Eleventh Report - Economic impact of coronavirus: gaps in support and economic analysis

Select Committee
Treasury Committee HC 882 15 February 2021
Report Status Government responded
Conclusions & Recommendations 24 items (15 recs)
Source View on Parliament website
Government Response (AI assessment · 24 of 24 classified)
Accepted 11
Accepted in Part 1
Acknowledged 3
Not Addressed 2
Rejected 7
Government response
Sixth Special Report: Economic impact of coronavirus: gaps in support and economic analysis: Government Response to the Committee's Eleventh Report · published 26 Apr 2021
Read the government response ↗ Response on the tracker

Recommendations & Conclusions

24 results
1 Conclusion Acknowledged
Para 16
Though the structure of the UK economy makes it potentially more vulnerable to the present...
Conclusion
Though the structure of the UK economy makes it potentially more vulnerable to the present shock, the Committee notes that comparisons with other countries’ GDP may also be affected by differing measurement methodologies. We therefore caution against over-reliance on the … Read more
Government Response Summary
The government acknowledged the committee's caution regarding over-reliance on GDP comparisons by stating that the Budget featured a commentary on international comparisons of economic performance and GDP measurement issues.
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2 Recommendation Accepted
We recommend that the Treasury and the Office for Budget Responsibility provide a commentary at...
Recommendation
We recommend that the Treasury and the Office for Budget Responsibility provide a commentary at the time of the Budget on GDP measurement issues and the implications that these measurement issues have for comparisons between the UK and other countries. … Read more
Government Response Summary
The government accepted the recommendation, stating that it had already provided a commentary on GDP measurement issues and international comparisons in pages 11 and 12 of the Budget document.
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3 Conclusion Accepted
Para 34
Given the economic outlook, we believe that the Government was right to extend both the...
Conclusion
Given the economic outlook, we believe that the Government was right to extend both the Coronavirus Job Retention Scheme and the Self-employment Income Support Scheme to the end of April 2021. However, given the extended duration of restrictions, we believe … Read more
Government Response Summary
The government stated it had already extended the CJRS and SEISS until September, beyond the April 2021 date mentioned, to address the ongoing economic challenges, highlighting the schemes' success and reach.
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4 Recommendation Accepted
Para 39
The 2019–20 self-assessment income tax returns will provide the Government with additional information that could...
Recommendation
The 2019–20 self-assessment income tax returns will provide the Government with additional information that could allow it to provide support to those who need it but have so far not received it. We therefore strongly urge the Treasury to use … Read more
Government Response Summary
The government accepted the recommendation, announcing that HMRC will use 2019-20 tax returns for the fourth and fifth SEISS grants, potentially allowing over 600,000 newly self-employed individuals to claim support.
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5 Conclusion Rejected
Para 47
By conspicuously leaving out a large proportion of limited company directors from support altogether, we...
Conclusion
By conspicuously leaving out a large proportion of limited company directors from support altogether, we are concerned that the Government is sending out the wrong message—that it is not adequately supporting entrepreneurs and employers, who have suffered significantly from a … Read more
Government Response Summary
The government responded to concerns about the exclusion of limited company directors by explaining that difficulties in identifying eligible individuals and high fraud risks prevent broader support through schemes like SEISS, while noting other available business support.
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6 Recommendation Accepted
Para 48
When responding to this report, the Treasury should provide an assessment of the level of...
Recommendation
When responding to this report, the Treasury should provide an assessment of the level of fraud which it believes would arise from the implementation of the DISS scheme.
Government Response Summary
The government provided a draft assessment indicating that the DISS scheme could have a wide error and fraud range, potentially as high as 20%.
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7 Recommendation Rejected
We question whether the Treasury could do more to investigate how to mitigate the fraud...
Recommendation
We question whether the Treasury could do more to investigate how to mitigate the fraud risks inherent in the DISS scheme and similar schemes, and whether the levels of fraud risk merit the Treasury’s position of not providing any support … Read more
Government Response Summary
The government rejected the recommendation to develop new support measures for limited company directors, citing significant difficulties in accurately identifying eligible individuals from HMRC data, high fraud risks associated with self-certification, and the availability of other business support schemes.
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8 Conclusion Rejected
Para 54
Although we acknowledge the Chancellor’s intention to target the SEISS at those who are most...
Conclusion
Although we acknowledge the Chancellor’s intention to target the SEISS at those who are most dependent on self-employed income, not all of them would have access to the Coronavirus Job Retention Scheme, as we pointed out in our first report … Read more
Government Response Summary
The government defended its SEISS eligibility criteria, particularly the 50% self-employed income test, stating it is designed to target support at those most in need and citing data on other income sources for those who do not qualify.
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9 Recommendation Rejected
Para 55
We believe that the Government should reconsider the 50 per cent limit in the eligibility...
Recommendation
We believe that the Government should reconsider the 50 per cent limit in the eligibility criteria for the fourth tranche of the SEISS grant so that those who derive less than half of their income through self-employment can receive some … Read more
Government Response Summary
The government rejected the recommendation to reconsider the 50% income limit for SEISS eligibility, stating the design aims to target those most in need and noting that stakeholders had initially supported an even higher threshold.
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10 Recommendation Rejected
Para 63
There is a striking inconsistency between the way the Government is treating employees earning more...
Recommendation
There is a striking inconsistency between the way the Government is treating employees earning more than £50,000 a year and those who are self-employed and have trading profits above £50,000 a year. Whereas those who are employed can receive support … Read more
Government Response Summary
The government rejects the implicit recommendation to remove the £50,000 cap or introduce a taper for SEISS, stating it is not proportionate due to complexity and the small number of potential beneficiaries, and that SEISS and CJRS are fundamentally different schemes.
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11 Recommendation Rejected
Para 64
We reiterate our recommendation from our first report in this inquiry that the Government must...
Recommendation
We reiterate our recommendation from our first report in this inquiry that the Government must tackle the cliff edge that exists in the design of the SEISS by removing the £50,000 cap and allowing those with profits just over this … Read more
Government Response Summary
The government rejects the recommendation to remove the £50,000 cap and introduce a taper for SEISS, stating it is not proportionate due to the complexity of administration and the relatively small number of people who would benefit.
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12 Recommendation Accepted in Part
Para 65
The Treasury should in its response to this report provide: • the number of people...
Recommendation
The Treasury should in its response to this report provide: • the number of people with self-employed income as their main source of income in the 2019–20 financial year; • the proportion of the self-employed who had more than £50,000 … Read more
Government Response Summary
The government provides partial data, giving statistics for 2018-19 and up to October 2020 for some points, and notes when SEISS statistics are updated, but states it does not have an assessment of the costs for implementing the committee's recommendations.
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13 Conclusion Acknowledged
The first version of the SEISS scheme had to be rolled out at speed in...
Conclusion
The first version of the SEISS scheme had to be rolled out at speed in March
Government Response Summary
The government acknowledges the committee's observation on the early rollout of SEISS/CJRS and notes its previous decision to extend support, further extending both schemes until September and detailing a wide range of other ongoing support measures.
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14 Recommendation Rejected
We recognise that it may not have been possible for the Government to help all...
Recommendation
We recognise that it may not have been possible for the Government to help all those who have fallen through the cracks of the support schemes. However, we are disappointed that the Government has so far shown no inclination to … Read more
Government Response Summary
The government stated it had explored alternative support models, including Northern Ireland's Directors' scheme, but concluded they were not viable due to higher fraud risks and practical issues with identifying eligible populations.
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15 Conclusion Accepted
Para 85
We are disappointed at the lack of analysis provided by the Treasury, despite such analysis...
Conclusion
We are disappointed at the lack of analysis provided by the Treasury, despite such analysis being referenced in the SAGE minutes. Without it, the impression is that the Government is making important decisions without proper regard to all their impacts, … Read more
Government Response Summary
The government acknowledges the concern about economic analysis and asserts that it has published a significant amount of analysis on the health, economic, and social impacts of COVID-19, including analysis underpinning the Roadmap out of lockdown, and has commissioned advice from SAGE.
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16 Recommendation Accepted
Para 86
We call on the Treasury to be more transparent about the economic analysis which it...
Recommendation
We call on the Treasury to be more transparent about the economic analysis which it undertakes to inform Government decisions in the fight against coronavirus and to publish any such analysis in a timely manner. The House should not be … Read more
Government Response Summary
The government claims it has already published a significant amount of analysis on the health, economic, and social impacts of COVID-19 and public health measures, including for the Roadmap, and commissioned advice from SAGE.
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17 Recommendation Acknowledged
Para 90
We agree with the Treasury that epi-macro modelling relies on assumptions which may not be...
Recommendation
We agree with the Treasury that epi-macro modelling relies on assumptions which may not be supported by extensive data sets. Nevertheless, we believe it would be a useful exercise for the Treasury to undertake epi-macro modelling to better understand the … Read more
Government Response Summary
The government acknowledges the committee's view on epi-macro modelling, stating it has studied academic literature and benefited from discussions with experts, and that decisions are based on health, economic, and social impacts, and SAGE advice.
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18 Conclusion Not Addressed
Para 98
The Treasury’s analysis has been criticised for not providing modelling of the alternative to lockdowns.
Conclusion
The Treasury’s analysis has been criticised for not providing modelling of the alternative to lockdowns. There is evidence to suggest that in the absence of lockdown, people would have socially distanced to a large extent through fear of viral transmission … Read more
Government Response Summary
The government provides a general statement about its approach to economic analysis and decision-making regarding COVID-19, but does not specifically address the committee's point about modelling alternatives to lockdowns or the costs of voluntary social distancing.
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19 Recommendation Accepted
Para 99
We strongly urge the Treasury to provide rigorous analysis of future policy choices which quantifies...
Recommendation
We strongly urge the Treasury to provide rigorous analysis of future policy choices which quantifies the harms and benefits of each of the plausible range of alternative policies. It has always been considered a good practice to publish an impact … Read more
Government Response Summary
The government states it has already taken decisions based on health, economic, and social impacts, studied academic literature, and published significant analysis throughout the pandemic, including for the Roadmap.
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20 Conclusion Accepted
While death rates from coronavirus are high, the rationale for Government decisions on social restrictions...
Conclusion
While death rates from coronavirus are high, the rationale for Government decisions on social restrictions is well understood by the public. As the vaccines roll-out proceeds and death rates fall, Government decisions on whether or not to lift restrictions will … Read more
Government Response Summary
The government asserts that it already makes decisions based on the health, economic, and social impacts of COVID-19, utilizing academic literature and SAGE advice to inform its policies and the Roadmap out of lockdown.
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21 Conclusion Accepted
Para 106
After almost a year of restrictions on social and economic activity, the general public and...
Conclusion
After almost a year of restrictions on social and economic activity, the general public and the business sector need confidence that the Government has as clear and as certain a route out of the crisis as possible.
Government Response Summary
The government states that since the report, it has published its roadmap for the economy's cautious reopening and announced the Budget, which together aim to provide the necessary security and certainty to the public and businesses.
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22 Recommendation Accepted
Para 107
We recommend that in order to provide some certainty to businesses, as well as to...
Recommendation
We recommend that in order to provide some certainty to businesses, as well as to the general public, the forthcoming Government plan for taking the country out of lockdown should set out criteria of how and when it will lift … Read more
Government Response Summary
The government states that since the report, it has published its roadmap for reopening the economy, fulfilling the recommendation to provide a plan for lifting restrictions, and also announced the Budget for economic support.
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23 Recommendation Accepted
Para 111
It is vital that economists work together with epidemiologists and health experts to make decisions...
Recommendation
It is vital that economists work together with epidemiologists and health experts to make decisions on social restrictions, and that the output of their work should be made public. We propose that the Government use a more multi-disciplinary approach to … Read more
Government Response Summary
The government states it has already taken decisions based on multi-disciplinary factors (health, economic, social) and published significant analysis, including commissioning SAGE advice, to inform its COVID-19 response.
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24 Recommendation Not Addressed
We strongly believe that the Treasury needs to retain greater modelling capacity outside the OBR,...
Recommendation
We strongly believe that the Treasury needs to retain greater modelling capacity outside the OBR, so that it can model the implications of different policies. It should also ensure that it has sufficient capacity to modify or use new types … Read more
Government Response Summary
The government provides a general description of its existing approach to economic analysis, including studying academic literature and commissioning SAGE advice, but does not address the specific recommendation to produce a policy document on its independent modelling capacity.
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