Sunak overrides HMRC perm sec's value-for-money concerns over jobs bonus and meal discount schemes

Chancellor says there are “compelling” reasons to press ahead with post-furlough and Eat Out to Help Out schemes
Rishi Sunak gave the ministerial directions this week. Photo: WIktor Szymanowicz/NurPhoto/PA Images

Rishi Sunak has overridden concerns that the job-retention bonus for businesses and the “Eat Out to Help Out” scheme he announced earlier this week may not provide value for money.

In two letters published yesterday, the chancellor formally directed HM Revenue and Customs permanent secretary Jim Harra to enact the two schemes “with immediate effect”, after Harra said there was “uncertainty” that they would comply with Treasury guidance.

The programmes will see the Treasury pay £1,000 to companies for each employee they bring back from furlough for at least three months, and subsidise discounts for midweek meals at restaurants during the month of August. They are part of a three-point jobs plan unveiled by the chancellor in his Summer Statement on Wednesday.

But Harra said to enact them, Sunak would have to give a written ministerial direction – which perm secs must ask for when they believe a proposed policy or programme would breach the Treasury’s Managing Public Money guidance.

In a letter to Sunak on Tuesday, ahead of the announcement, Harra said there was a “sound policy rationale” for providing businesses with a cash incentive to keep workers on amidst the continued economic uncertainty.

But he said advice seen by both him and the chancellor “highlights uncertainty around the value for money of this proposal”.

Based on this advice, Harra said he was unable to conclude that the policy represented value for money to the standards expected by the Managing Public Money guidance.

The tax agency boss said it had “proved difficult” to model the bonus scheme against an alternate scenario, because its ultimate cost and the number of jobs it will protect are both “highly uncertain”.

“That uncertainty also applies to the efficiency of the measure,” he added.

Harra also pointed out that the “propriety risk of nugatory spend” would increase if there was any delay to the scheme, and that the risk would be greater the more HMRC paid out.

In a second letter, Harra said the novel nature of the Eat Out to Help Out initiative meant there were “particular value for money risks surrounding the level of potential losses that could arise”.

In both cases, Harra said it would be “entirely appropriate” for the chancellor to direct him to launch the schemes, given the economic impact of Covid-19.

Sunak said he recognised the Managing Public Money concerns the proposals raised.

“However… there are broader issues that I am able to weigh in my decision that you are not able to accommodate in your own assessment,” he said.

And in both cases, he said there were “compelling” reasons to press ahead.

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