Some of these figures comparing the cost of the government job retention scheme to other government spending are wrong.
10th Jun 2020
A Facebook post shared thousands of times has compared the cost of the government’s furlough scheme to other public costs and spending.
The post claims that the scheme brought in to retain jobs amidst the new coronavirus pandemic is currently costing the government £14 billion per month. If continued at the same rate, then by October the cost of the scheme will have been £69 billion. This is then compared to what is claimed as the cost of bailing out the banks in 2009 (£500 billion), the cost of renewing Trident (£200 billion), the cost of HS2 so far (£106 billion) and the amount of tax dodged in the UK per year (£70 billion).
While the figure for the cost of the government’s job retention scheme is correct, the figures compared against it need more context and are vague in meaning, some are also incorrect. It should also be pointed out that they’re not necessarily very comparable figures; renewing trident, HS2, and bailing out the banks are and were years-long initiatives with spending spread out over long periods of time. Yearly tax and currently the furlough scheme are much shorter initiatives.
The £14 billion a month figure for the government furlough scheme is correct according to an estimate from the Office for Budget Responsibility.
The post claims that £500 billion was spent bailing out the banks. This is incorrect. The actual amount spent bailing out the banks was £137 billion, and most of this has been repaid. We wrote about this in 2019.
The £500 billion figure could refer to the value of the UK bank rescue package announced back in 2008. That was the amount of money made available by the government, but not all of it was spent.
The claim that renewing Trident cost around £200 billion appears to come from an estimate done by the Campaign for Nuclear Disarmament (CND) about Trident’s lifetime cost up to the 2040s. That’s above the government’s estimate which was around £41 billion in to build the submarines 2016, not including a £2.1 billion yearly service cost. The CND’s estimate includes these figures but also looks at additional costs like decommissioning.
The post claims that the “cost of HS2 so far” is £106 billion. The “so far” could refer to the fact that the estimate for the cost of HS2 has been revised many times, and the latest estimate stands at £106 billion. However, this shouldn’t be understood as how much has already been spent on HS2, which is estimated to be around £7.6 billion.
It’s difficult to say with any certainty the value of “tax dodged in the UK per year” and the definition is open to interpretation.
HMRC has a measurement called the tax gap, which estimates the difference between the tax that should have been paid and the tax actually paid. This includes tax evasion, but also things like tax calculation errors, which you might not consider as “tax dodged”. HMRC found that the tax gap in the 2017/18 financial year was £35 billion, with £5 billion of this attributed to evasion and £1.8 billion to tax avoidance.
A figure of £70 billion a year was suggested by Richard Murphy who writes the blog Tax Research UK back in 2010. The figure has been widely quoted in the press and may be the source for the Facebook post, we’ve looked at it before and found it’s hard to say what the true figure is with confidence.
The National Audit Office has said in the past that the tax gap is “inherently difficult to estimate”. You can read more about the various difficulties here.
Update 16 June 2020
We have updated this piece to clarify that the 41 billion figure estimated by the government for Trident in 2016 was just for building the submarines.