Bridget Phillipson calls for National Audit Office probe value of Job Retention Bonus

In a letter to Gareth Davies, National Audit Office Comptroller and Auditor General, Phillipson raises concerns about the Chancellor’s justification for the scheme’s “deadweight costs”. Rishi Sunak told the Treasury Select Committee that implementing the scheme in practice was “very difficult” and that other schemes for which he is responsible were also imperfect.

The inquiry should consider whether the scheme will deliver value for money for taxpayers before the legislation to deliver it comes before Parliament.

Calling it “extraordinary” for the Chancellor to defend spending large amounts of public money inefficiently on the grounds that other public spending for which he is responsible could also be better targeted, Phillipson makes clear that Government should “always be looking for ways to secure greater public good from public spending”.

Bridget Phillipson MP said:

“Labour is very concerned that the Chancellor’s Job Retention Bonus risks handing over billions to businesses that were already planning to bring their workers back from furlough.

"Labour accepts that no scheme can be perfect, but a poorly targeted and wasteful scheme is a missed opportunity. That’s why the NAO should investigate.

"With payroll employment down almost 650,000 since March, the need to target government support where it’s needed most couldn’t be clearer.”

Ends

Notes

Full text of the letter:

Dear Gareth,

Job Retention Bonus

First of all, I want to express my thanks, and the thanks of the Labour Party, for the work that you and your staff at the National Audit Office do and have continued to do during this immensely difficult time for our country. As monthly Government spending has ramped up at a speed perhaps unprecedented in peacetime, the importance of the work the National Audit Office does in ensuring that public money is spent both wisely and well has never been greater.

Significant parts of our economy, and millions of families, are in urgent need of targeted support and effective interventions that see Government money used to secure jobs and livelihoods for the future. While Government support for jobs and livelihoods is welcome, we are very concerned by the extent of the deadweight cost associated with the one-size-fits-all scheme they have brought forward.

The Government has had months to get this right since lockdown began, and will doubtless have also been able to draw on contingency planning work carried out in recent decades. Money spent on firms that don’t need it is money not spent on supporting the jobs and livelihoods that desperately need help.

You will be aware that Jim Harra, the Permanent Secretary of Her Majesty's Revenue and Customs required the Chancellor of the Exchequer to issue a Ministerial Direction on the subject of the Chancellor's Job Retention Bonus, and other measures.

I therefore wrote to Jim Harra asking for the analyses that had underpinned his decision to request a Ministerial Direction regarding the Job Retention Bonus, such modelling as had been undertaken on uptake and on the regional, sectoral, and distributional impact of this intervention, and for him to provide evidence to Parliament on the JRB, before legislation to give effect to the scheme is considered. He has replied, and I attach his letter.

Yesterday afternoon in comments to the Treasury Select Committee, the Chancellor of the Exchequer’s defence of deadweight spending in one part of Government expenditure was that it was difficult to do otherwise and that other schemes are also imperfect. It is an extraordinary position from the Chancellor to defend spending large amounts of public money inefficiently simply on the grounds that other public spending for which he is responsible could also be better targeted. The Government should always be looking for ways to secure greater public good from public spending.

Labour accepts that no scheme can be perfect but the impossibility of designing a perfect scheme cannot justify failing to deliver any such scheme. What is more, it is clear that Government is capable of targeted sectoral interventions – such as the welcome package for the arts and heritage which was recently announced.

It is exactly because we support the stated policy rationale of providing support and incentives to firms to keep employees during a period of continued uncertainty, that believe a more targeted approach is required. As it stands the JRB will see money allocated to firms that don’t need it, in respect of jobs that aren’t at risk, while in sectors such as childcare, tourism, oil and gas, hospitality, and aviation, thousands upon thousands of jobs and livelihoods may be under threat.

Our concern is that this blanket approach is both ineffective, because in too many firms the extra money will not change business decision-making, and is inefficient, because the money could be being allocated in a way that better supported the sectors facing the greatest challenges in the months ahead.

Can I ask you as Comptroller and Auditor General to report on the value for money of the JRB scheme as announced by the Chancellor of the Exchequer last week, such that Parliament has time to consider the conclusions of the National Audit Office before considering the legislation?

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