'Unfair' to criticise sky-high spending on Covid schemes, Sunak says

Chancellor defends £37bn spent on test and trace scheme and cost of furlough fraud
Screenshot: Parliament.tv

It is “unfair” to be overly critical of the way money was spent on NHS Test and Trace and Covid financial support schemes last year, given the speed at which they had to be put in place, Rishi Sunak has said.

In a comprehensive grilling before MPs yesterday, which focused on last week’s Spending Review announcement, Sunak defended the huge amount of money spent on emergency projects set up to deal with the coronavirus crisis.

Members of parliament’s Treasury Committee asked how the government expected to hold departments to account for their spending, given the £37bn cost of the test and trace programme and the tens of billions of pounds likely lost to fraud in business support schemes.

“I completely agree with you that people should expect and demand that their money is spent properly… I focus on it, we focus on it as a department,” the chancellor said.

“I do think it’s slightly unfair to focus on Covid schemes that were put in place at a time of national crisis, at enormous speed.”

Last October, the National Audit Office said HM Revenue and Customs "could have done more" to prevent fraud in its furlough scheme, after permanent secretary Jim Harra estimated 5-10% of applications may have been claimed fradulently or in error.

The Public Accounts Committee also released a highly critical report this summer noting that the Department for Business, Energy and Industrial Strategy has estimated it could lose up to £27bn through fraud or credit issues on the Bounce Back Loan Scheme.

Sunak said that whenever he had been grilled by MPs in parliament or select committees during the crisis about the Covid schemes, “nobody, not a single person... was saying, ‘please can you go a bit slower, chancellor? Actually what we really want are more checks because we want this money to take longer to get to people.’

“So on the Covid side, that is what it is… I said it at the time, when you’re in a crisis, you’re going to end up casting the net wider than you would in peacetime,” he added.

However, he said the country is “now through” the pandemic, and that committee members were “absolutely right” to push him and departments to ensure money is not being wasted.

“You can rest assured that I am holding departments to account to deliver on all these things. That’s the benefit of a three-year spending review,” he added.

'Hopefully some things go our way'

Asked how he could be sure that departments can stick to the budgets they have been given – particularly if unexpected costs arise in the coming years – Sunak said: “As you would expect, we’ve had quiet a lot of time to prepare for this multi-year Spending Review.”

He said the Treasury had worked with departments ahead of the Spending Review to quantify “known risks”, and built in an “appropriate margin that would be built in for departments to build around”.

He said there is “contingency built into the spending numbers” for both revenue and capital spending.

“Hopefully some things just go our way, hopefully the risks are not all asymmetric to the downside,” he added.

Later in the same session, Sunak defended his decision to raise taxes at the budget announcement, saying the extra funds will be needed to "fix the damage that coronavirus has done".

"We can look at the taxes and, yes, people are paying more, they're going to pay the new health and social care levy, no-one is pretending otherwise, that takes money from people, that's why in an ideal world I would prefer not to have to put taxes up on people," Sunak said, referring to a 1.25% National Insurance contribution rise that will take effect in April.

However, he argued that it is “slightly unfair” to say tax rises are damaging people’s standards of living “because people's quality of life is also influenced by the quality of the public services that they get”.

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