In a new report, Lynn Pamment found that the financial impact of Covid-19 was ‘unprecedented’ and placed a ‘significant workload’ on Treasury officers, with the urgency of the situation requiring a ‘pragmatic’ approach to some decisions.
The report notes that the government ‘did not have adequate arrangements’ in place for cash-flow forecasting at the outset of the pandemic.
Net spending for 2020 was forecast to be £272 million higher than the Government Plan for revenue and departmental expenditure during the pandemic and £99 million for Social Security, but the final figures ended up being much lower – £132 million and £21 million respectively.
Mrs Pamment also noted that the government took out a revolving credit debt facility to provide potential borrowing of £500 million, which ‘provided back-up to avoid any potential requirement to sell equity holdings at a temporarily depressed price’.
She also pointed out that the standard procurement process was not followed in particular circumstances, leading to some breaches.
The report said that ‘pragmatic and effective arrangements’ were put in place for departments to submit business plans to request additional funding for Covid-related expenditure, should they need it.
Mrs Pamment said: ‘The States responded well to the impact of Covid-19 on their financial management arrangements.
‘The response included adapting existing arrangements and developing new processes. However, the stress placed on the States’ financial management systems has highlighted some shortcomings in the arrangements previously in place, particularly in reporting financial information to decision makers and forecasting cash flows.
‘The States should take this opportunity to consider lessons from the impact of the Covid-19 pandemic on their financial management arrangements and identify and secure improvements going forwards.’
