PAC chair 'dumbstruck' as perm secs admit lack of economic planning for a pandemic

Economic support packages designed "as we have gone along", Sir Tom Scholar tells MPs

Civil service chief operating officer Alex Chisholm. Photo: Parliament TV

The government’s pandemic response planning did not look include economic modelling of large-scale layoffs or people being unable to work, it has emerged.

Civil service chief operating officer Alex Chisholm told MPs on the Public Accounts Committee yesterday that although the government’s planning for a nationwide disease outbreak went back “many years”, economic planning for companies shutting down was not in place before this year’s Budget.

The revelation, which PAC chair Meg Hillier said left her “dumbstruck”, means Treasury officials had to draw up entirely new plans in the run-up to the Budget to support businesses and individuals likely to be affected by Covid-19.


Chisholm was giving evidence to the committee on government’s response to the coronavirus crisis, alongside Treasury permanent secretary Sir Tom Scholar, Ministry of Housing, Communities and Local Government perm sec Jeremy Pocklington, Department for Business, Energy and Industrial Strategy acting perm sec Sam Beckett, and Treasury director general Cat Little.

The newly-instated COO said a pandemic had been identified as the “single top non-malicious risk for the government”.

In 2016, the Cabinet Office, the Department of Health and Social Care and NHS England simulated an influenza pandemic in an operation known as Exercise Cygnus – which found the UK was inadequately prepared for such a crisis.

But asked whether the government had used that exercise to model the steps it would need to take to mitigate the economic impact of a virus, Chisholm said: “I’m not aware of any direct actions that were taken on the economic side.”

The first schemes to support businesses, including tax breaks, grants and loans, were announced in the Budget on 11 March, and had to be designed from scratch, Scholar told the MPs.

“We developed our economic response in the weeks leading up to the Budget... We didn’t have these schemes ready and designed and ready to go. We have been designing them as we have gone along,” Scholar said.

Later announcements included the introduction of the coronavirus job retention furlough scheme, through which the government agreed to pay up to 80% of the wages of people who were unable to work because of the restrictions government put in place to reduce the spread of coronavirus.

“The need for a bigger support package materialised alongside decisions elsewhere in the government on imposing restrictions that would, in effect, make it impossible for people to work. So the development of a package to support those people proceeded alongside the decisions on public health grounds to impose those restrictions,” Scholar said.

The Treasury perm sec added that he did not know “to what extent the Treasury was involved” in the 2016 pandemic simulation.

The furlough scheme, as well as measures to support self-employed people unable to work during the pandemic, have been criticised as there remain some people who are not eligible for financial aid.

Scholar said one of the challenges in supporting self-employed people was having “insufficient reliable information” on earnings and the number of people needing support, since tax returns are not filed contemporaneously.

Pressed on the gaps in the self-employed support scheme, Scholar said: “We are aware that the scheme isn’t universal in its coverage. As you would expect, we’ve had a lot of correspondence and representations about that… these are things that we keep track of and keep under review in terms of our advice to ministers on the coverage of the schemes.”

Responding to the comments, Hillier said: “We were very surprised – gobsmacked, wouldn’t be too small a word to use – to say that there hadn’t been a proper economic planning, contingency planning, for this coronavirus.”

Chisholm said he would write to the committee providing further detail on the lack of economic planning for a pandemic.


Economics Economy
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