured a commentary on international comparisons of economic performance and GDP measurement issues.
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HM Treasury
2
Recommendation
Eleventh Report - Economic impact of co…
Accepted
We recommend that the Treasury and the Office for Budget Responsibility provide a commentary at the time of the Budget on GDP measurement issues and the implications that these measurement issues have for comparisons between the UK and other countries. (Paragraph 17) Gaps in support
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We recommend that the Treasury and the Office for Budget Responsibility provide a commentary at the time of the Budget on GDP measurement issues and the implications that these measurement issues have for comparisons between the UK and other countries. (Paragraph 17) Gaps in support
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Government response AI summary
The government accepted the recommendation, stating that it had already provided a commentary on GDP measurement issues and international comparisons in pages 11 and 12 of the Budget document.
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HM Treasury
3
Conclusion
Eleventh Report - Economic impact of co…
Accepted
Given the economic outlook, we believe that the Government was right to extend both the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme to the end of April 2021. However, given the extended duration of restrictions, we believe the Government was wrong not to address gaps in support.
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Given the economic outlook, we believe that the Government was right to extend both the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme to the end of April 2021. However, given the extended duration of restrictions, we believe the Government was wrong not to address gaps in support.
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Government response AI summary
The government stated it had already extended the CJRS and SEISS until September, beyond the April 2021 date mentioned, to address the ongoing economic challenges, highlighting the schemes' success and reach.
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HM Treasury
4
Recommendation
Eleventh Report - Economic impact of co…
Accepted
The 2019–20 self-assessment income tax returns will provide the Government with additional information that could allow it to provide support to those who need it but have so far not received it. We therefore strongly urge the Treasury to use the data from 2019–20 tax returns to help the newly …
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The 2019–20 self-assessment income tax returns will provide the Government with additional information that could allow it to provide support to those who need it but have so far not received it. We therefore strongly urge the Treasury to use the data from 2019–20 tax returns to help the newly self-employed who missed out on previous support. In order to ensure that this group is helped as quickly as possible, we recommend that HMRC prioritises work on analysing the 2019–20 tax returns.
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Government response AI summary
The government accepted the recommendation, announcing that HMRC will use 2019-20 tax returns for the fourth and fifth SEISS grants, potentially allowing over 600,000 newly self-employed individuals to claim support.
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HM Treasury
5
Conclusion
Eleventh Report - Economic impact of co…
Rejected
By conspicuously leaving out a large proportion of limited company directors from support altogether, we are concerned that the Government is sending out the wrong message—that it is not adequately supporting entrepreneurs and employers, who have suffered significantly from a lack of support. However, we recognise that there are administrative …
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By conspicuously leaving out a large proportion of limited company directors from support altogether, we are concerned that the Government is sending out the wrong message—that it is not adequately supporting entrepreneurs and employers, who have suffered significantly from a lack of support. However, we recognise that there are administrative difficulties to overcome and fraud risks with the implementation of any scheme.
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Government response AI summary
The government responded to concerns about the exclusion of limited company directors by explaining that difficulties in identifying eligible individuals and high fraud risks prevent broader support through schemes like SEISS, while noting other available business support.
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HM Treasury
6
Recommendation
Eleventh Report - Economic impact of co…
Accepted
When responding to this report, the Treasury should provide an assessment of the level of fraud which it believes would arise from the implementation of the DISS scheme.
Government response AI summary
The government provided a draft assessment indicating that the DISS scheme could have a wide error and fraud range, potentially as high as 20%.
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HM Treasury
7
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We question whether the Treasury could do more to investigate how to mitigate the fraud risks inherent in the DISS scheme and similar schemes, and whether the levels of fraud risk merit the Treasury’s position of not providing any support at all. We urge the Treasury to develop measures to …
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We question whether the Treasury could do more to investigate how to mitigate the fraud risks inherent in the DISS scheme and similar schemes, and whether the levels of fraud risk merit the Treasury’s position of not providing any support at all. We urge the Treasury to develop measures to support limited company directors and set these out in the Budget. (Paragraph 49) 34 Economic impact of coronavirus: gaps in support and economic analysis
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Government response AI summary
The government rejected the recommendation to develop new support measures for limited company directors, citing significant difficulties in accurately identifying eligible individuals from HMRC data, high fraud risks associated with self-certification, and the availability of other business support schemes.
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HM Treasury
8
Conclusion
Eleventh Report - Economic impact of co…
Rejected
Although we acknowledge the Chancellor’s intention to target the SEISS at those who are most dependent on self-employed income, not all of them would have access to the Coronavirus Job Retention Scheme, as we pointed out in our first report of this inquiry.
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Although we acknowledge the Chancellor’s intention to target the SEISS at those who are most dependent on self-employed income, not all of them would have access to the Coronavirus Job Retention Scheme, as we pointed out in our first report of this inquiry.
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Government response AI summary
The government defended its SEISS eligibility criteria, particularly the 50% self-employed income test, stating it is designed to target support at those most in need and citing data on other income sources for those who do not qualify.
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HM Treasury
9
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We believe that the Government should reconsider the 50 per cent limit in the eligibility criteria for the fourth tranche of the SEISS grant so that those who derive less than half of their income through self-employment can receive some level of support.
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We believe that the Government should reconsider the 50 per cent limit in the eligibility criteria for the fourth tranche of the SEISS grant so that those who derive less than half of their income through self-employment can receive some level of support.
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Government response AI summary
The government rejected the recommendation to reconsider the 50% income limit for SEISS eligibility, stating the design aims to target those most in need and noting that stakeholders had initially supported an even higher threshold.
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HM Treasury
10
Recommendation
Eleventh Report - Economic impact of co…
Rejected
There is a striking inconsistency between the way the Government is treating employees earning more than £50,000 a year and those who are self-employed and have trading profits above £50,000 a year. Whereas those who are employed can receive support from the Government up to a maximum wage amount of …
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There is a striking inconsistency between the way the Government is treating employees earning more than £50,000 a year and those who are self-employed and have trading profits above £50,000 a year. Whereas those who are employed can receive support from the Government up to a maximum wage amount of £2,500 a month through the Coronavirus Job Retention Scheme, those who are self-employed receive nothing at all under the Self-employment Income Support Scheme. This is unfair. We believe the Government ought not to disadvantage the self-employed in this way.
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Government response AI summary
The government rejects the implicit recommendation to remove the £50,000 cap or introduce a taper for SEISS, stating it is not proportionate due to complexity and the small number of potential beneficiaries, and that SEISS and CJRS are fundamentally different schemes.
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HM Treasury
11
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We reiterate our recommendation from our first report in this inquiry that the Government must tackle the cliff edge that exists in the design of the SEISS by removing the £50,000 cap and allowing those with profits just over this cap access to some financial support up to the total …
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We reiterate our recommendation from our first report in this inquiry that the Government must tackle the cliff edge that exists in the design of the SEISS by removing the £50,000 cap and allowing those with profits just over this cap access to some financial support up to the total monthly support cap of £2,500 (as for salaried employees).
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Government response AI summary
The government rejects the recommendation to remove the £50,000 cap and introduce a taper for SEISS, stating it is not proportionate due to the complexity of administration and the relatively small number of people who would benefit.
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HM Treasury
12
Recommendation
Eleventh Report - Economic impact of co…
Accepted in Part
The Treasury should in its response to this report provide: • the number of people with self-employed income as their main source of income in the 2019–20 financial year; • the proportion of the self-employed who had more than £50,000 trading profits in the 2019–20 financial year; • the median …
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The Treasury should in its response to this report provide: • the number of people with self-employed income as their main source of income in the 2019–20 financial year; • the proportion of the self-employed who had more than £50,000 trading profits in the 2019–20 financial year; • the median income of those above the £50,000 trading profits threshold in the 2019–20 financial year who earned the majority of their income from self- employment; and • the range of costs of applying the recommendations we have made to the SEISS.
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Government response AI summary
The government provides partial data, giving statistics for 2018-19 and up to October 2020 for some points, and notes when SEISS statistics are updated, but states it does not have an assessment of the costs for implementing the committee's recommendations.
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HM Treasury
13
Conclusion
Eleventh Report - Economic impact of co…
Acknowledged
The first version of the SEISS scheme had to be rolled out at speed in March
Government response AI summary
The government acknowledges the committee's observation on the early rollout of SEISS/CJRS and notes its previous decision to extend support, further extending both schemes until September and detailing a wide range of other ongoing support measures.
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HM Treasury
14
Recommendation
Eleventh Report - Economic impact of co…
Rejected
We recognise that it may not have been possible for the Government to help all those who have fallen through the cracks of the support schemes. However, we are disappointed that the Government has so far shown no inclination to expand or provide alternatives to the SEISS, which is providing …
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We recognise that it may not have been possible for the Government to help all those who have fallen through the cracks of the support schemes. However, we are disappointed that the Government has so far shown no inclination to expand or provide alternatives to the SEISS, which is providing a vital life-line to many but is not available to all those whom we believe should qualify. We recommend Economic impact of coronavirus: gaps in support and economic analysis 35 that the Government look at other models of support, including those developed by the devolved administrations with a view to extending support to people who require support and who do not currently qualify. (Paragraph 76) Economic analysis
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Government response AI summary
The government stated it had explored alternative support models, including Northern Ireland's Directors' scheme, but concluded they were not viable due to higher fraud risks and practical issues with identifying eligible populations.
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HM Treasury
15
Conclusion
Eleventh Report - Economic impact of co…
Accepted
We are disappointed at the lack of analysis provided by the Treasury, despite such analysis being referenced in the SAGE minutes. Without it, the impression is that the Government is making important decisions without proper regard to all their impacts, both on health and the economy. The lack of such …
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We are disappointed at the lack of analysis provided by the Treasury, despite such analysis being referenced in the SAGE minutes. Without it, the impression is that the Government is making important decisions without proper regard to all their impacts, both on health and the economy. The lack of such analysis also prevents the public from understanding in full the basis for, and impact of, the restrictions imposed upon them.
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Government response AI summary
The government acknowledges the concern about economic analysis and asserts that it has published a significant amount of analysis on the health, economic, and social impacts of COVID-19, including analysis underpinning the Roadmap out of lockdown, and has commissioned advice from SAGE.
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HM Treasury
16
Recommendation
Eleventh Report - Economic impact of co…
Accepted
We call on the Treasury to be more transparent about the economic analysis which it undertakes to inform Government decisions in the fight against coronavirus and to publish any such analysis in a timely manner. The House should not be asked to take a view on proposals which have far-reaching …
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We call on the Treasury to be more transparent about the economic analysis which it undertakes to inform Government decisions in the fight against coronavirus and to publish any such analysis in a timely manner. The House should not be asked to take a view on proposals which have far-reaching consequences for the general population, such as those involving restrictions on social interaction, education, movement and work, without the support of appropriate and comprehensive economic analysis.
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Government response AI summary
The government claims it has already published a significant amount of analysis on the health, economic, and social impacts of COVID-19 and public health measures, including for the Roadmap, and commissioned advice from SAGE.
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HM Treasury
17
Recommendation
Eleventh Report - Economic impact of co…
Acknowledged
We agree with the Treasury that epi-macro modelling relies on assumptions which may not be supported by extensive data sets. Nevertheless, we believe it would be a useful exercise for the Treasury to undertake epi-macro modelling to better understand the implications of Government-imposed social restrictions and to evaluate the costs …
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We agree with the Treasury that epi-macro modelling relies on assumptions which may not be supported by extensive data sets. Nevertheless, we believe it would be a useful exercise for the Treasury to undertake epi-macro modelling to better understand the implications of Government-imposed social restrictions and to evaluate the costs and benefits of such social restrictions.
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Government response AI summary
The government acknowledges the committee's view on epi-macro modelling, stating it has studied academic literature and benefited from discussions with experts, and that decisions are based on health, economic, and social impacts, and SAGE advice.
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HM Treasury
18
Conclusion
Eleventh Report - Economic impact of co…
Not Addressed
The Treasury’s analysis has been criticised for not providing modelling of the alternative to lockdowns. There is evidence to suggest that in the absence of lockdown, people would have socially distanced to a large extent through fear of viral transmission and infection. As such, while a lockdown is a significant …
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The Treasury’s analysis has been criticised for not providing modelling of the alternative to lockdowns. There is evidence to suggest that in the absence of lockdown, people would have socially distanced to a large extent through fear of viral transmission and infection. As such, while a lockdown is a significant and costly imposition by Government, that cost when compared to the alternative with voluntary social distancing, may be less than many assume.
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Government response AI summary
The government provides a general statement about its approach to economic analysis and decision-making regarding COVID-19, but does not specifically address the committee's point about modelling alternatives to lockdowns or the costs of voluntary social distancing.
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HM Treasury
19
Recommendation
Eleventh Report - Economic impact of co…
Accepted
We strongly urge the Treasury to provide rigorous analysis of future policy choices which quantifies the harms and benefits of each of the plausible range of alternative policies. It has always been considered a good practice to publish an impact assessment for every measure that the Government proposes.
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We strongly urge the Treasury to provide rigorous analysis of future policy choices which quantifies the harms and benefits of each of the plausible range of alternative policies. It has always been considered a good practice to publish an impact assessment for every measure that the Government proposes.
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Government response AI summary
The government states it has already taken decisions based on health, economic, and social impacts, studied academic literature, and published significant analysis throughout the pandemic, including for the Roadmap.
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HM Treasury
20
Conclusion
Eleventh Report - Economic impact of co…
Accepted
While death rates from coronavirus are high, the rationale for Government decisions on social restrictions is well understood by the public. As the vaccines roll-out proceeds and death rates fall, Government decisions on whether or not to lift restrictions will become more finely balanced. We believe that economic analysis and …
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While death rates from coronavirus are high, the rationale for Government decisions on social restrictions is well understood by the public. As the vaccines roll-out proceeds and death rates fall, Government decisions on whether or not to lift restrictions will become more finely balanced. We believe that economic analysis and modelling is essential to inform those decisions, alongside evidence of the other necessary infrastructure such as test, trace and isolate, and responses to new variants, being comprehensive and in place to mitigate against the need for a further lockdown. (Paragraph 105) 36 Economic impact of coronavirus: gaps in support and economic analysis
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Government response AI summary
The government asserts that it already makes decisions based on the health, economic, and social impacts of COVID-19, utilizing academic literature and SAGE advice to inform its policies and the Roadmap out of lockdown.
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HM Treasury
21
Conclusion
Eleventh Report - Economic impact of co…
Accepted
After almost a year of restrictions on social and economic activity, the general public and the business sector need confidence that the Government has as clear and as certain a route out of the crisis as possible.
Government response AI summary
The government states that since the report, it has published its roadmap for the economy's cautious reopening and announced the Budget, which together aim to provide the necessary security and certainty to the public and businesses.
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HM Treasury
22
Recommendation
Eleventh Report - Economic impact of co…
Accepted
We recommend that in order to provide some certainty to businesses, as well as to the general public, the forthcoming Government plan for taking the country out of lockdown should set out criteria of how and when it will lift restrictions— this could be in terms of the prevalence and …
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We recommend that in order to provide some certainty to businesses, as well as to the general public, the forthcoming Government plan for taking the country out of lockdown should set out criteria of how and when it will lift restrictions— this could be in terms of the prevalence and R rate of the virus. We recognise that this would be a contingent plan, based on the stages only being activated after milestones are met, with the Government providing the maximum possible certainty. Alongside this plan, the Treasury should also provide the combined economic and epidemiological modelling to support it, and show how it would best optimise health and economic outcomes.
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Government response AI summary
The government states that since the report, it has published its roadmap for reopening the economy, fulfilling the recommendation to provide a plan for lifting restrictions, and also announced the Budget for economic support.
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HM Treasury
23
Recommendation
Eleventh Report - Economic impact of co…
Accepted
It is vital that economists work together with epidemiologists and health experts to make decisions on social restrictions, and that the output of their work should be made public. We propose that the Government use a more multi-disciplinary approach to examine the health and economic costs of social restrictions without …
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It is vital that economists work together with epidemiologists and health experts to make decisions on social restrictions, and that the output of their work should be made public. We propose that the Government use a more multi-disciplinary approach to examine the health and economic costs of social restrictions without delay, and we recommend that the Government should put more information in the public domain as to how economic and health factors have been taken into consideration regarding Government decisions on social restrictions. How the Government made decisions on social restrictions is an area that might be expected to come under further review in any future public inquiry into the Government’s effectiveness in combating coronavirus.
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Government response AI summary
The government states it has already taken decisions based on multi-disciplinary factors (health, economic, social) and published significant analysis, including commissioning SAGE advice, to inform its COVID-19 response.
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HM Treasury
24
Recommendation
Eleventh Report - Economic impact of co…
Not Addressed
We strongly believe that the Treasury needs to retain greater modelling capacity outside the OBR, so that it can model the implications of different policies. It should also ensure that it has sufficient capacity to modify or use new types of modelling techniques where necessary. We recommend that the Treasury …
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We strongly believe that the Treasury needs to retain greater modelling capacity outside the OBR, so that it can model the implications of different policies. It should also ensure that it has sufficient capacity to modify or use new types of modelling techniques where necessary. We recommend that the Treasury produces a policy document that sets out what its modelling capacity should be and what modelling it should be expected to carry out and publish, independently of the OBR. This is especially important in times of crisis, when the Treasury may rapidly roll out programmes without the benefit of OBR analysis. (Paragraph 114) Economic impact of coronavirus: gaps in support and economic analysis 37
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Government response AI summary
The government provides a general description of its existing approach to economic analysis, including studying academic literature and commissioning SAGE advice, but does not address the specific recommendation to produce a policy document on its independent modelling capacity.
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HM Treasury