The younger generation cannot be sacrificed again as they were before
There must be no repeat of the reaction to the 2008 financial crisis when those starting out bore the brunt
How will the UK’S response to coronavirus affect people of different generations? Last year, I sat on a House of Lords committee considering “Intergenerational Fairness” following government interventions after the 2008 financial crisis. It had crucial lessons to consider for the Covid-19 crisis.
The committee’s report concluded that economic measures taken by the government to support banks and pour money into the economy through quantitative easing had favoured home owners, stock holders and pensioners. In short, older people did better than the young who were caught by the immediate impact of the crisis, and then the cold wind of austerity.
It strikes me that the current government has a similar moral dilemma concerning the fairness shown to different generations in pursuing its pandemic policy, but on a much, much greater scale. For example, the hospitality sector has currently lost all its business, as has high street retail. Research suggests more than 20pc of customers have neither the money nor confidence to return swiftly after lockdown, and this will worsen the longer the crisis lasts. That is borne out by evidence from countries emerging from the crisis where sales are half what they were on reopening. There is also the knock-on to the supply chain. British farmers are throwing milk away or selling it for a pittance as they have lost catering sector trade. They will not be able to continue in this situation.
At Fairtrade, where I am chairman, we are seeing 50 tons of fresh-cut Kenyan flowers thrown away each day and tens of thousands of flower workers losing their jobs. The price of tea has plummeted by 40pc in India. Clothing contracts worth $1.5bn (£1.2bn) have been cancelled in Bangladesh. We are storing up global as well as national economic problems.
The Government’s financial intervention may help some firms survive, but many more are vulnerable now than in 2008, with problems intensifying the longer the lockdown rolls on. Already, we have nine million furloughed workers and rapidly rising unemployment. This economic shock and the cost to come of “righting the ship” will again be shouldered by the younger part of society.
Most would agree that a lockdown is sensible to allow the NHS to build capacity to treat Covid-19 patients as well as all others. The plan to flatten the rate of hospital admissions and deaths seems to be working. The Government is managing the mortality risk by closing the economy, but at some point, will have to decide if some or all of that risk needs to be passed back to individuals, and particularly those in the most vulnerable groups.
Perhaps it will ask them to keep self-isolating, pending a vaccine or reliable mass testing, so that an indefinite blanket lockdown can be lifted, which, as we learnt from 2008, will impact severely on other groups.
Around 75pc of the country’s tax take comes through business; the lockdown must be lifted as soon as possible so we can begin paying back its incredibly high cost. Opening schools and getting younger workers back to work, sooner rather than later, will allow us to repair some of the intergenerational damage this crisis has both wrought and exacerbated.
‘Getting younger people back to work will repair some of the intergenerational damage wrought’
Lord Price is a British businessman and former managing director of Waitrose and deputy chairman of the John Lewis Partnership