Rishi’s resolve will help to save lives and protect jobs
AS London gets pushed into Covid restrictions’ Tier 2, there is just one man, it seems, who is keeping the country from a second national lockdown. Rishi Sunak has been resisting demands by Cabinet colleagues for such a measure. Yesterday, he described it as a “blunt instrument” that “would cause needless damage” to regions with low virus rates.
The Chancellor is right. While Covid- 19 is a serious disease that has already caused or contributed to the deaths of more than 40,000 people in Britain, we can’t simply write off the economy in order to fight it.
Just look at the horrendous cost of the last lockdown. In March the Government expected to borrow £ 55billion in this tax year. By July, after three months of lockdown, the Institute for Fiscal Studies forecast that the deficit will now be closer to £ 350billion.
To put that into context, those 12 weeks when the shops were closed and we were all ordered to stay at home cost the taxpayer the equivalent of three HS2s, a project that has been widely damned for its extravagance.
IF a 12- week lockdown cost the public purse about £ 300billion, then a two- week circuit break would perhaps cost £ 50billion. What would we get for that money? According to the SAGE committee, all it would do is to delay the epidemic for 28 days after which we would be back in the same position as now.
That extra debt will hang around the necks of future generations. Interest rates are at 400- year lows, but even so the Government is already spending more on paying the interest on its debts than it spends on defence or transport.
It would be foolish in the extreme to imagine that benign interest rates will last. Few foresaw, in 1990 when interest rates were 15 per cent, that they would one day come to zero.
And few will see it coming when they start to rise, either. If they reach 15 per cent again, with government debt at current levels the country faces bankruptcy.
A second lockdown would cost businesses and individuals dearly, too. So far, millions of people have been shielded from recession thanks to the furlough scheme – which at one stage was subsidising the wages of nearly nine million workers.
Now it is being withdrawn, many of those workers will become officially unemployed.
Brewer and pub operator Marston’s yesterday announced that it was making 2,000 workers redundant. How can it do otherwise, when its pubs are not allowed to operate at anything near normal capacity and now face being shut altogether?
Most businesses have some cash reserves, which allowed them to keep going through the first lockdown. But you can only dip into your cash reserves for so long. Another lockdown and we will see once- strong businesses going down like ninepins. Some people find it distasteful to talk about economics when people are dying. But the economics of lockdown very much do matter, because poverty and unemployment costs lives, too.
Back in July the Department of Health and Social Care quietly published an analysis which predicted that the effects of lockdown will eventually cost more “quality- adjusted life years” than Covid.
This is partly down to people failing to seek or get timely medical attention for nonCovid conditions. But mostly it will be a result of greater poverty and unemployment in years to come.
THAT doesn’t mean we shouldn’t take serious precautions against Covid- 19. But it is a reminder that risks have to be balanced.
Once again, we are facing Hobson’s Choice. Get on with their lives as normal and face more cases and deaths from Covid- 19. Yet lock down again and that will cause misery and deaths, too.
Opinion polls suggest that at present a majority of the public is in favour of a two- week lockdown ( although that support may well crumble as unemployment rises). That was no doubt why Labour leader Sir Keir Starmer tried to seize the political initiative by backing calls for a lockdown.
Former Labour leadership candidate Andy Burnham, who has Greater Manchester to run and who understands the economic damage that a local lockdown has caused, simultaneously threatened to sue the Government if it introduces more restrictions in the city.
Having to balance the needs of health and the economy is not an enviable choice to have to make.
But Rishi Sunak is quite right to resist a second national lockdown. He, of all ministers, knows what it is at stake.
‘ The extra debt will hang around necks of future generations’