Rishi Sunak has been accused of repackaging up to £10bn of previously announced government spending to form the backbone of his summer statement plan to save jobs during the pandemic. Serving the chancellor with a blunt rebuke, the Institute for Fiscal Studies said it was “corrosive to public trust” for the government to reallocate old funds and pass them off as new money. It said at least £8bn and up to a third of the £30bn coronavirus response package announced by Sunak in his summer statement last week would be funded from underspending on previously planned projects. David Phillips, an associate director at the IFS, said: “It makes scrutiny of plans more difficult and is corrosive to trust. While governments of all stripes will, of course, want to follow the adage of ‘repetition, repetition, repetition’ when it comes to highlighting the goodies they are funding, official policy documents should also be clear about when and where spending is expected to be lower than previously planned too.” The country’s leading tax and spending thinktank said the package unveiled by the chancellor included £5.5bn in transport and infrastructure projects announced by Boris Johnson that was in fact money reallocated from other schemes. The government has been clear that the infrastructure package announced in the prime minister’s “new deal” speech was from old money, representing instead the acceleration of previously planned investments. Paul Johnson, the director of the IFS, wrote on Twitter: “All that extra money announced by govt last week not quite what it seems. The ‘Rooseveltian’ additional £5.5bn of capital spending represents an increase of precisely zero this year on budget plans. Is a reallocation from one set of projects to another.” In addition, the IFS said, the £2bn “green homes grant” announced by Sunak to help insulate Britain’s energy-inefficient homes had been allocated from previously announced spending, and the £400m for traineeships, apprenticeships, school leavers and careers advice in England was from an existing funding pot. Labour said the report was evidence that the government was doing too little to protect jobs as the British economy sinks into the deepest recession for 300 years, triggered by the coronavirus pandemic. Unemployment is expected to more than double this year, to hit the highest levels since the 1980s. Bridget Phillipson, the shadow chief secretary to the Treasury, said: “The summer statement unravels with every passing day. Money targeted to those who don’t need it, money for second homeowners rather than social housing, and now money for new pledges using money for old ones. “Passing old money off as new is no way to save jobs.” Earlier this week, the government’s tax and spending watchdog, the Office for Budget Responsibility, said the chancellor’s £30bn plan to save jobs was worth about £20bn. It said this reflected the fact that many of the measures were already in its forecasts, and that it did not expect the government to pay out all of the £9.4bn earmarked for paying £1,000 bonuses to businesses bringing back furloughed staff. The IFS said the discrepancies in the chancellor’s statement emerged because the UK’s devolved administrations in Scotland, Wales and Northern Ireland were in line to receive less money than would have been the case if the spending package were entirely new. It said the Scottish government would have got about about £750m via the Barnett formula – the system for allocating the share of new public spending to the devolved administrations – if the funds were new. Instead, Scotland will receive about £21m for the additional spending measures in Sunak’s statement. It will also get more due to the chancellor cutting stamp duty, with Holyrood set to receive about £120m in total, the IFS said.
Alison Thewliss, the Scottish National party’s Treasury spokeswoman, said the Tories had been “caught out bending the truth”, adding: “Much of the money is recycled and reallocated from previous spending, with just a fraction of new investment. When it comes to saving jobs, smoke and mirrors simply won’t cut it.” The IFS said reductions in spending in some areas and shifting the funds elsewhere was reasonable, because old projects may now be deemed less of a priority or infeasible due to Covid-19. However, it said, a lack of transparency over where spending would be lower had led to confusion over the scale of the support. Phillips said: “A lack of illumination leaves significant scope for misunderstanding and even misrepresentation of the UK government’s plans. So, can the UK government please turn on the lights?” A Treasury spokesperson said: “This suggestion is wrong. The Treasury has approved additional activity by departments as part of the plan for jobs.” • This article was amended on 17 July 2020. An earlier version which said that the Scottish government will receive about £21m for the additional spending measures in Sunak’s statement had not taken into account the cut in stamp duty, which brings the total up to about £120m. This has been corrected.