Report

by the Comptroller
and Auditor General

Overview of the UK government’s response to the COVID-19 pandemic

HC 366 Session 2019–2021 21 may 2020

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Report by the Comptroller and Auditor General

Ordered by the House of Commons
to be printed on 20 May 2020

This report has been prepared under Section 6 of the National Audit Act 1983 for presentation to the House of Commons in accordance with Section 9 of the Act

Gareth Davies
Comptroller and Auditor General
National Audit Office

19 May 2020

This report is the first of a programme of work to be undertaken by the National Audit Office (NAO) to support Parliament in its scrutiny of the UK government’s response to COVID-19. It provides a summary of the government’s actions to date. It does not assess the value for money of the measures adopted by government or the effectiveness of its response.

© National Audit Office 2020

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009137 05/20 NAO

The National Audit Office study team consisted of:
Leon Bardot, Eleanor Fairbairn, Yusra Haji Abdilkadir, Pauline Ngan, Poppy Sparham, Katie Taylor and Nadia Xarcha, under the direction of Sian Jones.

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Summary

Introduction

1 Significant outbreaks of disease are among the greatest risks faced by any society, threatening lives and causing significant disruption to public services and the economy. The scale and nature of the current COVID-19 pandemic and government’s response is unprecedented in recent history.

2 The UK government is implementing an extensive range of measures in response to the COVID-19 pandemic. This report presents a factual summary of:

the background (Part One);

government activity and costs (Part Two); and

our approach to examining the UK government’s response (Part Three).

3 This report is the first of a programme of work to be undertaken by the National Audit Office (NAO) to support Parliament in its scrutiny of the UK government’s response to COVID-19. It provides a summary of the government’s actions to date. It does not assess the value for money of the measures adopted by government or the effectiveness of its response.

4 The report covers the main actions taken by the UK government in England, as well as the funding provided to support responses in the devolved administrations of Northern Ireland, Scotland and Wales. It does not cover the individual responses in the devolved administrations, or the separate responses implemented by local authorities. The report covers the government’s response up to 4 May 2020, and also includes any significant additional commitments (defined as those over £0.5 billion) the government announced between 4 and 15 May. More details on our audit approach, our evidence base and its limitations are available in paragraph 9 and Appendix One.

Key findings

5 The UK government mobilised a wide-ranging response to COVID-19 across five response areas:

Health and social care responses covering service delivery, equipment, testing, services and vaccine development.

Other public services and emergency responses across all public services, both local and national.

Support for individuals affected by the pandemic, including benefits and sick pay, direct support to individuals or households and deferring tax payments.

Support for businesses affected by the pandemic, including support for retaining jobs, loans and grants.

Other support including international aid and providing the public with information.

6 The costs of the government’s response are large and uncertain and will depend on the continuing health and economic impacts of the pandemic. The report covers the government’s response up to 4 May 2020. It also includes any significant additional commitments (defined as those over £0.5 billion) the government announced between 4 and 15 May, giving a total of £124.3 billion.1 This covers grants and other payments (£111.3 billion); expected costs of loans (£5.0 billion) and increases to benefits (£8.0 billion). This does not include loss of receipts to the Exchequer of £4.4 billion, largely from deferred tax payments.

7 As of 4 May, there had been 11 ministerial directions related to the government’s responses to COVID-19, largely arising from the substantial and urgent additional spending commitments. A ministerial direction is sought when the permanent secretary of a department thinks that a spending proposal breaches any of the following criteria: regularity; propriety; value for money or feasibility. In relation to COVID-19, ministerial directions have been sought and granted to exceed Departmental Expenditure Limits authorised by Parliament for 2019-20 to support urgent spend; and because it had not been possible for departments to carry out as full an appraisal of the value for money of some schemes as would usually be undertaken.

8 Of the £124.3 billion committed to responding to COVID-19:

£6.6 billion was to support the health and social care response (not including £13.4 billion of NHS debt that has been written off);

£15.8 billion was for other public services and the wider emergency response;

£19.5 billion was for support measures for individuals;

£82.2 billion was for financial support for businesses;2 and

£0.2 billion was for other support.3

These cost commitments are those that we have been able to identify for central government spending, based on estimates from departments and the Office for Budget Responsibility (OBR). The cost commitments do include the UK’s government’s allocation of funding to local authorities in England and devolved administrations of Scotland, Wales and Northern Ireland but do not include further spending decisions taken by them. Some of these commitments are likely to change over time for a given period of support, which may lead to adjustments in costs and receipts.

9 The aim of this report is to provide a broad overview of activity and estimated costs. Events are moving quickly and the UK government’s response to COVID-19 is evolving. The figures in this report are initial estimates of costs and our best understanding of the announced measures. Many costs are not yet final as the UK government’s response continues. Precise costs will also depend on a range of uncertain factors, including the impact of the crisis on the wider economy and the level of take-up for each scheme. As a result, there are limitations and uncertainty in the information available. Limitations include:

The completeness and quality of cost information. We have not audited individual programme costs.

The overlap between COVID-19 additional funding and costs that are business-as-usual. Funding may not represent the net additional cost to government (i.e. how much additional funding to departments and devolved administrations will eventually be required), as in some cases the measures will be deliverable through the reprioritisation of existing funding and resources.

For a number of policies, this report uses OBR estimates of policy costs (last updated on 14 May) which capture the direct impact of new policy measures on cash borrowing in 2020-21 and are based on their ‘coronavirus reference scenario’ (published on 14 April). The OBR website (https://obr.uk/coronavirus-analysis/) explains the assumptions underpinning these in more detail. Further details can be found in Appendix One.

Technicalities such as Barnett formula adjustments (applied to funding from the UK government to the devolved administrations) have been explained where they are known to be included within costs but may not be identified in all cases.

Departments have reviewed and commented on the activities and costs relating to them. HM Treasury has commented on some aspects of the report but has not fact checked all the figures.

1 The £124.3 billion figure represents the sum of the £6.6 billion to support the health and social care response (paragraph 2.4) and the amounts we present in Figures 4 to 7 excluding loss of receipts to the Exchequer. Significant additional commitments announced between 4 and 15 May totalled £12.8 billion. The sources are government departments and the Office for Budget Responsibility (OBR).

2 Includes: an estimated £50 billion in financial support for businesses to furlough employees, which also represents a support measure for individuals; and the current estimate of £5 billion for the cost of loans to businesses in 2020-21, although the full cost of these loans will not be known for some time.

3 Source for information on costs of support for health and social care, other public services and emergency responses, and other support: government documents and websites. Sources for information on costs of support for individuals and support for businesses: government documents and websites and OBR. Cost information has not been audited.

Part One

Background

1.1 Significant outbreaks of disease are among the greatest risks faced by any society, threatening lives and causing extensive disruption to public services and the economy. The scale and nature of the current COVID-19 emergency and government’s response is unprecedented in recent history.

Stages of the pandemic

1.2 As of 4 May 2020, the UK government had made more than 500 announcements on its responses to the pandemic. These responses are covered in more detail in Part Two. A timeline of key events is set out in Appendix Two.

1.3 The government launched its action plan in response to the pandemic on 3 March 2020. It set out its four-stage strategy:

Contain: detect early cases, trace close contacts to avoid the spread of the disease, and prevent it taking hold in the UK for as long as is reasonably possible. On 12 March, the government announced that the country had moved from the Contain to the Delay stage.

Delay: slow the spread of the disease in the UK. If it does take hold: lower the peak impact; push it away from the winter season.

Research: better understand the virus and the actions that will lessen its effect on the UK population; innovate responses, including diagnostics, drugs and vaccines; use the evidence to inform the development of the most effective models of care.

Mitigate: provide the best care possible for people who become ill; support hospitals to maintain essential services; ensure ongoing support for people ill in the community to minimise the overall impact of the disease on society, public services and on the economy.

Preparations for the Research and Mitigate stages began during the Contain stage. As of 4 May, the Delay, Research and Mitigate stages are still ongoing.

1.4 A wide range of organisations are involved in delivering the UK government’s response to COVID-19 (Figure 1), including government departments, local authorities, other public sector organisations, private sector organisations and charities. For example, broadcasters have played an important role in helping the government to get its messages across, such as the importance of hand-washing and social distancing in preventing and slowing the spread of COVID-19.

1.5 Local authorities play a significant role in the UK government’s response to COVID-19 across all the response areas. Government’s funding commitments include contributions towards the additional costs that this response imposes on local government. Local authorities will be managing these central obligations alongside their other locally initiated responses, which are not reflected in this report. Obligations include the following:

Health and social care. Local authorities aim to: work with care providers to coordinate social care beds so patients can be quickly and safely discharged from hospitals; ensure viable care home provision during the outbreak; contact all registered care providers in the local authority area and establish plans for mutual support and aid across the area (for example, by sharing care workers between supported living and home care providers); and support the local distribution of items of personal protective equipment (PPE).

Other public services and emergency responses. Local authorities aim to: provide accommodation and social care basics such as food and health support to homeless people sleeping rough or in shelters; work with local education providers to ensure enough school places for children of key workers and vulnerable children; and manage additional demands on local death management systems (for example, collecting information from mortuaries on capacity in local systems).

Support for individuals. Local authorities aim to: coordinate local support systems of volunteers, charities and local access to provide emergency food support to those people classed as clinically extremely vulnerable; and use the Hardship Fund to reduce council tax bills for working-age people in receipt of Local Council Tax Support.

Support for businesses: Local authorities aim to: administer grant schemes to small businesses and retail, hospitality and leisure businesses, which were set up with Department for Business, Energy and Industrial Strategy funding to respond to COVID-19-related disruption; and administer the business rates holiday for retail, hospitality and leisure businesses, estate agents and nurseries for the 2020-21 tax year.

Other support. Local authorities aim to maintain transparent local democracy during lockdown by using new powers to hold public meetings remotely by video or telephone.

Governance and decision-making structures

1.6 The Cabinet Office has set out the governance and decision-making structures for the UK government’s response to COVID-19. They comprise a Cabinet Secretariat with four Ministerial Implementation Committees representing health, international, economic and wider public services led by relevant ministers (Figure 2). Departments also have their own reporting structures and governance.

Ministerial directions

1.7 Ministerial directions are formal instructions from ministers telling their department to proceed with a spending proposal, despite an objection from their permanent secretary. Permanent secretaries, who are directly accountable to Parliament for how the department spends its money, have a duty to seek a ministerial direction if they think a spending proposal breaches any of the following criteria:

regularity – if the proposal is beyond the department’s legal powers, or agreed spending budgets;

propriety – if it does not meet “high standards of public conduct”, such as appropriate governance or parliamentary expectations;

value for money – if something else, or doing nothing, would be cheaper and better; and

feasibility – if there is doubt about the proposal being “implemented accurately, sustainably or to the intended timetable”.4

1.8 To seek a ministerial direction, the permanent secretary of a department writes to his or her Secretary of State expressing concerns about a decision and asking for formal direction to proceed. In response, the Secretary of State issues a ministerial direction that instructs the permanent secretary to implement the decision. As a result of this direction, the minister, not the permanent secretary, is now accountable for the decision. As of 4 May, there had been 11 ministerial directions related to the government’s responses to COVID-19. Ministerial directions have been sought and granted to exceed Departmental Expenditure Limits authorised by Parliament for 2019-20 to support urgent spend; and because it had not been possible for departments to carry out as full an appraisal of the value for money of some schemes as would usually be undertaken.

4 HM Treasury, Managing public money, March 2018.

Part Two

Government activities, programmes and costs

2.1 This Part provides more details about the UK government’s response to COVID-19 across the five response areas: health and social care; other public services and emergency responses; support for individuals; support for businesses; and other support.

2.2 This Part sets out the main activities that have an associated cost or financial commitment above £1 million. UK government activities in response to COVID-19 will also include other measures taken under the Coronavirus Act 2020 to ensure government can continue to function during the COVID-19 outbreak (for example, releasing local authorities from the requirement to fully assess people who have care needs), where there are limited or unclear cost implications. All costs are government figures unless stated otherwise.

Support for health and social care

2.3 Following its commitment to provide the NHS with whatever resources it needs, government has taken a range of actions to support the health and social care response to COVID-19 which have a significant associated cost (Figure 3). They include measures to increase capacity to treat COVID-19 patients, manage medical supplies, support for adult social care, and research and development for COVID-19 tests, treatments and a vaccine.

2.4 On 13 April 2020, the government announced £6.6 billion funding from the Coronavirus Emergency Fund to support the health and social care response, in addition to the routine Department of Health & Social Care budget that is being spent on responding to COVID-19. Figure 3 sets out key activities that government is undertaking to support health and social care and the associated costs where we have been able to identify them. The government has not yet set out which of these activities or costs will be funded from the £6.6 billion Coronavirus Emergency Fund.

2.5 In addition, the government announced the write-off of £13.4 billion of NHS debt from 1 April 2020 as part of a wider package of NHS reforms which aim to ensure the NHS has the necessary funding and support to respond to the COVID-19 pandemic.5

2.6 Government has also taken a range of other actions to support the health and social care response to COVID-19 that do not have a significant associated cost, including:

issuing guidance for COVID-19 patients and health and social care professionals;

reviews by the Scientific Advisory Group for Emergencies (SAGE) of the number of cases in the UK, modelling and interventions made by other countries; and

issuing notifications to healthcare organisations, GPs, local authorities and arm’s-length bodies that they should share information to support efforts against coronavirus.

Support for other public services and emergency responses

2.7 Government has taken a range of measures to support other public services and the emergency response to COVID-19 which have a significant associated cost (Figure 4). They include funding to support local government services, education and children’s services, repatriation and other public services. The government has committed £15.8 billion to these measures.

2.8 Government has also taken a range of actions which are being delivered through re-prioritising existing resources. These include the following:

Armed Forces support. This includes a £1 million Defence Innovation Fund to aid the Armed Forces in their work tackling COVID-19 and similar future threats. A new COVID-19 Support Force has been established to assist public services. Support includes deploying military planners and distributing medical and PPE.

Education and children’s services. The Department for Education is: supporting home schooling by making an expected 200,000 laptops available for vulnerable and disadvantaged pupils otherwise unable to access online education at an estimated cost of £110 million; funding the additional costs incurred by schools having to remain open at an estimated cost of £113 million; and committed funding for 14 projects to provide extra support for vulnerable children most at risk of neglect, violence or exploitation (£12 million) and an adoption support fund (£8 million). Schools also have flexibility to offer shopping vouchers or to continue providing meals for collection or delivery to families whose children are eligible. Depending on demand, the Department estimated this may cost up to £330 million.

The Department for Digital, Culture, Media & Sport. The Department is supporting: the arts through Arts Council funding for organisations (£140 million) and individuals (£20 million); the heritage sector (£50 million); community sport and physical activity organisations (£20 million); local tourism organisations (£1 million) and rugby league through a package of emergency loans (£16 million) to safeguard the immediate future of rugby league (£11 million from new funding and £5 million from amended existing funding.

In addition, many local services are experiencing additional cost pressures associated with maintaining the safety, resilience and personal protection of their workforce through the pandemic.

2.9 Government has also taken a range of other actions to support local services and the wider response to COVID-19, such as changes to regulations or guidance, that do not have a significant associated cost, including:

extending driver hours to help deliver more goods to supermarkets and to help meet the increased demand for home deliveries and relaxing competition law to ensure food retailers can work together to keep shops open;

introducing new public health regulations strengthening police enforcement powers in England to ensure people stay at home and avoid non-essential travel;

issuing guidance for schools and education providers;

extending visas for those currently unable to return home due to COVID-19 and lobbying other governments to do the same for British nationals overseas; and

working closely with third sector organisations to help vulnerable British nationals wanting to return from overseas who are in urgent need of food and shelter in their current locations.

Support for individuals

2.10 The government has introduced a range of measures to support people facing specific economic or personal difficulties as a result of the COVID-19 outbreak, such as loss of income (Figure 5). It includes changes to benefits and statutory sick pay, direct support provided to individuals or households, financial support for self-employed people and deferring tax payments. These measures are expected to cost around £19.5 billion in total. This total does not include loss of receipts from non-recoverability of deferred tax payments, which is expected to be around £1.2 billion.

2.11 Government has also taken a range of actions to support individuals that do not have a significant associated cost for government. These include:

issuing guidance and advice on matters affected by the COVID-19 outbreak, for example on social distancing, unpaid care and home moving; and

extending notice periods covering most private and social rented accommodation.

Support for businesses

2.12 The government announced support measures for businesses to help them cope with the economic disruption caused by COVID-19 (Figure 6). They include payments to businesses for furloughed employees, government-backed loan schemes, cash grants and additional reliefs. Departments and the Office for Budget Responsibility (OBR) have estimated that the cost of business support measures so far is expected to be £82.2 billion. In addition, the loss of receipts from measures such as deferring VAT payments and postponing off-payroll working reforms is expected to total £3.2 billion.

2.13 The full cost of government-backed loan and finance schemes will not be known for some time, as it will depend on take-up and how many businesses default on their loans. The OBR estimates that three of the largest loan schemes could cost around £5 billion in 2020-21 (the Coronavirus Business Interruption Loan Scheme for small and medium-sized businesses, the equivalent scheme for large businesses, and the Bounce Back Loan Scheme). HM Treasury has announced that the main loan and guarantee schemes will be of unlimited size, with an initial £330 billion of guarantees being made available in March 2020.

2.14 Government has also taken a range of actions which are being delivered through re-prioritising existing resources. These include the following:

accelerating £200 million of grant and loan funding to research and development SMEs; and

£6.1 million of funding to support local Business Improvement Districts.

2.15 Government has also taken a range of actions to support businesses which are not expected to have a significant associated impact on public spending, including:

issuing a range of guidance on issues affecting businesses as a result of the COVID-19 outbreak;

introducing a ban on evictions for commercial tenants who miss rent payments until 30 June, with an option for the government to extend it if needed;

giving companies a three-month extension period to file accounts during the COVID-19 pandemic; and

support from the Department for International Trade to help exporters overcome trading barriers, find new sources of supply and access new government finance schemes.

Other support

2.16 Government has also undertaken other measures in response to the COVID-19 outbreak (Figure 7) including communications and public information campaigns. This other support is expected to cost £217 million.

2.17 Government has also taken a range of actions which are funded through re-prioritising existing resources. These include:

£744 million of UK aid to tackle COVID-19 worldwide, including £250 million to the Coalition for Epidemic Preparedness Innovations to research a coronavirus vaccine and £200 million to UK charities and international organisations to help reduce mass infections in developing countries; and

support for Overseas Territories, including the Conflict, Stability and Security Fund, which is procuring essential medical supplies, staff and logistical support, as well as supporting medical facilities in the Falkland Islands; providing a Security Assistance Team to local authorities in the Cayman Islands; and Turks and Caicos, and supporting border security measures in Anguilla.

A £5 million COVID-19 support package for St Helena and Montserrat.

2.18 Government has also taken a range of actions which do not have a significant cost associated with them. These include:

publishing its ‘battle plan’ to tackle COVID-19;

launching a Coronavirus Information Service on WhatsApp; and

listing cultural content available online, including from the Department for Digital, Culture, Media & Sport’s arm’s-length bodies.

5 The amount of debt written off is subject to validation and has no fiscal cost to the government.

Part Three

Our approach to examining the UK government’s response to COVID-19

3.1 This report is the first stage of our programme of work examining government’s response to COVID-19. We will use this report to identify a risk-based series of evaluative and descriptive reports targeted on areas where we think there have been particular challenges and where we feel there is most to learn.

3.2 In carrying out our programme of work, we will continue to carefully consider its timing and nature to minimise the impact on those dealing with the emergency at this exceptionally busy time, while providing Parliament and the public with timely reporting to support accountability and learning.

3.3 Our confirmed programme of work so far includes this summary overview, which aims to set out the facts and figures around the government’s response; and our review of Readying the NHS and social care for the COVID-19 peak, which will provide a factual update on progress with key government actions across health and social care. These areas include:

increasing the availability of healthcare professionals and beds to treat COVID-19 patients while maintaining other essential health services;

securing adequate vital supplies, including personal protective equipment (PPE), testing equipment, and ventilators; and

protecting and supporting vulnerable groups, including those residents in care homes and healthcare professionals.

3.4 The immediate priorities for the government response have been to ensure that measures protect people from exposure to COVID-19 and ensure that those infected are cared for. However, the government is also having to consider and mitigate the risks created by its response to the crisis. Looking ahead, we expect to report on how government has approached these risks. Our further enquires will likely consider the following areas (not an exhaustive list):

Procurement and supply chains. Many departments are having to source products and services quickly in new or emerging markets, often with complex and varied supply chains. The health and social care supply chain has had to work with pharmaceutical companies, private sector health equipment companies and manufacturing and logistics companies, and must compete with many other purchasing entities from across the world. This increases the risk that there will be insufficient supply, such as the well-documented challenges with providing sufficient PPE and other medical equipment.

Fraud and error. To get support to those that need it quickly, departments have had to relax the controls and checks they would normally have in place to administer and deliver schemes of support. This increases the risk of fraud and error, as support may be given to those that are not eligible and fraudsters may seek to exploit any loopholes.

Capitalising on new ways of working and retaining lessons learnt. In order to deal with the impacts of COVID-19 and implement its responses, government has had to streamline decision-making, work across multiple departments and public bodies and use a range of delivery structures. Departments’ risk not capitalising on the benefits and opportunities these new ways of working have brought.

Maintaining focus on existing significant challenges. The COVID-19 pandemic hit as government was already dealing with major challenges, including EU Exit; meeting government’s net zero carbon emissions target; major infrastructure projects; and the financial sustainability of key public services. Departments’ risk losing ground on the progress they have made in addressing these challenges.

3.5 Our future work programme will necessarily need to be responsive to events as the government’s response to the COVID-19 pandemic evolves. As our work develops and individual areas of focus become clear, we will publish the details on the dedicated COVID-19 section on our website (www.nao.org.uk/about-us/covid-19-coronavirus/).

Appendix One

Our methodology

Scope

1 This report provides an overview of the UK government’s response to COVID-19 and the costs involved. As at 15 May 2020, the government had made more than 500 announcements and committed over £124.3 billion in response to COVID-19. This report sets out the facts relating to:

the government’s coronavirus action plan launched on 3 March;

the organisations involved in the government’s response;

the governance and decision-making structures for the government’s response;

the government’s activities and related costs across five response areas: health and social care; other public services and emergency responses; support for individuals; support for businesses; and other support;

the role of government departments and other bodies in implementing those plans; and

our approach to examining the government’s response.

2 The report covers the main actions taken by the UK government in England, as well as the funding provided to support responses in the devolved administrations of Northern Ireland, Scotland and Wales. It does not cover the individual responses in the devolved administrations, or the separate responses implemented by local authorities. The report covers the government’s response up to 4 May 2020, and includes additional government funding commitments of over £0.5 billion, made up to 15 May 2020

3 This report sets out the main activities that have an associated cost or financial commitment above £1 million. UK government activities in response to COVID-19 will also include other measures taken under the Coronavirus Act 2020 to ensure government can continue to function during the COVID-19 outbreak (for example, releasing local authorities from the requirement to fully assess people who have care needs), where there are limited or unclear cost implications. All costs are government figures unless stated otherwise.

4 This report does not assess the value for money of the measures adopted by government or the effectiveness of its response. These cost commitments are those that we have been able to identify for central government spending, based on estimates from departments and the Office for Budget Responsibility (OBR). The cost commitments do include the UK’s government’s allocation of funding to local authorities in England and devolved administrations of Scotland, Wales and Northern Ireland but do not include further spending decisions taken by them. Some of these commitments are likely to change over time for a given period of support, which may lead to adjustments in costs and receipts.

5 The aim of this report is to provide a broad overview of activity and estimated costs. Events are moving quickly and the UK government’s response to COVID-19 is evolving. The figures in this report are initial estimates of costs and our best understanding of the announced measures. Many costs are not yet final as the UK government’s response continues. Precise costs will also depend on a range of uncertain factors, including the impact of the crisis on the wider economy and the level of take-up for each scheme. As a result, there are limitations and uncertainty in the information available. Limitations include:

The completeness and quality of cost information. We have not audited individual programme costs.

The overlap between COVID-19 additional funding and costs that are business-as-usual. Funding may not represent the net additional cost to government (i.e. how much additional funding to departments and devolved administrations will eventually be required), as in some cases the measures will be deliverable through the reprioritisation of existing funding and resources.

For a number of policies, this report uses OBR estimates of policy costs (last updated on 14 May) which capture the direct impact of new policy measures on cash borrowing in 2020-21 and are based on their ‘coronavirus reference scenario’ (published on 14 April). The OBR website (https://obr.uk/coronavirus-analysis/) explains the assumptions underpinning these in more detail. Given the timing of this work, OBR notes there is a high level of uncertainty around these figures. Many of the policies costed will have short-term, substantial direct budgetary costs, designed to support individuals and businesses through this temporary shock in order to help prevent greater economic and fiscal damage in the long-term. OBR has not attempted to quantify the costs of inaction. OBR’s standard approach to forecasting is to evaluate the cost (or yield) from new policies against a pre-measured baseline. It does not deem this approach to be feasible in the current circumstances. Instead it has presented the costs relative to a scenario baseline that already captures the effect of policy interventions on economic activity.

Technicalities such as Barnett formula adjustments (applied to funding from the UK government to the devolved administrations) have been explained where they are known to be included within costs but may not be identified in all cases.

Departments have reviewed and commented on the activities and costs relating to them. HM Treasury has commented on some aspects of the report but has not fact checked all the figures.

Methods

6 We have produced this report after collecting evidence between 31 January and 15 May 2020. We:

reviewed announcements made by the government in response to COVID-19;

reviewed key documents and guidance published by government departments in response to COVID-19;

reviewed government’s data on the costs of responding to COVID-19;

reviewed other estimates on the costs of government’s response, such as from the Office for Budget Responsibility; and

drew on discussions with government departments about the impact of COVID-19 on their operations.

Appendix Two

Timeline of key events

1 See Figure 8.

Design and Production by NAO External Relations
DP Ref: 009137-001