Covid has cost £372 billion and will take TWO DECADES to pay off

UK's debt interest is 'not too worrying' says Portillo

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In two hard-hitting reports published today, the Commons’ Public Accounts Committee also said auditing work on money spent during the pandemic needs to start now and cannot wait for a delayed public inquiry. They estimated the cost of spending on Covid measures has already hit £372billion. MPs from all parties on the committee agreed the country faces “significant financial risks for decades to come” and warned Boris Johnson and his ministers they need to make hard decisions on how to pay off the debt.

The report is the first look into the cost of the pandemic and lockdown, but Labour committee chairwoman Dame Meg Hillier said that it was addressing “only the tip of the iceberg” of the overall cost.

She said: “It’s like a wartime debt. If you look at the First and Second World Wars, public spending went up higher.

“While it’s not as high as the two wars, it’s a huge change.

“Remember we only paid off the money we borrowed from America [for the wars] during the last years of the last Labour government.”

The report said loans given to cultural bodies to deal with the pandemic are for 20 years, with no incentive to pay them back early, while business bounce-back loans are for a decade.

Dame Meg said that did not take into account money lost in tax revenue because of a loss of economic growth.

She said: “We want the Governƒfment to come forward with a plan about payback given that they are arguing like rats in a sack about how to do this at the moment. A time like this is not easy for any government. They are hard decisions, but we need decisions. Everybody from businesses to the NHS will need to plan for long-term ideas.”

She also warned ministers against trying to use inflated economic growth projections to balance the books.

She said: “We’ve got to be careful we don’t have a chancellor at the dispatch box saying everything will be OK because we have economic growth.

“It is really important the Government levels with the country and explains how we are going to pay for this.”

The committee also highlighted concerns over PPE and the MPs “remain concerned that despite spending over £10billion on supplies, the PPE stockpile is not fit for purpose”.

The committee said that as of May this year, out of 32 billion items of PPE ordered by the Department of Health and Social Care, some 11 billion had been distributed while 12.6 billion are stored in the UK as central stock.

Some 8.4 billion on order from other parts of the world have still not arrived in the UK. MPs were concerned the stockpile was costing around £6.7million a week to store, with potential waste levels “unacceptably high”.

The report said there were 10,000 shipping containers of PPE still to be unpacked by May this year, but 2.1 billion items of PPE had already been found unsuitable for use in medical settings. The committee said this has cost more than £2billion of taxpayers’ money.

For the excess PPE that was suitable for medical use, the MPs were concerned the Government was yet to create any robust plans for repurposing and distributing this essential stock in a way which ensured value for money and protected staff and patients.

A Department of Health and Social Care spokesman said: “There are robust processes in place to ensure government spending always provides value for money for the taxpayer.

“We have worked tirelessly to source life-saving PPE to protect health and care staff, and we have delivered over 12.7 billion items to the frontline at record speed. As the National Audit Office has recognised, all NHS providers they spoke to were able to get the equipment they needed in time. We have established and maintained safety stocks of all Covid PPE, to ensure an uninterrupted supply to the frontline.”

Meanwhile, Dame Meg also insisted part of the long-term plan must be to retain experienced staff in the NHS who are in danger of leaving because they are exhausted. While acknowledging recruitment of new staff is high because “people want to do their bit”, she added: “Losing those who have been through hell and back and have vital experience would be a poor dividend for the nation.” A promised public inquiry into the pandemic is not expected to start until next spring and will likely be long-running.

The committee said it was “clear Government cannot wait for the review before learning important lessons” and must present a Covid recovery plan in the autumn spending review.

Julian Jessop, an economist with the Institute of Economic Affairs, said: “Many people argue the pandemic has demonstrated the Government can borrow and spend a large amount of money quickly and wisely – and therefore it should continue to do so.

“This report has debunked this myth.”

John O’Connell, chief executive of the Tax-Payers’ Alliance, said: “The simple truth is the pandemic has left taxpayers on the hook for billions.

“Of course the Government had to react quickly, but the sheer scale of squandered public money will shock those whose budgets have been squeezed.”

Will Tanner, of Conservative thinktank Onward, struck a very different tone. He said: “Instead of attacking waste during an unprecedented crisis, we should be asking how the Government can learn the lessons of the pandemic to make funding schemes much faster, more digital and more responsive to need.”

John Longworth, the former director general of the British Chambers of Commerce who now chairs the Independent Business Network, said the findings showed why the country is in danger of an economic crisis and needs to go for “super growth”.

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