Spending on crisis already at £124bn, watchdog reveals

THE country is facing a bill of at least £124 billion to cover the cost of the coronavirus crisis, the spending watchdog has said.

A National Audit Office (NAO) report found that ministers made more than 500 announcements between Jan 31 and May 4 on the Government’s response to the pandemic, with commitments worth £124.3billion.

The figure does not include the loss of receipts to the Treasury, worth an estimated £4.4billion, mostly from deferred tax payments.

Of the Covid-19 commitments made so far, £111.3billion has gone on grants and other payments, while £5billion has been spent on loans and £8billion on increases to benefits. That was split between about £82 billion for businesses, £19.5billion to support individuals such as through benefits, £6.6 billion on health and social care, and £15.8billion on other public services.

Gareth Davies, the head of the NAO, said: “The scale and nature of the Covid-19 pandemic and government response is unprecedented in recent history. This report outlines the range of measures taken to date and where financial support has been targeted.

“It also forms the basis for a substantial programme of independent reports from the NAO to Parliament and the public on how the money has been spent and the lessons learned.”

The Daily Telegraph has previously revealed the Treasury’s internal estimates put the ultimate cost of coronavirus at almost £300billion this year and could require measures including an increase in income tax, the end of the triple lock on state pension increases and a two-year public sector pay freeze.

A Treasury document drawn up for Rishi Sunak, the Chancellor, proposes a “policy package” of tax increases and spending reductions that may have to be announced within weeks in order to “enhance credibility and boost investor confidence” in the British economy.

The document reveals that the “base case scenario” now forecasts that Britain will have a £337billion budget deficit this year, compared to the £55 billion forecast in March.

The Office for Budget Responsibility has previously estimated total public spending for 2019-20 to total £840.7 billion, a rise of about £20billion on the previous year.