MPs ‘astonished’ at lack of pandemic economic impact planning

A cross-party group of MPs has said it is ‘astonished’ that the government failed to plan for how it might deal with the economic impacts of a pandemic, like COVID-19.

In a wide-ranging report published today (23 July), the public accounts committee said the last pandemic simulation exercise, Exercise Cygnus took place in 2016.

According to the report, it was focused around health issues and added it is ‘astounding that the government did not think about the potential impact on the economy’ and that the that the Department for Business, Energy and Industrial Strategy (BEIS) was not even aware of the exercise.

And despite the first reported case of coronavirus being confirmed by the Chief Medical Officer in England on 31 January, the Treasury did not announce plans for significant funding to support businesses and individuals until the budget on 11 March, and it did not become clear to the Treasury until the following week that a furlough scheme would be needed.

The report states 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 reliable information.

But it does credit the HMRC for successfully delivering the Coronavirus Job Retention and Self Employment Support schemes to assist over 10m individuals.

The report also warns that Whitehall has not given local authorities the clarity or support they need over longer-term funding.

‘Central government promised that local authorities would have the resources they needed to respond to the COVID-19 crisis, but many local authorities are facing income shortfalls and increased demand and will not be able to fund crisis spending out of their current resources,’ the report states.

‘The government is working on a comprehensive solution to provide more certainty to local government and it will look at long-term funding as part of the next Spending Review, but local authorities need clarity now so that they can plan and prioritise future spending,’ it adds.

‘This is vital if we are to avoid the situation of local authorities getting into acute financial difficulties and having to issue section 114 notices imposing spending restrictions. The Ministry is monitoring monthly returns from councils to identify funding problems but has not yet published these.’

A UK Government spokesperson said: ‘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 £160bn. The next stage in our economic response will make a further £30bn available to ensure all areas of the UK bounce back.

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