Source · Select Committees · Public Accounts Committee
Recommendation 19
19
Rejected
Untargeted early grant schemes overwhelmed departmental capacity and posed fiscal challenges.
Conclusion
The first wave of grant schemes in spring 2020 were largely untargeted. They account for around half of the £22.6 billion eventually provided to businesses under these schemes over the pandemic.38 HM Treasury told us the amount paid out in the first wave was very large; it was fiscally very difficult and it reduced its ability to fund other things later on.39 DBT’s Accounting Officer reflected that to some extent teams in the department had needed to do their best at very hard jobs, under incredible pressure, without sufficient capacity or access to the right skills. This reflected that BEIS was traditionally a policy rather than a delivery department with, for example, a very small counter-fraud team.40 HM Treasury said that later in the pandemic the government sought to move to more targeted schemes, to improve value for money.41 However, the demands of doing this in the second half of 2020 overwhelmed the capacity of the officials in charge of the grant schemes within BEIS. No more than 20 people were working on the grants in the early stages of the pandemic. This was the period of most frequent revision of guidance and related documents, which DBT linked to “the desire at that point to have more nuanced interventions.”42
Government Response Summary
The government rejects the committee's implied recommendation, stating that a single precise definition for the basic level of control in national emergencies is inappropriate due to varying circumstances. It affirms that established spending frameworks apply, with Accounting Officers responsible for expenditure, but flexibility is necessary to tailor responses to specific emergencies.
Government Response
Rejected
HM Government
Rejected
The government disagrees with the Committee’s recommendation. 1.2 Every national emergency is different, and HM Treasury (HMT) adopts levels of control proportionate to the scale and nature of the emergency in question. It is therefore not appropriate to set a single precise definition for the basic level of control needed and exactly how the trade-offs with speed of response should be handled. 1.3 The first principle, however, is that in the case of national emergency, the established spending framework continues to apply. Specifically: • accounting officers (AOs) remain responsible for departmental expenditure and for maintaining the AO standards of regularity, propriety, value for money and feasibility in relation to public spending; • departments must comply with Managing Public Money (including the requirement for HMT consent); and • requirements for appropriate budget cover, estimates authority and legal powers to spend money still apply. 1.4 As seen during the COVID-19 pandemic, there is sufficient flexibility within this framework to tailor responses to the specific circumstances of the emergency in question. In such circumstances, AOs are expected to exercise sound judgement concerning the application of resources – as afforded them by Parliament – and they are responsible for the management of the associated risks and trade-offs, such as between the need for speed and the increased likelihood of fraud and error. Where appropriate, HMT may implement flexibilities within the spending framework tailored to the specific emergency, as it did during the COVID-19 pandemic, although these do not abrogate the AO’s responsibilities. In addition to these flexibilities, HMT may also enhance assurance to deal with heightened risks - for example reducing the risk of fraud by integrating the role of the Public Sector Fraud Authority into HMT approval processes. 1.5 Should the AO consider that they are unable to meet these duties, they are expected to seek direction from their senior minister.