Up to a third of Rishi Sunak’s £30bn Covid package was ‘old money passed off as new’
IFS says chancellor’s spin on recycled cash is ‘corrosive to public trust’
Rishi Sunak has been accused of “twisting the figures” by rechannelling up to £10bn of planned government spending to pay for his new deal to save jobs threatened by the coronavirus pandemic.
The chancellor last week unveiled an economic aid package that that Treasury said was worth “up to £30bn”. But an analysis of the Sunak’s summer statement by the Institute for Fiscal Studies (IFS) found that at least £8bn and up to a third of the pledged cash would come from trimming back or cancelling previously planned projects.
This bid to “pass off old money as new spending”, as The Times puts it, is “corrosive to trust”, the spending watchdog is warning.
“All that extra money is not quite what it seems,” said IFS director Paul Johnson.
The watchdog says that “the package unveiled by the chancellor included £5.5bn in transport and infrastructure projects announced by Boris Johnson that was in fact money reallocated from other schemes”, The Guardian reports.
This “represents an increase of precisely zero this year on budget plans,” IFS boss Johnson said. “It is a reallocation from one set of projects to another.”
The measures announced by Sunak also include a “Jobs Retention Bonus” of £1,000 to be paid to businesses for every furloughed employee kept on as staff until at least January 2021.
But the Office for Budget Responsibility (OBR), the government’s independent fiscal watchdog, this week predicted that not every employer would claim the bonus - which would bring the total cost of Sunak’s aid package down to about £20bn.
IFS associate director David Phillips, who conducted the new analysis, concludes that “the £30bn package turns out to be more like £12bn of additional spending plus some £8bn or so reallocated from previously planned projects”.
A spokesperson for the Treasury told The Times that the claim was “wrong”. The summer statement figures were not final and would be properly costed as part of a normal budget forecast process in the autumn, the spokesperson added.