Initially government’s overriding ambition for both schemes was to provide financial support to businesses and individuals as quickly as possible in the wake of the COVID-19 pandemic to protect jobs.
At 20 September 2020 CJRS had supported 1.2 million employers and 9.6 million jobs, with claims totalling £39.3 billion. The Office for Budget Responsibility expects CJRS claims to reach £54.5 billion in total. By 20 September 2020 the SEISS scheme had at least 2.6 million claims, totalling £13.4 billion. OBR forecasts SEISS claims will total £15.2 billion, bringing total forecast spending for these schemes to nearly £70 billion.
Scope of the report
This report considers how well HM Treasury and HMRC have managed risks thus far in implementing these schemes. This report considers whether the Departments have:
- managed design and delivery risks effectively in implementing the schemes (Part One)
- understood whether the schemes are reaching the people intended (Part Two); and
- managed fraud and error risks effectively (Part Three)
This report does not consider HMRC’s other COVID-19 interventions designed to support businesses, including the Coronavirus Job Retention Bonus and Eat Out to Help Out, or the relationship between the schemes and wider government support such as business loans and benefits. We have previously reported on the Bounce Back Loans Scheme.
Report conclusions
HM Treasury and HMRC met their objective to rapidly implement the schemes and the Departments should be commended for making these available ahead of schedule. The schemes were relatively straightforward to apply for, and payments quickly reached those who applied. Indications are that this has helped to protect jobs in the short term and the numbers of people moving from furlough arrangements back to work are encouraging. However, many other people have lost earnings and have not been able to access support. The long-term impact of the schemes will also depend on wider financial support and the ongoing impact of COVID-19.
A key value-for-money test for these schemes will be how far the Departments can mitigate fraud and error. The pace at which the schemes were designed and implemented meant the Departments had to accept a greater risk than normal. As such, there are likely to be considerable amounts of fraud and error, particularly on the furlough scheme. Limiting applications to existing taxpayers should have reduced the fraud risk, but HMRC could have done more to make clear to employees whether their employer was part of the furlough scheme. In future, the Departments should do more while employment support schemes are running to protect employees and counter acts of fraud. The Departments will need to ensure sufficient resources are committed to recover money where it is cost-effective to do so.