2Key areas of the response
Procurement and distribution of essential supplies
15.Many departments are having to source products and services quickly in new or emerging markets, often with complex and varied supply chains. The health and social care supply chain has had to work with pharmaceutical companies, private sector health equipment companies and manufacturing and logistics companies, and must compete with many other purchasing entities from across the world.34 The Cabinet Office told us that there was around a fourfold increase in demand for personal protective equipment (PPE) across 58,000 sites in the health and social care sector, and that its central buying operation alone bought 1.7 billion pieces of PPE. It claimed that while things were “tight” at various stages of the peak of the crisis, it did not run out of any items centrally. However, it acknowledged that there were daily examples of local shortages, particularly of aprons, and that it believed this was “inevitably” the case.35
16.The Cabinet Office acknowledged that it was taken by surprise by the need for a massive quantity of protective equipment, and by the difficulty of sourcing it from reliable UK-based suppliers.36 It said that a particular challenge was supplying PPE to care homes, hospices and community care organisations. While NHS systems are designed to deal with supplying the 226 NHS trusts, delivering to the social care sector “added enormously” to the logistical challenge.37 The Cabinet Office acknowledged that it had more work to do to in planning for the future to ensure it had identified manufacturers who could quickly produce PPE and undertook in future to build up bigger stocks than it had done in the past to prepare for high-impact, low probability events.38 When challenged on why it did not have the foresight in January and February 2020 to know that the UK would need to step up production of PPE and ventilators, the Cabinet Office claimed that the full effects of the crisis were not at all visible in January and only became so in the latter part of February and March.39 The government did not publish its national plan to secure PPE until 10 April.40 At the start of the outbreak, the only central stockpile – held by Public Health England – was designed for a flu pandemic. It lacked items such as gowns and visors, which an independent committee advising the Department on stockpile contents had recommended in 2019.41 The Department of Health & Social Care has previously told us that it buys the vast majority of its PPE on international markets and will continue to do so.42 Issues have been reported with some shipments from abroad.
17.In April 2020 the Treasury committed £4 billion of funding for the UK’s PPE demand up until the end of July 2020. This was an initial estimate that may since have changed.43 We questioned the Cabinet Office on whether the national PPE contracts had been value for money. The Cabinet Office told us that the per unit cost it paid for PPE and ventilators was higher than it would have liked. However, it considered that it has been value for money when compared to not having enough PPE.44
Support for businesses
18.The government has instituted a range of support measures for businesses to help them cope with the extensive economic disruption caused by COVID-19. These include payments to businesses for furloughed employees, government-backed loan schemes, cash grants and additional reliefs.45 The Department estimates that over one million businesses have benefited from the schemes. For instance, the loan schemes run by the British Business Bank have extended more than £35 billion of finance to businesses.46 In total, the cost of business support measures in place at May 2020 is expected to be at least £82 billion. In addition, the loss of receipts from measures such as deferring VAT payments is expected to total £3.2 billion.47
19.The largest business support measures, such as the furlough scheme and loans schemes have been broad-based: for example, the Job Retention Scheme is open to all employers across the UK and the Bounce Back loans are available to all businesses.48 The Department said that this was intentional as by creating a broad suite of schemes, government avoided having to have “high-touch, intense and bespoke engagement” with businesses in difficulty.49 We have previously seen this type of one-size-fits-all approach in government’s engagement with businesses on EU Exit preparations.
20.We asked the Department whether it would adopt a more bespoke, sector-based approach to supporting businesses, given some sectors and industries have said they are not receiving the support they need. The Department told us that in cases of very large companies of national strategic significance, it would discuss those with the Treasury. However, it said that it believed that many of those sectors would be able to access the existing schemes of the British Business Bank and the Bank of England.50 Government has been slow to engage and provide targeted support for sectors such as the steel, aviation, aerospace and automotive industries. For example, UK Steel waited 10 weeks for support and was unable to get it, whereas competitor countries such as France and Germany were able to distribute funds in 10 days.51 The Department told us about five in-depth economic recovery discussions it held with 20 or 30 businesses and academics. However, we were concerned that those business roundtables were not what businesses were expecting and the Department had not published a list of businesses invited to the roundtables, on what basis they were invited or who attended.52 On 15 June, the Department published a list of attendees at the roundtables and the topics discussed.53
Local government funding
21.Local authorities play a significant role in all parts of the UK government’s response to COVID-19. They have key obligations such as to deliver social care, other parts of the emergency response and support for individuals and businesses. Central government funding to local authorities has included £3.2 billion provided in two tranches of £1.6 billion and a £600 million Infection Control Fund to tackle the spread of COVID-19 in care homes.54
22.Local authorities’ budgets are under more pressure than ever as a result of COVID-19, and many local authorities are concerned that they are not getting the financial support that they need from central government.55 The Local Government Association told us that without certainty of further funding and flexibility around their budget setting, many councils will have to take measures in anticipation of future funding shortfalls.56 This could mean in-year cuts to vital local services that are supporting communities through the crisis.57 The Ministry acknowledged that the need to provide more support for local government is well understood.58 The Ministry told us that it was taking action in three ways: analysing monthly monitoring returns from local authorities; providing further funding to local authorities, including £300 million for the Test and Trace programme; and work on a “fuller, more comprehensive solution” on local authority finance, to ensure that councils are put on a more sustainable footing this financial year.” It intends to publish the monthly monitoring return details “very soon”.59 It said that the most recent return shows that local authorities estimated expenditure pressures of £795 million from March to the end of May against the government’s COVID-19 priorities. The Ministry said it is reassured that it has provided sufficient funding to date and also that its policies and support for the sector can be informed by comprehensive returns.60 The Ministry told us that it was not aware of any local authorities that are imminently planning to issue a section 114 notice.61
23.Although the Ministry has set out the areas of local government funding that central government will refund, this does not include all of the detail needed to give local authorities clarity. For instance, on homelessness and rough sleeping it is not clear whether the whole of the homelessness and rough sleeping spend by local authorities will be refunded.62 The Treasury told us that the financial position of local authorities will be something that it will discuss with the Ministry and address in the next spending review.63
34 C&AG’s Report, para 3.4
35 Qq 5–7
36 Q 5
37 Q 7
38 Q 26
39 Q 33
40 C&AG’s Report, Figure 8
41 C&AG’s Report, Readying the NHS and adult social care in England for COVID-19, Session 2019–21, HC 367, 12 June 2020, para 20
42 Committee of Public Accounts, Eighth Report of Session 2019–21, NHS capital expenditure and financial management, HC 344, 8 July 2020, para 15
43 C&AG’s Report, Figure 3
44 Q 23
45 C&AG’s Report, para 2.12
46 Q 105
47 C&AG’s Report, para 2.12
48 C&AG’s, Figure 6
49 Q 105
50 Q 107
51 Q 105
52 Qq 110–113
54 C&AG’s report, para 1.5, Figure 4
55 Q 66
56 Local Government Association submission, dated June 2020
Qq 62–65
57 Local Government Association submission, dated June 2020
Qq 62–65
58 Q 88
59 Q 67
60 Supplementary Information dated 22 June 2020 from the Ministry of Housing, Communities & Local Government, para 5
61 Q 66
62 Q 87
63 Q 114
Published: 23 July 2020