Public spending during the Covid-19 pandemic

How much was spent on Covid-19 measures?

The Covid-19 pandemic resulted in very high levels of public spending. Current estimates of the total cost of government Covid-19 measures range from about £310 billion to £410 billion. This is the equivalent of about £4,600 to £6,100 per person in the UK.

Official figures show that spending in 2020/21 was about £179 billion higher than had been planned before the pandemic for that year.

_{Source: National Audit Office and HM Treasury (NAO/HMT), Office for Budget Responsibility (OBR), and International Monetary Fund (IMF); see section 1.1 of this briefing for details. Calculated using UK population estimate from Office for National Statistics (ONS), Population estimates for the UK, England and Wales, Scotland and Northern Ireland: mid-2020, 25 June 2021}

What was the extra spending used for?

Most of this extra money was spent on public services (such as the NHS), support for businesses, and support for individuals. Some of the most expensive schemes include the Coronavirus Job Retention Scheme (CJRS, sometimes called the furlough scheme) and NHS Test and Trace.

The departments responsible for most of the extra spending were HM Revenue and Customs, the Department for Health and Social Care, HM Treasury, and the Department for Business, Energy and Industrial Strategy.

How did the Government pay for extra Covid-19 spending?

All public spending is eventually paid for by taxes and other government income, but the amounts raised by these methods fell during the pandemic (which is common during economic recessions).

The Government compensated for this shortfall by increasing borrowing to £313 billion in 2020/21. The interest rates on government debt were low at the time, so the Government could borrow cheaply; however, with higher government debt, any increases in the interest rates on the debt would make it more expensive to pay off.

Is the Government still spending money on Covid-19 measures?

Although most spending directly related to the Covid-19 pandemic ended after 2021/22, public spending may have to remain high to respond to the long-term effects of the pandemic.

In the Autumn Budget and Spending Review in October 2021, spending forecasts increased substantially, particularly for health. However, it is not clear how far this was in response to the pandemic.