For min­is­ters, it would be best to keep out to help out

Gim­micky schemes are a mis­judged at­tempt to re­turn us to an ‘old nor­mal’ that may no longer ex­ist

The Daily Telegraph - Business - - Business Comment - Matthew lynn

A“seat out to help out” scheme to re­vive empty theatres is one pos­si­bil­ity. Free com­muter trains and tubes to start per­suad­ing peo­ple back into the of­fice is an­other. And of course, we have al­ready munched our way through 100 mil­lion half-price piz­zas on the wildly suc­cess­ful “eat out to help out” scheme. The Gov­ern­ment has al­ready come up with all sorts of wheezes to get the econ­omy back to nor­mal and is now look­ing at a few more. At this rate, it wouldn’t be sur­pris­ing to see a “dig out” scheme to help gar­den cen­tres. Or, in­deed, a “freak out” plan to get night­clubs and mu­sic fes­ti­vals restarted.

But hold on. This is get­ting crazy. In truth, we can’t keep hand­ing out vouch­ers and dis­counts like con­fetti.

Each scheme will in­evitably end up cost­ing far more than orig­i­nally planned. We keep on of­fer­ing in­cen­tives for get­ting back to nor­mal, but with­out any costs if we don’t.

And most of all, the Gov­ern­ment is sim­ply try­ing to re­set the clock to 2019, when it would be bet­ter to let the post-Covid econ­omy emerge even if there is some dis­rup­tion along the way. What we need right now is to re­store the econ­omy to long-term health – not sim­ply patch it up with a se­ries of here to­day, gone to­mor­row gim­micks.

The Chan­cel­lor’s eat-out scheme turned out to be a far greater suc­cess than ex­pected. Over Au­gust, it was used 100 mil­lion times and, for many restau­rants, Mon­day be­came the new Fri­day. In many big cities, it was hard to get a ta­ble. Inspired by that, plenty of other sec­tors are look­ing for sim­i­lar help. Over the week­end, we learned the Gov­ern­ment was look­ing at a “seat out to help out” scheme for when theatres, con­cert halls and sports are­nas are fi­nally al­lowed to open again. Like­wise, Trans­port for Lon­don re­vealed that a day of free train and tube travel was one of the ideas un­der dis­cus­sion to per­suade com­muters back into the of­fice, while sub­ur­ban ser­vices could get dis­counted rush hour tick­ets.

Once you start get­ting cre­ative about it, there is no end to the deals the Gov­ern­ment could of­fer. Gar­den cen­tres and night­clubs might need help. And, of course, beauty sa­lons (“tan out”), soft play cen­tres (“bounce out”) and theme parks (“ride out”). It would be worth sub­si­dis­ing gyms just be­cause “work out to help out” is such a good slo­gan. The list is end­less.

True, we can un­der­stand what the Gov­ern­ment is try­ing to do. In many ways, lock­down was too suc­cess­ful, if not at con­trol­ling Covid-19 then at clos­ing down the econ­omy.

With a 20pc col­lapse in out­put, it is prov­ing tough to get ev­ery­thing back to nor­mal. Of­fices re­main closed. The shop­ping malls are half-empty. And, of course, many venues re­main shut­tered. The trou­ble is, it is only go­ing to make the long-term prob­lems worse. Here’s why.

First, the schemes end up cost­ing far more than planned. By def­i­ni­tion, they have to be open-ended. The eat-out scheme was fore­cast to cost £500m, but by last week had al­ready racked up £522m, and restau­rants still have un­til the end of the month to claim. It is a fair bet the fi­nal bill will be closer to £1bn.

Blank cheques writ­ten by the Gov­ern­ment have never been a great idea. Not very surprising­ly, peo­ple like cheap and dis­counted stuff. There is a short-term boost, but over time the money to pay for it all still has to come from some­where.

Next, it’s all car­rot, when we need some stick as well. Sure, it is fine to try to en­cour­age peo­ple to go back to the restau­rants and shops, and to the theatres as well once they are open. But do we re­ally need to sub­sidise them to go back to the of­fice if they are prov­ing re­luc­tant to do so? Maybe we

Fort­num & Ma­son’s branch at the Royal Ex­change. All types of restau­rants have been im­pacted by coro­n­avirus should tweak em­ploy­ment law so that work­ing from home doesn’t come with quite the same range of rights? That would prob­a­bly be a lot more ef­fec­tive, and a lot cheaper as well.

Fi­nally, each scheme sim­ply tries to re­set the clock to 2019. It is based on the idea that post-Covid, ev­ery­thing will be ex­actly the same as it was be­fore. But that is not nec­es­sar­ily true.

We might well be evolv­ing to­wards a slightly dif­fer­ent post-pan­demic econ­omy. There will be fewer sand­wich chains, for ex­am­ple, and more home-de­liv­ered meals. Or not so many theatres, and more stream­ing ser­vices. Many com­pa­nies al­ready seem to get that. Pret A Manger, for ex­am­ple, is al­ready talk­ing about shift­ing to the sub­urbs and home de­liv­ery. The su­per­mar­ket chains are al­ready beef­ing up on­line shop­ping, while some shop­ping malls are re­design­ing space that re­tail­ers don’t want any­more as hot-de­sk­ing units for of­fice staff that only come in two days a week.

Busi­nesses and their cus­tomers can work out that bal­ance for them­selves. The im­por­tant point is this. It is not for the Gov­ern­ment – and cer­tainly a Con­ser­va­tive gov­ern­ment – to de­cide where and how peo­ple should spend their money. We have seen enough gim­micks over the last few months. The task now is to re­store and re­build the econ­omy on a sus­tain­able ba­sis, not just for a few weeks but for the next few years.

We still have no clear idea how long the epi­demic will last or what its long-term im­pact will be. But it has clearly ac­cel­er­ated a switch to­wards an on­line, work­ing-partly-from-home econ­omy. That still needs to be fine-tuned. Yet the Gov­ern­ment’s heavy-handed at­tempts to drive us back to the “old nor­mal” look in­creas­ingly fool­ish. Keep de­mand alive, spend enough to keep un­em­ploy­ment un­der con­trol and keep in­ter­est rates low – but be­yond that, let the mar­ket de­cide where and how we spend our money. And if you needed a slo­gan for that, “keep out to help out” would be a good one.

‘It is not for the Gov­ern­ment – and cer­tainly a Con­ser­va­tive one – to de­cide where peo­ple should spend their money’

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