Two of Rishi Sunak’s plans to boost the economy were not signed off as being value for money by the civil service.
The chancellor’s pledges to subsidise meals out and pay firms for each employee retained into the new year came without the approval of the permanent secretary at HMRC, Jim Harra.
That and a reported admission by Mr Sunak some of the taxpayers’ money being spent is “deadweight” have led to criticism from Labour he is wasting cash by not targeting it enough at those who need it.
Ministers are putting in unprecedented state support in a bid to revive the economy during what the chancellor says is already a “very significant recession” caused by the coronavirus lockdown.
Around £30bn was committed by Mr Sunak on Wednesday.
But two of the promises have come into question after Mr Harra – the most senior civil servant at HMRC – said he could not support them in a letter sent on Tuesday, but published on Thursday.
“As you know, it is my personal responsibility as principal accounting officer to ensure that the department’s use of its resources is appropriate and consistent with the requirements as set out in Managing Public Money (MPM),” he said.
“The advice that we have both received highlights uncertainty around the value for money of this proposal and it is upon this advice that I have reached my conclusion that I am unable to reach a view that this represents value for money to the standards expected by MPM.
“It has proved difficult to establish a counterfactual for this scheme, which depends on the overall cost of the scheme and the number of extra jobs it would protect both of which are currently highly uncertain.
“That uncertainty also applies to the efficiency of the measure.”
He added that he required “written instruction” directly from Mr Sunak to proceed.
The chancellor wrote back on the same day saying “there are broader issues that I am able to weigh in my decision” that an independent civil servant is “not able to accommodate in your own”.
He insisted that without bringing in a £1,000 payment for each employer that brings back a furloughed colleague until at least next year, “jobs will be at acute risk.”
And he added that the “eat out to help out” scheme was needed because “restaurants and cafes are likely to see lower demand than usual, even as concerns about the safety of going out for a meal or a coffee gradually fall away” now “the time is right for people to experience going out again”.
In an interview with the BBC earlier on Thursday, Mr Sunak also admitted some money was being spent where it wasn’t needed.
“Without question there will be deadweight and there has been deadweight in all of the interventions we have put in place and there will be some degree of moral hazard,” he said.
“In an ideal world we wouldn’t be doing those things but in order to get something like the furlough scheme up and running in the few weeks that we did, we did not have the luxury of being able to design something that would target exactly everyone who specifically needed it.”
Labour claim the government had months to prepare for the end of the COVID-19 lockdown and design targeted support but “instead we have an on-the-hoof fix that the chancellor himself admits risks wasting billions of pounds of taxpayer money”.
Shadow chief secretary to the Treasury Bridget Phillipson said: “Hard-pressed sectors where thousands of jobs are at risk, like aviation, oil and gas, and tourism, will be missing out on the help they need while companies who are returning to normal get public money they don’t.
“The chancellor should be targeting support on those who need it, not handing it out aimlessly to those who don’t. It’s not brave to admit the government plans to waste billions at a time when others are crying out for support.”
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