Winner of the New Statesman SPERI Prize in Political Economy 2016

Monday, 28 September 2020

Sunak and most Tory MPs do not understand the economics/health trade-off, and many people will die as a result


It is well known and generally accepted that despite warnings from China, Italy and elsewhere, the UK government were late in imposing a lockdown that reversed the march of the virus . That mistake cost tens of thousands of lives, and a severe hit to national output.

You might have thought that this colossal error would have made the government fear the virus. Surely mistakes would not be repeated. But as Harvard epidemiology professor William Hanage notes, having not learnt the lessons from its neighbours its now failing to learn the lessons from itself. The Prime Minister, despite getting the virus in a life threatening way himself, is predisposed to tell good news stories, and so was too eager to relax the lockdown. Sunak egged him on, thinking only about how much money the Treasury was spending and the immediate impact on GDP. 

There seems to have been no strategic thinking about stopping a second wave developing. It was as if the government can only focus on one idea at a time, and after a belated focus on saving lives they moved on to restarting the economy, with no thought to how the pandemic might develop. The crucial failure over the summer was a failure to fix the problems with the private sector (not NHS) testing and tracing system, at the same time as expanding capacity to deal with an inevitable Autumn surge.

Any thought about strategy would have signalled the return to school and then the return to university as danger points that had to be handled very carefully, and almost certainly offset by restrictions elsewhere. Yet Dido Harding, who runs the privatised test and trace operation, said with a straight face that no one could have anticipated a rise in the demand for tests in late August and September. But it wasn’t just Dido Harding. Everyone in government, from Matt Hancock to superforecaster Cummings to the Prime Minister himself must have agreed that there was no reason why all this increased mixing among schoolchildren would lead to an increase in the demand for tests.

Perhaps they had their minds on other things. For example Hancock decided that the end of August was a good time to announce the abolition of Public Health England, with a new body to be run by none other than Dido Harding. It was another U-turn, undoing part of the Lansley reforms. The Conservatives seem to like reforming parts of the health service at times of maximum stress to that service. The reforms were supposed to take a few months, in time for a second wave, but instead they are happening during a second wave..

It is difficult to understand quite what ministers thought would happen once new coronavirus case numbers began to plateau at around 700 per day in July. It was obvious at that point that there was a big danger that people would become complacent, and relax on social distancing etc, leading to cases beginning to rise, which in August they began to do. Yet rather than the government emphasising the dangers of such relaxation, they were in full ‘save the economy’ mode, with things like Eat Out to Help Out, which may have helped the virus as well as restaurants. The Prime Minister and Chancellor began a big campaign to stop people working from home and instead come back to their offices. Luckily most ignored them, which may be one reason why most of the south east (excluding London) is relatively COVID-free.

These actions give the lie to attempts by the government to suggest that the only guilty party responsible for the second wave is the public. (Of course the government should lead by example, as it famously failed to do with Cummings’ eye tests.) Blaming the public is an absurd excuse anyway. Any government that assumed there wouldn’t be a gradual forgetting or ignoring of the oft-changing coronavirus rules is incompetent. A government should plan for what they expect behaviour to be, rather than assume everyone sticks to their rules.

This month things have gone from bad to worse. With reported cases rising rapidly, and true cases rising even more rapidly because of the failure of the testing system, the Prime Minister is repeating the mistake he made in March. The lesson from the first wave of the virus is that you act fast and act hard. You do not gradually tighten restrictions in the hope that this will be enough. You may get to the same place eventually, but the difference is measured in lives lost to coronavirus. Even if the Prime Minister had wanted to go further in combating the virus, his Chancellor, cabinet and Tory MPs could have stopped him.

In a similar spirit, the Chancellor replaced what was initially a generous furlough scheme with a modest wage subsidy scheme that, in the words of the Resolution Foundation, has design flaws that limit its ability to maintain employment and help firms. If there are design flaws coming out of a Treasury scheme that probably means the flaws are intentional.

The Chancellor talks about supporting jobs that are viable in the longer term. This is doublespeak unless the Chancellor thinks no vaccine will ever work and we are not going to eliminate the virus by other means. There is a real question about whether people who temporarily cannot work because of the virus could do something that benefits themselves and society instead, but the answer to that question is not unemployment. With incompetence comes a lack of imagination.

Collectively the Tory party, reading anti-lockdown nonsense in the Telegraph and other newspapers, has collectively failed to understand the economics/health trade off. Of course there is a very short run trade off, but this trade off disappears after a few months, because a failure to keep virus numbers low will kill the economy. This is not an idiosyncratic view, but the view of most economists, who understand that during a pandemic social consumption collapses. For most this is not because they are prevented from going to pubs, restaurants, football matches, concerts and so on, but because they do not want to risk their health and the health of others by doing these things. So even if you didn’t care about the thousands of deaths that would result from an anti-lockdown policy, that policy doesn’t do the economy any good either.

Once again the Tory party is ignoring the experts, and while in previous years that has led to lower incomes for most people and poorer public services, this time it will do those things and also lead to many more deaths from the virus. Why do Tory MPs and the columnists they read live in a fantasy land where they ignore the fact that Sweden has the highest death rate by far compared to other Scandivian countries, and as Nick Cohen points out has far more generous unemployment benefits and far better help for the unemployed than the UK? Is this the point where an ideology that idealises the market finally drives its followers mad, or are jobs and businesses in the areas that would suffer from a second wave, as well as thousands of deaths, of little interest to the party’s backers?

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