News | Published July 23 2020

Committee criticises lack of planning for economic impact of Covid-19 pandemic

The Commons Public Accounts Committee has criticised the government for what it calls an “astonishing” failure to plan for the economic effect of a pandemic situation, adding that Westminster’s response to the Covid-19 crisis was rushed.

The committee warned that the economic effects of the pandemic could be long-term and was critical of the Treasury for waiting until March to introduce economic support initatives.

The government has said that it regularly tested its pandemic plans which allowed for a quick response.

The Commons Public Accounts Committee’s criticism comes after official figures showed that the economy shrank by a greater margin than anticipated in January and March, having contracted by 2.2 per cent.

The committee urged the government to “ensure it doesn’t repeat its mistakes again” should a “second spike” or “another novel disease outbreak” come to pass.

The body of MPs said: "We are astonished by the government's failure to consider in advance how it might deal with the economic impacts of a pandemic."

The report acknowledged that the government took part in a pandemic simulation exercise in 2016 called Exercise Cygnus, but said that the Department for Business, Energy and Industrial Strategy had no knowledge that the exercise took place.

The committee added: "It is astounding that the government did not think about the potential impact on the economy."

The committee added that although the first official case of Covid-19 in the UK was confirmed on January 31, the Treasury did not announce plans for “significant funding” to support businesses and people until the March 11 Budget and “it did not become clear to the Treasury until the following week that a furlough scheme would be needed”.

The committee continued: "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."

Its report said that more transparency in the government’s decision making was required and said that ministers had been slow to take action on issues including the UK test and trace system, recommending that the Cabinet Office review its crisis command procedures to “ensure longer-term decision making” in future.

Other areas of the government’s response in line for criticism included the procurement of personal protective equipment [PPE], where the committee highlighted “fundamental flaws” both in procuring and distributing key equipment.

The report said on the matter: "Despite a pandemic being identified as the government's top non-malicious risk, it failed to stock up in advance."

The report also set out the task that the country will not face in ensuring that long-term school closures do not bring “long-term or irreversible effects” upon the wellbeing of children and young people and their “future health and education”.

A government spokesperson said in the wake of the 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 spokesperson added that a further £30 billion in funding will become available for the next stage of the government’s response, with £100 million dedicated to help children who are educating themselves at home and £28 billion going to local councils, businesses and communities across the country.

Labour MP for Hackney South and Shoreditch, Meg Hillier, who chairs the Public Accounts Committee said: "Pandemic planning 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 of necessity rushed and reactive, initially a one-size-fits-all response that's leaving people - and whole sectors of the economy - behind."

Hillier called on the government to “take honest stock” and learn from the Covid-19 situation and “change course” where required in order to build confidence that there is “serious thinking” going on in Westminster about how to handle a possible second wave.

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Authored by

Alexander Bridge-Wilkinson
Junior Editor
July 23 2020

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