PM to join Bank chief in call for commuters to return to work

The capital is bankrupt, its business model destroyed by shifts in behaviour that may never now be reversed

BORIS JOHNSON will tomorrow tell the nation it is time to get back to work after the Governor of the Bank of England said people’s “fear” of commuting was “holding back the recovery”.

The Prime Minister is concerned that the economy is recovering more slowly than had been hoped after most lockdown restrictions were lifted, and wants people to return to their workplaces wherever it is safe to do so.

His worries were echoed by Andrew Bailey, the Bank of England chief, last night, who told Tory MPS he was shocked by deserted city centres such as central London.

Mr Bailey set out a three-point plan for saving city-centre economies, saying that ministers must restore confidence in using public transport, lift all remaining restrictions and get people back to work. He warned that if the Government did not follow his advice, the country would be “in a recession for a long time”.

Mr Johnson is expected to stick to a similar theme when he sets out a “road map” for the coming months at a Downing Street press conference tomorrow.

He is expected to change the Government’s official guidance, which still states that “people who can work from home should continue to do so”, and which also advises public transport be used only for essential journeys.

Civil servants have been told to prepare to get back to offices to set an example to the nation after ministers admitted that fewer than 10 people are working in some Whitehall buildings usually occupied by thousands.

Mr Bailey told the 1922 Committee of Tory backbenchers that workers must return to their offices to support cafes, restaurants, bars and shops.

He said he had been driving into his office at the Bank every day for 17 weeks and had been shocked how empty London felt, with commuters and tourists staying away. He said he is one of only around 80-100 staff working from the Bank each day, out of thousands who work there.

Mr Bailey, the first governor of the Bank to address the 1922 Committee in decades, said train usage remained below 20 per cent of capacity. One MP on the video conference said Mr Bailey spoke of his concerns that the “fear of using public transport is really holding back the recovery”.

Mr Bailey set out a “three-point plan” of how he thinks this needs to be addressed, according to the source.

Another MP said it involved: “One, trying to get people to overcome their caution and trying to get more people back on public transport. Two, unlocking all the restrictions as quickly as possible. And three, trying to boost productivity by getting people back to work. He said we’d be in a recession for a long time if we didn’t do all these things.” A third source said: “The point he was making was that the only way we are going to revive central London and other city centres is if people feel confident about using public transport.

“And until they feel confident about using public transport, then they are not going to return.” Mr Johnson has indicated that he wants the official advice on going to work to change, having already suggested people should go to work if they can do so safely. However, he must first convince Chris Whitty, the Chief Medical Officer, and Sir Patrick Vallance, the Chief Scientific Adviser, that it is safe to change the advice, otherwise he will be open to accusations that he has ignored his own experts. The two scientists have in the past routinely joined Mr Johnson at his coronavirus press conferences, and Mr Johnson will today ask them for their support when they attend a meeting of the Cabinet’s Covid-19 committee, which decides policy on coronavirus.

Prof Whitty and Sir Patrick will also attend a meeting of the Scientific Advisory Group for Emergencies today, at which the risks of further easing lockdown measures will be discussed.

Earlier this month, Prof Whitty appeared lukewarm about the Government’s decision to allow pubs and restaurants to reopen, and said it was “absolutely not” a “risk-free next step”.

Mr Johnson said last week that he wanted people to go back to work and support the economy, but this appeared to have little effect. Network Rail said passenger numbers were 20 per cent of pre-covid levels on Monday, with no discernible rise in footfall from a week earlier. He now believes changing the official advice is the only way to change behaviour, and wants civil servants to lead the push.

In some Whitehall buildings, as few as one in 400 workers are physically present, and one Government source said: “Civil servants will need to be dusting off their suits after Friday.”

However, Mr Johnson faces resistance from the unions, with Dave Penman, general secretary of the FDA civil service union, saying his members were “there to provide vital public services, not simply supply customers to city-centre economies”.

Rail firms are already abandoning the message to avoid unnecessary journeys. Thameslink, which operates in the South East, has removed posters telling people to travel only if essential, and replaced it with advertising urging people to “travel safely this summer”.

Mr Johnson yesterday committed to holding an independent inquiry into the Government’s handling of Covid-19.

This was the week when the penny finally dropped. The prevalence of coronavirus may have collapsed across Britain, but we are not returning to our old, carefree ways for the foreseeable future. This will have immense, permanent consequences for our economy and way of life. Its most devastating impact will be on central London, which is facing an extinction-level event.

The Government’s mask-wearing edict shows that it remains terrified of a second wave, and doesn’t understand why, whether or when the virus will return. Its only solution remains a vaccine or a cure: prospects are promising, but it will be months at best before mass inoculations can begin.

It’s not just in Britain where neither the establishment nor the bulk of the public is prepared to live with the virus. California is shutting its restaurants again, Los Angeles and San Diego won’t be reopening schools, Melbourne is back in lockdown, Israel is in crisis, and masks will be mandatory in French public spaces.

For better or worse, neither West nor East will tolerate a resurgence in infections; they will hunker down again. There is apparently no other plan, no hope until we get a vaccine or cure. This über risk-averse approach will also apply to any major new virus: social distancing, masks and homeworking are bound to be reintroduced each time a new infectious disease appears anywhere in the world, and even during significant flu seasons.

The implications will, in many cases, be catastrophic. The old order could have survived a once-in-a-generation government-subsidised hibernation, an extended Christmas holiday; it cannot cope with indefinite social distancing, and the threat of similar shocks every three to four years. We now face an excruciating period of destruction as malinvestment is purged, jobs are cut, debt is written off and resources are reallocated.

The private sector is already adjusting: many will delay the return to offices planned for September, regardless of official advice. Why move workers back if this will need to be reversed in November or December in the event of a second wave? The longer workers stay at home, the less likely they are ever to come back fully. I don’t know a single employer who believes they will revert to previous levels of office working. The interaction of the virus and technology will create a new class divide in Britain: those who can work from home, and those who can’t.

Until now, the most successful geographies were those that attracted members of the former category. Yet this is now a recipe for disaster: London’s economic and political business model has suddenly been rendered unsustainable, with office districts turned into ghost towns. The Greater London Authority, and Transport for London, its main asset, are, in effect, bankrupt, with nearly empty Tubes meaning fare revenues are in freefall, reliant on handouts from the Government. Devolution is over, de facto if not de jure. Sadiq Khan has accelerated his own demise by hyping the risks of public transport, but his likely reelection next year will mean nothing. His power – other than to infuriate his Tory minority in London by tolerating graffiti, hiking the congestion fee, shutting roads and cutting the police – has evaporated.

The private sector, for its part, is facing gargantuan structural losses: the economics of offices and retail is predicated on mass commuting and tourism. The former won’t fully come back; the latter will take a year or two. The arts, luxury, fashion, transport, hospitality, restaurant and many service industries face decimation. It’s a full-on biotic crisis: London’s economic ecosystem is suffering an immense decline in diversity. Lowerpaid jobs, in particular, are being culled; the population could fall, with tens of thousands returning to Europe.

Ever since the Eighties, Britain has led the way in shifting its economy to exportable knowledge work, with an emerging London megalopolis cashing in on agglomeration effects and the increasing returns to scale from the clustering and networking of educated workers, entrepreneurs and firms.

In 1986, Big Bang transformed the City; in 1988, Lord Lawson slashed the top rate of tax from 60 to 40 per cent; in 1991, Canary Wharf opened for business. Starting with Michael Howard’s time as Home Secretary, a crackdown on crime made inner London a safer place for the middle class. In the 1990s, Tony Blair massively increased immigration; and billions were spent on public transport, culminating in London’s population recently smashing its previous 1939 record of 8.6 million.

A few years ago, Bridget Rosewell, an economist, revealed how the capital lost 1 million, mostly manufacturing, jobs on radial routes in the suburbs over three decades and created 1 million, mostly high-value-added services jobs in central London. Suburban factories and offices became homes. Economic activity became hyper-concentrated in the centre. This model was seen globally as a triumph of renewal. There were risks: it was contingent on staving off urban decay, avoiding terrorism, making sure taxes were not hiked, ongoing vast subsidies to public transport, continued globalisation, containing property prices – and yes, avoiding pandemics.

As to the downsides: the rest of the UK failed to pull off its own transition, becoming addicted to transfers from London; and the capital’s culture shifted corrosively, becoming the epicentre of Remainia, Corbynite attitudes and intolerant illiberalism.

This is a moment of extreme danger for the economy, which faces a productivity shock if agglomeration effects cannot be replicated when workers scatter widely, but there is a way out. Boris Johnson must not seek to prop up bankrupt central London investors. Instead, he must allow the market to work, and encourage Tory heartlands – suburbia, exurbia and smaller cities – to hoover up London refugees, workers who no longer need to commute daily. New, more spacious, houses will need to be built, not just tiny city-centre flats, as well as a new generation of suburban or out-of-town flexible offices. We will need electric cars, not HS2.

It once seemed that levelling up was about making the rest of the country more like London – now, it is the opposite. Britain’s only hope is a suburban renaissance.