Recommendations & Conclusions
8 items
2
Recommendation
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
We are concerned that HM Treasury does not intend to adequately monitor and update the ongoing cost of COVID-19 to the taxpayer. Monitoring the forecast costs and actual spend related to COVID-19 is crucial for Parliamentary scrutiny and for holding departments to account for their use of taxpayers’ money. The …
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We are concerned that HM Treasury does not intend to adequately monitor and update the ongoing cost of COVID-19 to the taxpayer. Monitoring the forecast costs and actual spend related to COVID-19 is crucial for Parliamentary scrutiny and for holding departments to account for their use of taxpayers’ money. The cost-tracker has enabled Parliament and the public to have full visibility over what government has spent and committed to spend in response to the pandemic and the financial risks to the public purse. Government estimates that it will lose £21 billion as a result of loans that it does not expect will be repaid. HM Treasury will know more about how much will be lost in connection to these loan schemes over time as more repayment data is received. HM Treasury has committed to conduct a routine review of material changes to the estimated costs, including updating the costs associated with the COVID-19 loan schemes and some public services measures, where these can be reliably attributed to COVID-19. However, it has not specified which elements of government’s response to the pandemic will be included in these updates, what will constitute material changes to estimated costs, or how the costs of those elements which are excluded will continue to be monitored and Departments held to account for spending taxpayers’ money. From 2022–23 onwards, funding to tackle issues arising from COVID-19 will not be ring-fenced. Some of the costs currently included in the cost tracker will form part of departments’ ongoing activities. 6 COVID-19 cost tracker update Recommendation: As part of its Treasury Minute response, HM Treasury should explain how, when, and which subsets of the data captured by the NAO in the COVID-19 cost tracker it will continue to update. This should also address how loan book commitments, including those made under the Culture Recovery Fund, and any associated liabilities, such as estimated write-off costs under the Bounce Back Loans Scheme, will be moni
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Government response AI summary
The Treasury will publish annual updates on the COVID-19 cost tracker data for the next two years, focusing on material changes reliably attributed to COVID-19, and will then review the need for further updates.
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HM Treasury
3
Recommendation
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
HM Treasury does not yet know how much money has been lost to fraud and error across government’s response to COVID-19. Our previous work on government’s response to COVID-19 has revealed that the risk of fraud and error to public finances has risen substantially during the pandemic. As a result, …
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HM Treasury does not yet know how much money has been lost to fraud and error across government’s response to COVID-19. Our previous work on government’s response to COVID-19 has revealed that the risk of fraud and error to public finances has risen substantially during the pandemic. As a result, government is likely to be exposed to significant financial risk. Some of the larger COVID-19 measures are likely to lose large sums of taxpayers’ money to fraud and error. For example, the Coronavirus Job Retention Scheme is estimated to lose £5.3 billion to fraud and error – equating to 8.7% of the funding distributed through the scheme. HM Treasury asserts that it has increased its investment in the detection and recovery of fraud and expects this to have a significant return. However, HM Treasury is not able to put a figure to the expected return on investment or the amount of fraud and error across the breadth of government’s response to COVID-19. Given that the increased risk of fraud and error could cost the taxpayer billions of pounds, it is crucial that HM Treasury can identify, estimate the volume of, and attempt to recover, funding that was distributed in error or through fraudulent claims. Recommendation: HM Treasury should write to the committee by the end of the financial year with its estimate of: • how much taxpayers’ money has been lost to fraud and error within schemes introduced in response to the pandemic; and • how much it expects will be recovered for each pound it spends doing so.
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Government response AI summary
The government stated that each department is responsible for estimating fraud and error in the schemes it administers and that the department wrote to the Committee on 31 March 2021 to respond to these questions and that latest estimates are set out in departments’ 2020-21 …
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HM Treasury
4
Recommendation
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
HM Treasury has not set out what lessons it has learnt from the government’s response to COVID-19 and how it will apply these in future. The pandemic required government to respond rapidly to emerging issues across all areas of society. It is essential that government learns from its response to …
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HM Treasury has not set out what lessons it has learnt from the government’s response to COVID-19 and how it will apply these in future. The pandemic required government to respond rapidly to emerging issues across all areas of society. It is essential that government learns from its response to the pandemic and identifies what it should do to ensure that those lessons are applied, both to improve its ability to respond to emergencies, and to improve its business-as-usual service delivery. Departments cannot wait until the public inquiry, which may take some years to complete, to learn the lessons from government’s handling of the pandemic. HM Treasury agreed that it is now an appropriate time to undertake a lessons learned exercise covering the whole of government’s initial response to the pandemic. The sooner this exercise takes place, the quicker departments can embed the lessons they have learned in their practices and guidance. Recommendation: HM Treasury should write to the committee by the end of the financial year setting out: • what it has learned from the government’s response to the COVID-19 pandemic; and • what action it is taking to identify and collate learning from across government departments. COVID-19 cost tracker update 7 1 The cost of the pandemic to the taxpayer
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Government response AI summary
The government stated that the department wrote to the Committee on 31 March 2021 outlining lessons and actions that have been taken across public spending, finance and economic support schemes.
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HM Treasury
9
Recommendation
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
Across government’s response to COVID-19, there are also other substantial loan books that have no estimated write-offs as at the September 2021 update to the cost tracker, but which government will have to manage until the loans are repaid. For example, as at the September 2021 update to the cost …
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Across government’s response to COVID-19, there are also other substantial loan books that have no estimated write-offs as at the September 2021 update to the cost tracker, but which government will have to manage until the loans are repaid. For example, as at the September 2021 update to the cost tracker, Arts Council England was responsible for £252 million of loans issued through the Culture Recovery Fund.22 We examined the Culture Recovery Fund in June 2021 and concluded that, as the largest ever single investment in the arts and culture sector, and with a typical 20-year term, these will require skilled oversight and careful management for years to come. We were concerned about the Department’s and Arts Council England’s ability to manage the significant 16 Q 18 17 Q 11 18 Qq 19, 21; Letter from Tom Scholar, Permanent Secretary, HM Treasury, to Dame Meg Hillier MP, Monitoring the cost of cross-government programmes, 23 December 2021 19 The COVID-19 cost tracker, available at: COVID-19 cost tracker - National Audit Office (NAO) 20 Q 37 21 Office for Budget Responsibility, Economic and fiscal outlook – October 2021 22 The COVID-19 cost tracker, available at: COVID-19 cost tracker - National Audit Office (NAO) COVID-19 cost tracker update 11 and ongoing loan book commitments created by the Fund and recommended that the Department made sure it had the resources in place to take on the new responsibility for managing the loans.23
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Government response AI summary
HM Treasury will continue to conduct a routine review of COVID-19 costs, including the Culture Recovery Fund, and publish annual updates for the next two years, after which the Treasury will review what is still required.
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HM Treasury
10
Recommendation
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
In its letter to us after our evidence session, HM Treasury recognised the helpful role that the NAO cost tracker has played in improving transparency on the cost of COVID-19, as well as its role as the definitive source of information on the public expenditure costs of the pandemic. It …
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In its letter to us after our evidence session, HM Treasury recognised the helpful role that the NAO cost tracker has played in improving transparency on the cost of COVID-19, as well as its role as the definitive source of information on the public expenditure costs of the pandemic. It told us that it would conduct “a routine review of material changes to the estimated costs of these measures and provide public updates”. It confirmed that this would include updates to the estimated lifetime costs of loans and updated costs for some public services measures “where these can be reliably attributed to COVID-19”. It did not comment, however, on which measures this would include, what would constitute material changes to estimated costs, or what approach it would take to monitoring the costs of those measures that were not included in the updates.24 23 Committee of Public Accounts, COVID 19: Culture Recovery Fund, Eighth Report of Session 2021–22, HC340, 23 June 2021 24 Letter from Tom Scholar, Permanent Secretary, HM Treasury, to Dame Meg Hillier MP, Monitoring the cost of cross-government programmes, 23 December 2021 12 COVID-19 cost tracker update 2 Fraud and error within pandemic spending
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Government response AI summary
The Treasury will publish annual updates on the COVID-19 cost tracker data for the next two years, focusing on material changes reliably attributed to COVID-19, and will then review the need for further updates.
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HM Treasury
11
Conclusion
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
We examined fraud and error across government in 2021. We found that government had introduced many vital support schemes in response to the pandemic, but that these had substantially increased the risk of fraud and error to public finances and the taxpayer was expected to lose billions of pounds as …
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We examined fraud and error across government in 2021. We found that government had introduced many vital support schemes in response to the pandemic, but that these had substantially increased the risk of fraud and error to public finances and the taxpayer was expected to lose billions of pounds as a result. Between April 2020 and March 2021, fraud within Universal Credit rose to an all-time high of 14.5%. At the time of our previous evidence session, BEIS estimated that between 35% and 60% of loans issued through the Bounce Back Loan Scheme may not be repaid.25 HM Revenue & Customs (HMRC), the Department for Work & Pensions (DWP), and the Department for Business, Energy & Industrial Strategy (BEIS) are responsible for some of the schemes we identified as having the highest risk of fraud and error. Since our report in June 2021, all three departments have published their annual report and accounts for 2020–21, which provide an updated position on the estimated fraud against some of the largest COVID-19 measures. These show that at the end of March 2021, these three departments expected to lose £15.7 billion as a result of fraud and error within COVID-19 support schemes, with their estimated total losses ranging between £12.4 billion and £20.1 billion.26 Department and scheme Estimated loss from COVID-19 support schemes Lower estimate Central estimate Upper estimate (£ millions) (£ millions) (£ millions) Department for Work & 3,850 Pensions & Universal Credit HM Revenue & Customs & 4,065 5,279 7,281 Coronavirus Job Retention Scheme HM Revenue & Customs & 355 493 631 Self-Employment Income Support Scheme HM Revenue & Customs & 43 71 99 Eat Out to Help Out Business, Energy & Industrial 3,615 4,944 6,725 Strategy & Bounce Back Loan Scheme Business, Energy & Industrial 514 1,038 1,562 Strategy & Local Authority Grant Scheme (figures do not include all local authority grant schemes) Total 12,442 15,675 20,148
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Government response AI summary
The government acknowledges the committee's finding and states that each department is responsible for estimating fraud and error in its schemes, with estimates published in Annual Report and Accounts, indicating existing processes address the issue.
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HM Treasury
12
Conclusion
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
We asked HM Treasury what its current assessment of fraud and error across government was, given the availability of the new data. HM Treasury told us that its upfront estimates on losses due to fraud and error were broadly in line with HMRC’s most 25 Committee of Public Accounts, Fraud …
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We asked HM Treasury what its current assessment of fraud and error across government was, given the availability of the new data. HM Treasury told us that its upfront estimates on losses due to fraud and error were broadly in line with HMRC’s most 25 Committee of Public Accounts, Fraud and Error, Ninth Report of Session 2021–22, HC253, 24 June 2021 26 HM Revenue & Customs, Annual Report & Accounts 2020–21, 4 November 2021 HMRC Annual Report and Accounts 2020 to 2021 (Web) (publishing.service.gov.uk); Department for Work & Pensions, Annual Report & Accounts 2020–21, 15 July 2021 HC 422 – Department for Work and Pensions – Annual Report and Accounts 2020–21 (publishing.service.gov.uk); Department for Business, Energy & Industrial Strategy, Annual Report & Accounts 2020–21, 25 November 2021 BEIS Annual report and accounts 2020–21 (publishing.service.gov.uk) COVID-19 cost tracker update 13 likely scenario in its annual report and accounts for three of its measures: the Coronavirus Job Retention Scheme (CJRS), the Self-Employment Income Support Scheme (SEISS) and Eat Out to Help Out (EOHO). It explained that this had helped HM Treasury validate its methodology for estimating fraud. For example, it had initially estimated that fraud within CJRS and EOHO would be between 5% and 10%. It told us that the most likely estimated of fraud within the schemes were 8.7% and 8.5% respectively. It similarly told us that this had allowed it to target funding in a more effective way when investing in counter-fraud activities.27
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Government response AI summary
The government acknowledges the committee's finding and states that departments are responsible for estimating fraud and error, with estimates published in Annual Report and Accounts, indicating that existing processes are in place for assessment.
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HM Treasury
17
Conclusion
Thirty-Eighth Report - COVID-19 cost tr…
Accepted
We examined the initial lessons that can be learned from government’s response to the pandemic in June 2021 based on 20 evidence sessions on various aspects of the government’s response. In our report, we set out our views on what government can 32 Q 5 33 Committee of Public Accounts, …
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We examined the initial lessons that can be learned from government’s response to the pandemic in June 2021 based on 20 evidence sessions on various aspects of the government’s response. In our report, we set out our views on what government can 32 Q 5 33 Committee of Public Accounts, Fraud and Error, Ninth Report of Session 2021–22, HC253, 24 June 2021 34 Committee of Public Accounts, Twelfth Report of Session 2021–22, COVID-19 Cost Tracker Update, HC173, 19 July 2021 35 Q 2; HM Treasury, Government response to the Committee of Public Accounts on the Twelfth and Seventeenth to the Twenty-First Reports from Session 2021–22, CP 583, 9 December 2021 36 Q 2 37 Q 2 38 Q 40 COVID-19 cost tracker update 15 learn from its response to the pandemic, what it should do to ensure that those lessons are applied, and what it should do to improve both its ability to respond to emergencies and its business-as-usual service delivery. We noted that the future public inquiry into the government’s handling of the pandemic could take some years to complete, and that government could not wait for the review before learning important lessons.39
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Government response AI summary
The government agrees with the committee's observation about the need to learn pandemic lessons promptly and states it has already outlined lessons and actions taken in a letter to the committee dated March 2021.
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HM Treasury