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Tue, 11 August 2020

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Coronavirus: cost of pandemic fight nears £190bn — including ‘eye-watering’ £15bn on PPE for frontline staff

Coronavirus: cost of pandemic fight nears £190bn — including ‘eye-watering’ £15bn on PPE for frontline staff

Chancellor Rishi Sunak unveiled fresh measures to tackle the effects of the virus on Wednesday. (Image: PA)

3 min read

The Government has spent almost £190bn combating the coronavirus pandemic since March, Treasury figures show.

Numbers released alongside Chancellor Rishi Sunak’s £30bn summer economic update reveal that the Government has already provided a higher-than-expected £158.7bn in direct support schemes in response to the virus.

That includes an extra £48.5bn spent on public services — including more than £15bn to secure personal protective equipment for frontline staff.

And £10bn has been allocated to the NHS’s ‘Track and Trace’ programme to try to limit the spread of Covid-19.

The massive spending on PPE is more than the Home Office’s entire budget for 2019/20, which stood at around £12bn.

The Institute for Fiscal Studies think tank said the latest Treasury price-tag — which came as Mr Sunak unveiled a raft of new measures to try to revive the economy and protect jobs — was billions higher than predicted.

IFS deputy director Carl Emmerson said: “New figures released by the Treasury suggest that the total cost of temporary measures announced since the Budget stood at almost £160 billion, almost £30 billion higher than the latest estimate from the Office for Budget Responsibility of £133 billion. 

“The main difference is that the Treasury has now allocated an additional £49 billion to spending on public services since March, which is £33 billion higher than the OBR’s June estimate. Of this £49 billion over £30 billion has gone to health services – including £15 billion on purchases of Personal Protective Equipment.”

He added: “The Treasury estimates that the measures announced by the Chancellor Rishi Sunak in today’s statement could have a direct cost of up to £30 billion, with the biggest new giveaway likely to be the payment to employers of £1,000 for every furloughed employee who is kept in their employment. 

“The overall direct cost of fiscal policy measures since March therefore now stands at almost £190 billion, which is equivalent to almost 9% of what the UK economy produced in 2019–20.”

The IFS said there was now a “huge amount of uncertainty” around the UK’s public finances, with the fresh plan unveiled by the Chancellor “likely to push the deficit further above £300 billion, which would be easily the highest as a share of national income since the Second World War”.

But Mr Emmerson warned against attempts to reduce the deficit — the gap between what the government spends and what it takes in in taxes — too quickly, pointing out that extra borrowing was being taken on “at very low interest rates”.

“What matters more for the public finances will be the extent to which the economy manages to bounce-back strongly,” he said.

“If – as is likely – the economy does not fully recover then future fiscal events are likely to involve a less pleasant set of announcements over the extent to which taxes need to rise to restore the health of the public finances. 

“But those decisions can – and should – be left for another year.”

But the Institute of Economic Affairs, a free-market think tank, questioned the scale of the public spending.

The IEA’s Christopher Snowdon told The Telegraph that the figures for PPE procurement were “eye-watering” and said a “lack of preparation” by health officials had left the UK exposed.

“A global shortage made it inevitable that we would pay over the odds for PPE,” he said.

Meg Hillier, the Labour MP who chairs the Commons Public Accounts Committee, said the Govenrment had “questions to answer” over the fledgling test and trace programme which she warned “won’t be supporting the unlocking of the economy for some time to come”.

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