Sunak Overrode His Officials’ Concerns Over Coronavirus Stimulus

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U.K. Chancellor of the Exchequer Rishi Sunak wrote two letters to formally override the concerns of Treasury officials over aspects of his plans to reboot the U.K. economy announced on Wednesday.

Both the “Eat out to Help Out” program, offering subsidies for people to buy food from restaurants, and a plan to give cash to companies which keep furloughed workers employed after the job support program ends needed him to write so-called ministerial directions taking responsibility for the spending.

Such letters are uncommon -- The Institute for Government said last month that 84 had been sent in the last 30 years -- and the fact Sunak had to write them shows the novelty of the programs and the speed at which ministers are having to move to counter the economic effects of the coronavirus pandemic.

Jim Harra, who as permanent secretary in the Treasury is its principal accounting officer, warned Sunak there wasn’t time to properly assess the risks and benefits of either measure -- or the potential for wasting public money.

“I am unable to reach a view that this represents value for money to the standards expected,” Harra wrote in a letter to Sunak about the job retention bonus. It had been hard to model different outcomes and assess how many jobs the program would save, he said.

‘Highly Uncertain’

There were similar problems with supporting the eating out plan, which will subsidize meals in restaurants in August. Any assessment “depends on the future demand for eating out in the absence of this scheme, which is currently highly uncertain,” he wrote. “This is a novel scheme meaning there are also particular value for money risks surrounding the level of potential losses that could arise.”

Sunak in his replies said there are “compelling reasons” to go ahead outside the scope of the Treasury’s guidelines for managing public money.

On Thursday, the chancellor conceded in media interviews there would be “dead-weight” in the economic support packages he had put forward, while targeting has been difficult because the crisis has moved so fast.

“Throughout this I’ve had decisions to make, whether to act in a broad way at scale and at speed, or to act in a more targeted and nuanced way,” Sunak told BBC Radio. “In an ideal world, you would minimize that dead-weight and do everything in incredibly targeted fashion,” he said, but the pandemic “demanded a different response.”

©2020 Bloomberg L.P.

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