Labour pressures government over “value for money” of coronavirus scheme

Labour is applying pressure on the government over whether its coronavirus measures represent “value for money”, as the party under Keir Starmer’s leadership undertakes a notable shift in tone on the economy.

Both the Labour leader and the Shadow Chief Secretary to the Treasury, Bridget Phillipson, have come out today with strong criticisms of the job retention bonus scheme announced by the Chancellor.

The plan unveiled by Rishi Sunak will see employers receive £1,000 for every furloughed employee that they bring back to work until at least January. The workers must be paid at least £520 each month on average.

In the summer financial statement delivered in the Commons on Wednesday, the Chancellor noted that the scheme would cost over £9bn if all furloughed employees were brought back in this way.

It has since been revealed that the HM Revenue and Customs chief executive Jim Harra had raised concerns with the Chancellor about the “value for money” of the proposal before it was presented to MPs.

Phillipson has now written to Harra emphasising the importance of “effective and efficient public spending” and making a number of demands on this basis – including the publication of HMRC analysis.

“It is so important that we see decisive and effective government action to support jobs, livelihoods, and companies in the months ahead, and value for money is critical,” Phillipson’s letter reads.

“Every penny given to those who don’t need it, when whole sectors of our economy are in trouble, is money not available to support jobs at risk, money not helping the families and firms in desperate need.”

The Shadow Chief Secretary to the Treasury has asked the HMRC head to release estimates or modelling of the scheme and to give evidence to parliament before MPs consider the relevant legislation.

Commenting on the letter, the BBC’s Laura Kuenssberg has tweeted that Labour may be “turning into spending hawks” while The Times‘ Patrick Maguire has suggested they are “outflanking [the Tories] from the right”.

Below is the full text of Bridget Phillipson’s letter to the head of HMRC.

Dear Jim,

First of all, I want to pay tribute to the impressive work of Her Majesty’s Revenue and Customs (HMRC) staff in recent weeks and months. I know many HMRC staff will have worked for long hours to put in place the systems which have seen the delivery of support we have welcomed, such as the Job Retention Scheme and the Self-Employment Income Support Scheme. Labour is proud to put on record its thanks to the HMRC staff who work to ensure that taxes are collected fairly and efficiently.

This morning there are press reports that you required a Ministerial Direction before implementing the Chancellor’s Job Retention Bonus scheme, because of concerns about value for money. You will be aware that these are exactly the concerns that I and other Labour colleagues raised in debate yesterday. This morning the Chancellor of the Exchequer himself admitted on the radio the potential deadweight cost associated with the scheme.

Ministerial directions can be an important part of how government ensures fast and effective action in a crisis. However, Parliament needs to understand when Ministers are overriding the advice of their own experienced and knowledgeable civil servants. Given both the huge amount of public money involved and the immense importance of achieving value for money with government spending, I am requesting that HMRC:

• immediately publish whatever information or analyses HMRC staff prepared such that you informed the Chancellor of the Exchequer that you were unable to support the scheme without a Ministerial Direction;
• immediately publish any estimates or modelling of the scheme you may have prepared, including any work you may have done on this with Treasury colleagues, on the expected uptake of the scheme, including distributional, sectoral, and regional analyses;
• give evidence to Parliament before any legislation is considered which would give effect to the Job Retention Bonus Scheme, in respect of whether the scheme constitutes Value for Money.

It is so important that we see decisive and effective government action to support jobs, livelihoods, and companies in the months ahead, and value for money is critical. Every penny given to those who don’t need it, when whole sectors of our economy are in trouble, is money not available to support jobs at risk, money not helping the families and firms in desperate need.

You will understand that given the amount of public money involved and the wider public interest in effective and efficient public spending, I am publishing this letter.

Yours sincerely,
Bridget Phillipson MP
Shadow Chief Secretary to the Treasury
Member of Parliament for Houghton & Sunderland South