The government has been accused of a “corrosive” lack of transparency after economists said the Treasury had overestimated the size of its economic support plans by as much as £20bn.
Rishi Sunak announced a £30bn “plan for jobs” last week, including subsidised restaurant meals, a VAT cut for hospitality firms and £1,000 bonuses for companies that kept furloughed staff on. But analysis by the Institute for Fiscal Studies (IFS) found the plan was party funded by cuts from elsewhere.
The think-tank criticised what it called a lack of transparency that was “corrosive to trust” in government.
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The Office for Budget Responsibility (OBR) said the total cost of the measures amounted to just £20bn, with £10bn coming from cutbacks in other areas, the IFS said. Additional spending is likely to be between £10bn and £12bn.
A £2bn green homes scheme unveiled last week is to be funded by raiding existing budgets, the IFS said; half of the £400m allocated for traineeships comes from cuts elsewhere; and all of the £5.5bn of capital spending that Boris Johnson announced in the previous week would come from reallocation of funds from other projects.
IFS director Paul Johnson said the “Rooseveltian” new deal announced by Boris Johnson to invest in schools and infrastructure “represents an increase of precisely zero this year on Budget plans”.
The IFS’ analysis confirmed Scotland would receive just £21m from the money announced to support the economy – “because [the] total spending envelope is so little changed by last week’s announcement”.
Commenting, the SNP’s Alison Thewliss said: “The Tory government has been rumbled. It’s now beyond doubt that the chancellor’s so-called recovery package was deeply disappointing and failed to deliver anything like the scale of investment needed to protect jobs and kick-start the economy.”
The IFS’ associate director, David Phillips, said: “In its summer economic update last week, the UK government launched its £30bn plan for jobs. What it didn’t say was that almost £8bn of that is to be paid for by spending less than previously planned on other things.
“Indeed, the whole of the £5bn of additional capital spending trumpeted by the prime minister a couple of weeks ago in fact represents funding previously allocated to other capital projects which will no longer happen this year.”
“Meanwhile, the OBR thinks the plan for jobs will cost £20bn, not £30bn. So the £30bn package turns out to be more like £12bn of additional spending plus some £8bn or so reallocated from previously planned projects.
“And capital spending is actually left no higher overall than was planned back in March.”
The Treasury hit back at the IFS analysis. A spokesperson said: “This suggestion is wrong. The Treasury has approved additional activity by departments as part of the plan for jobs.”
But the spokesperson acknowledged that “it’s true that some other projects are underspending across government – this is not unusual in normal times – and not surprising in a global pandemic”.
