Government’s failure to plan for economic impact of coronavirus pandemic ‘astonishing’, says financial watchdog

A report by financial watchdogs has slammed the government’s economic reaction to the pandemic as “astonishing” and warned that the Cabinet Office and Treasury must “learn the lessons” or risk making “similar mistakes” if a second wave of coronavirus were to hit the UK.

The cross-party Commons Public Accounts Committee (PAC) published a scathing report that found the government’s financial planning when Covid-19 hit was rushed and has left whole sectors behind.

The committee said it was “astonished” to learn that the government failed to consider how it might deal with the economic impacts of a national disease outbreak despite the threat of a pandemic being one of its “top risks for years”.

It said the Treasury did not announce plans for funding to support businesses and individuals until 11 March, over a month after the first case of Covid-19 was confirmed in England, and that it did not become clear to the Treasury until the week after that a furlough scheme was necessary.

“The lack of prior thinking on the types of schemes that may be required led to a delay in implementation because the government needed to design the schemes from scratch, particularly in relation to the self-employed scheme where it lacked sufficient, reliable information on who the recipients should be, causing unnecessary uncertainty for businesses and individuals,” said the committee.

Meg Hillier, Labour chairwoman of the committee, said: “Pandemic preparation is the bread and butter of government risk planning, but we learn it was treated solely as a health issue, with no planning for the economic impacts.

“This meant that the economic strategy was rushed and reactive, initially a one-size-fits-all response that’s leaving people – and whole sectors of the economy – behind.

“A competent government does not run a country on the hoof, and it will not steer us through this global health and economic crisis that way,” she added. “Our government needs to take honest stock now, learning, and rapidly changing course where necessary.

“We need reassurance that there is serious thinking behind how to manage a second spike. This is not some kind of competition – this is our nation’s lives and livelihoods at stake.”

The report called for more transparency in the government’s decision-making, stating that it has been slow “on important issues”, such as the NHS Test and Trace programme. It also criticised the “stop-start” approach to school closures, stating the risk of “major harm to many children’s life chances, exacerbating already-existing inequalities”.

“The government’s response in some areas has been poorly coordinated and has not adequately taken into account long-term impacts on people and communities,” it added.

The PAC report also criticised the issue of how personal protective equipment (PPE) was handled, as shortages of such vital equipment greatly affected the NHS and the care sector at the height of the pandemic.

“We recognise that the government was faced with a massive challenge to procure a huge quantity of PPE for 58,000 separate sites including hospitals and care homes. But despite a pandemic being identified as the government’s top non-malicious risk, it failed to stock up in advance.

“The Department of Health and Social Care was not focused enough on the challenge of how to identify need in the care sector and ensure supply of PPE,” it said.

It was recommended that the Cabinet Office reviews its “crisis command structures” to ensure any future or long-term decisions are “properly informed and coordinated effectively” throughout the government.

The committee also called for greater involvement with businesses regarding their needs and said the Treasury should engage with key sectors and industries to “develop bespoke support measures aimed at helping those businesses through the ongoing effects of the pandemic”.

It added: “Central government has not given local authorities the clarity or support they need over longer-term funding.”

A government spokesperson said in response to the PAC report: “As the public would expect, we regularly test our pandemic plans – allowing us to rapidly respond to this unprecedented crisis and protect the NHS.

“It was clear that Coronavirus would affect all areas of the country, that’s why we immediately put in place an unprecedented initial economic support package for jobs and business worth £160 billion. The next stage in our economic response will make a further £30 billion available to ensure all areas of the UK bounce back.

“We’re providing over £100 million to support children to learn at home and a £1 billion Covid catch up fund will directly tackle the impact of lost teaching time, as schools and colleges welcome children back in September. In addition, we’ve committed almost £28 billion to local areas to support councils, businesses and communities.

“Over £3 billion of additional winter funding will be available immediately to the NHS to prepare for the risk of a second peak and we continue to work around the clock to ensure PPE is delivered as quickly as possible to those on the frontline.”