Source · Select Committees · Public Accounts Committee
Recommendation 21
21
The total cost of the schemes is now estimated to be £76 billion, with OBR...
Conclusion
The total cost of the schemes is now estimated to be £76 billion, with OBR estimating that the extensions to the schemes will add an additional £21 billion to the total. We asked the Departments what calculations they had made of the value for money provided by the schemes. HM Treasury told us that the introduction of the schemes in March did not lend itself to traditional cost-benefit analysis because “it was not a marginal change in policy” but “a major structural change” almost without parallel in recent history. It told us that at the point at which ministers had to decide whether to intervene in the economy the cost of doing so could not be known with any certainty. It explained that it had no way of predicting in March what the impact of the schemes would be, in part because it did not know how long the lockdown would last or what the future costs of the pandemic would be.56
Government Response
Not Addressed
HM Government
Not Addressed
7: PAC conclusion: We are concerned that HM Treasury is unable to explain how much the extended schemes are forecast to cost or what would constitute value for money. 7: PAC recommendation: HM Treasury should write to the Committee within a month to set out how it will assess value for money for the extended schemes. 7.1 The government agrees with the Committee’s recommendation. Recommendation implemented 7.2 As requested by the Committee, the Permanent Secretary to the Treasury wrote to the committee 29 on 20 January 2021 outlining how HM Treasury will assess value for money (VFM) for the extended schemes. HM Treasury considered the VFM of the schemes and subsequent changes at key stages of the policy making process. Ensuring VFM, protecting employment and supporting businesses were central to the decision-making for the CJRS and SEISS extensions. Extending the CJRS was a critical response to the economic conditions, and the Office of Budget Responsibility have estimated that this extension will support up to 6 million jobs in November 2020 declining thereafter. The OBR have also estimated that unemployment would have been higher in the second quarter of 2021 in the absence of the CJRS and other measures. 7.3 The revised cost of the CJRS and SEISS will be set out at the next Budget in March 2021. Given the economic and fiscal significance of the CJRS, HM Treasury and HMRC are undertaking an evaluation of the schemes. 7.4 In December 2020, the departments published the Evaluation Plan for the CJRS, which sets out their approach to evaluating the CJRS. 7.5 The CJRS evaluation will draw on the Magenta Book and Green Book. The departments also plan to evaluate the SEISS, although self-assessment data will not be available until at least 2022.