Dame Meg Hillier by UK Parliament is licensed under CC BY 3.0
As the national lockdown loomed in March 2020 concerns about money were mostly from individuals and businesses worried about how they would survive financially.
The Public Accounts Committee was crystal clear about its role: the committee was concerned with and would continue to scrutinise how the government managed taxpayers’ money in a national emergency.
From June of 2020, with the support of the National Audit Office, we were able to start looking closely, and in close to “real time”, at government spending on Covid measures.
We were right to focus on the money. About £376bn was allocated to Covid support over the two years of the pandemic – more than double the NHS budget for England for the year to 2020.
Part of our role was to try to help the government learn from early mistakes in delivering Covid support and recovery programmes.
The public inquiry finally underway will of course be able to examine this more fully, but we knew we had a role in real time, as well as helping the government assess risk better in the future.
For example, the discovery of the VIP lane for PPE contracts (and let’s not forget at the last count there were 176 PPE contracts in dispute, representing about another £2.7bn at risk) underlined that without transparency, decisions made at speed can lead to undue profits at a cost to the taxpayer – some middle men made millions of pounds just for facilitating introductions.
Experience underlines the need for real-time audit in these situations. The National Audit Office and PAC had to balance this urgency with the very real pressures on departments and civil servants, and the Committee has always been clear that in those early weeks the necessity for speed meant that there would be risks to taxpayers’ money.
The pace at which new schemes were introduced meant that there were calculated and unforeseen risks. Some have been critical of the PAC for worrying about money when people were dying. But it is of course also the job of the government to be cognisant of the longer-term consequences of actions taken today.
What we wanted to see and understand was that anyone spending or allocating funds had a realistic understanding of the range of costs involved, the risks they were balancing and how to learn quickly. Any wildly out-of-kilter budget was a concern, as was any gung-ho approach that refused to recognise that there was more than one right answer to the challenges the government faced.
There are some obvious lessons. In an emergency, the government needs to learn to ‘fail fast’ rather than stick doggedly to one approach. This also requires a better understanding of relative risks of different approaches, and of the balance of risks to value for money against wider risks to health and the economy. The Committee was more sympathetic to departments that had understood the risks and had a plan to reduce these as quickly as possible.
Fraud in government expenditure has risen to £21bn in the two years following the pandemic, from £5.5bn total in the two years previous. Even departments such as HMRC and DWP, which are best at recognising the risk of fraud, still did not do enough to crack down on fraud as quickly as they could. The longer it takes to identify money fraudulently gained, the harder it is to recover.
There was an assumption that existing systems would offer more protection than they are in fact able to. Weaknesses in Companies House data and the variability of local government business rates systems both made major contributions to the mistakes and unacceptable rates of fraud in the Covid business loan and grant schemes.
And the cost of austerity to resilience in public systems was a key factor. Everything from outdated local authority finance systems and creaking databases, to the ill-planned out announcement of headcount reduction in the civil service (usually code for lost expertise that future recruitment drives never really replace) had an impact on catching fraud and saving money.
The use of consultants mushroomed – in the Test and Trace programme, many simply duplicated roles at extremely high cost – and there must be a transfer of knowledge where organisations outside Whitehall carried out critical work.
Above all the detail, there was a push from ministers to act at speed – whatever the risk to spending. With better planning some of the risks could have been mitigated.
I have served as a government minister and I understand the impact that urgent situations can have on decision making. But at times of emergency we need cool heads and more transparency, not less.
And at the bottom line, if even half of the billions of pounds wasted was recoverable we’d be having less debate about NHS and school funding. Every pound spent matters as much if not more now than it did then.
There is a long tail to Covid spending – business recovery loans were for up to 10 years and some of the culture loans run for 20 years. We all need to be watching this money for many years to come.
