Recommendations & Conclusions
5 items
6
Conclusion
Thirty-Eighth Report - COVID-19 cost tr…
Acknowledged
We noted that the public inquiry into government’s handling of COVID-19 was due to start in the spring or summer of 2022, and that understanding how money was being spent was likely to be an important part of this inquiry. We therefore asked HM Treasury how it would ensure that …
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We noted that the public inquiry into government’s handling of COVID-19 was due to start in the spring or summer of 2022, and that understanding how money was being spent was likely to be an important part of this inquiry. We therefore asked HM Treasury how it would ensure that this information was kept in good shape to allow for proper scrutiny and oversight about how government had handled the pandemic. HM Treasury explained that there were three elements to identifying the cost of COVID-19. The first is the direct public expenditure during the pandemic, which was captured by the cost tracker. Secondly, there would be ongoing costs to public services in the future which would not have happened were it not for the pandemic, which it told us was “easy to measure today … [but] gets harder to measure as time goes by”. It explained that the third element is the indirect cost due to the effect on the economy, jobs and businesses, and the effect of this on tax revenue, which it told us was much more difficult to answer.12
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Government response AI summary
Acknowledges that the COVID-19 cost tracker has increased transparency and that the Treasury has committed to continue to conduct a routine review of these costs and to provide public updates.
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HM Treasury
7
Conclusion
Thirty-Eighth Report - COVID-19 cost tr…
Acknowledged
HM Treasury told us that, during the pandemic, it had made some very significant sums of money available at short notice in conditions of great uncertainty. This funding was ring-fenced so that, if it was not needed for the intended purpose, it would not be spent on other things.13 HM …
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HM Treasury told us that, during the pandemic, it had made some very significant sums of money available at short notice in conditions of great uncertainty. This funding was ring-fenced so that, if it was not needed for the intended purpose, it would not be spent on other things.13 HM Treasury told us that there will not be separate ring-fenced COVID-19 expenditure for 2022–23 onwards. It suggested that bringing the tracker to a close at the end of 2021–22 was “probably the right thing to do” given the difficulties in distinguishing expenditure from this point.14 We therefore asked what its approach would be to programmes such as NHS Test and Trace and the vaccines programme, which would still be in place after 202122 and were clearly COVID-19-related costs. HM Treasury told us that while some ongoing costs, such as NHS Test and Trace and the vaccines programme, could reasonably be separately identified, it was increasingly difficult to distinguish costs due to COVID-19 from routine business costs.15 It gave the example of the backlog of cases within the criminal courts where HM Treasury asserted that the source of the backlog did not matter, what mattered was dealing with the backlog and that it had not ring-fenced any money specifically for COVID-19-related backlogs. It 11 Qq 56–58 12 Q 19 13 Q 18 14 Q 9 15 Qq 8, 10 10 COVID-19 cost tracker update told us that this approach would provide departments with greater flexibility to deal with the circumstances they faced.16 HM Treasury said that it would keep the departmental allocations under review and respond to changes in the pandemic.17
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Government response AI summary
Acknowledges that the COVID-19 cost tracker has increased transparency and that the Treasury has committed to continue to conduct a routine review of these costs and to provide public updates.
Read full response →
HM Treasury
8
Conclusion
Thirty-Eighth Report - COVID-19 cost tr…
Acknowledged
HM Treasury told us that one element of the cost tracker it would definitely continue to monitor and report on was the cost of the various loan and grant schemes where the true cost will only be known over time.18 Government has guaranteed or issued loans worth a total of …
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HM Treasury told us that one element of the cost tracker it would definitely continue to monitor and report on was the cost of the various loan and grant schemes where the true cost will only be known over time.18 Government has guaranteed or issued loans worth a total of £129 billion during the pandemic. This comprises of loans issued through business support schemes such as the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme, the Future Fund and the Covid Corporate Financing Facility.19 The September 2021 cost tracker reported that the government expected to lose £21 billion as a result of some loans issued or guaranteed by government not being repaid (write-offs).20 The Office for Budget Responsibility (OBR) produces estimates of write-offs that the government will be required to fund if loans it issued or guaranteed are not repaid. In October 2021, the OBR revised its estimate of the cost of write-offs for the 2020–21 financial year down to £21 billion from £26 billion in March 2021. This is partly because the economy is recovering better than expected but also due to some early repayment data.21 Estimated total Volume of Expected volume of loans loans reported cost of write- Scheme expected to guaranteed offs be guaranteed or issued by (£ millions) or issued by government (£ government (£ million) millions) Bounce Back Loan Scheme 47,360 47,360 18,373 Coronavirus Business 26,390 26,390 2,198 Interruption Loan Scheme Coronavirus Large Business 5,560 5,560 357 Interruption Loan Scheme Future Fund 1,137 1,137 75 Recovery Loan Scheme 1,600 428 164 Total 82,047 80,875 21,167
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Government response AI summary
Acknowledges that the COVID-19 cost tracker has increased transparency and that the Treasury has committed to continue to conduct a routine review of these costs and to provide public updates.
Read full response →
HM Treasury
16
Recommendation
Thirty-Eighth Report - COVID-19 cost tr…
Acknowledged
We therefore asked HM Treasury what it was doing to identify and address some of the issues raised by our and the NAO’s work examining the response to the pandemic, for example around the trade-offs between acting at speed and ensuring value-for- money.36 HM Treasury said that, although it had …
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We therefore asked HM Treasury what it was doing to identify and address some of the issues raised by our and the NAO’s work examining the response to the pandemic, for example around the trade-offs between acting at speed and ensuring value-for- money.36 HM Treasury said that, although it had disagreed with our recommendation, it agreed that it should review major COVID-related spending decisions and “consider very carefully value for money”.37 It told us that it did not intend to carry out a full formal audit of all COVIDrelated expenditure and then reach a value-for-money judgement on all programmes. However, when we asked whether there was a process for assessing previous spending decisions and learning from them, it told us that ahead of new funding decisions, for example on NHS Test and Trace and the vaccines programme, it reviewed and learned lessons from departments’ previous spending.38
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Government response AI summary
The government agrees and states the recommendation is implemented, referring to a March 2021 letter outlining general lessons and actions, but it does not detail a specific new process for identifying and addressing the trade-offs between speed and value for money as raised by the …
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HM Treasury
19
Recommendation
Thirty-Eighth Report - COVID-19 cost tr…
Acknowledged
We asked HM Treasury what it was doing to ensure that, if emergency support such as business support schemes or loans were needed in future, those responsible would have the information they needed to act quickly, informed by lessons from the COVID-19 pandemic. HM Treasury explained that it was able …
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We asked HM Treasury what it was doing to ensure that, if emergency support such as business support schemes or loans were needed in future, those responsible would have the information they needed to act quickly, informed by lessons from the COVID-19 pandemic. HM Treasury explained that it was able to draw on lessons learned from the financial crisis of 2007–2009 when designing some of the COVID-19 schemes. In particular, HM Treasury said that it was useful to be able to draw on the design of measures used to address the effects of the financial crisis when it was designing the Covid Corporate Financing Facility, the Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme. In contrast, it explained that there was no relevant precedent that HM Treasury could use to help design the Bounce Back Loan Scheme. As a result, HM Treasury recognised that there was a huge amount that could be learned from that scheme. We stressed that these lessons should be recorded in such a way that their usefulness does not depend on current HM Treasury staff being available when the lessons need to be drawn upon.44 39 Committee of Public Accounts, Initial lessons from the government’s response to the COVID-19 pandemic, Thirteenth Report of Session 2021–22, HC 175, 25 July 2021 40 Q 5 41 Q 49 42 Qq 52, 54 43 Qq 2, 5 44 Q 42 16 COVID-19 cost tracker update
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Government response AI summary
The government agrees and states the recommendation is implemented by referring to a March 2021 letter that generally outlines lessons learned, but does not specifically detail how lessons are recorded to ensure long-term usefulness independent of staff changes, as requested.
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HM Treasury