UK Markets closed

£372bn and counting: Cost of COVID-19 on UK taxpayers 'too early to tell'

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Tom Scholar, permanent secretary at HM Treasury. Photo: Parliament TV
Tom Scholar, permanent secretary at HM Treasury. Photo: Parliament TV

It is too early to tell what the cost of COVID-19 will be to taxpayers’ and the question is riddled with challenges, senior Treasury officials said, as they were grilled about the £372bn ($526bn) of taxpayers' money that has been committed to the pandemic so far.

The parliament session was looking at the National Audit Office's (NAO) latest COVID-19 cost tracker figures. 

The NAO “is keeping track of the gross public expenditure costs but the answer to how much COVID going to cost the country is broader than that and will depend above all on the degrees to which the pandemic has a lasting medium-term hit on the economy," said Tom Scholar, permanent secretary, HM Treasury.

To view this content, you'll need to update your privacy settings.
Please click here to do so.

“In terms of cost to business, jobs and incomes and then ultimately tax receipts and the public purse… that’s the figure that’s unknown and we will be debating it for some years to come”.

He added that the NAO’s figure of £372bn “is a good and reliable snapshot based on what we know now” but it does not take into account, for instance, programmes that are demand-driven where cost will depend on take-up, such as COVID testing and vaccination.

“We just don’t know that, yet all of those things will have a big impact on public expenditure figures.”

He also said a major factor will be the extent to which businesses are able to pay back the loans they’ve received.

The NAO estimates £92bn in loans has been guaranteed by the government and the Bank of England, of which £26bn are likely to be written off.

Meanwhile, Cat Little, director general public spending at the HM Treasury, said estimating the cost of programmes like the NHS Test and Trace "has had some real challenges" when it comes to "managing its demand modelling."

Chart: National Audit Office
Chart: National Audit Office

Another challenge Treasury officials pointed out was deciding exactly what is a COVID related cost. This becomes tricky when it comes to Universal Credit (UC) and the NHS.

"When people register a UC claim... you can't track individually what's COVID driven. What you can do is estimate the impact of the economy on unemployment and wages," said Conrad Smewing, director of public spending, HM Treasury.

He said it wasn't always easy to label something as COVID or non-COVID related, in which case "it's better to do top down statistical economic analysis."

The NAO tracker that was being used as the basis for questioning brings together data from across the UK government and provides estimates of the cost of measures announced in response to the coronavirus pandemic.

The aim of the tracker is to increase transparency, and promote scrutiny and parliamentary accountability.

It found that the government expects to spend £372bn on COVID-19 measures as at May 2021.

This was made up of £150.8bn to support businesses, £97.4bn for health and social care, £54.9bn for support for individuals, £65bn for public services and emergency responses and £3.5bn for operational costs.

Watch: What is universal basic income?