The devastating cost of Covid will hang over us for decades
Fundamental reform of the economy is as important as ever, but Covid has made it significantly more difficult
If anybody believes that the recent good news about coronavirus vaccines means life will soon return to normal, Rishi Sunak will bring them crashing down to earth on Wednesday, when he announces the Spending Review. The vaccines, government insiders and pharmaceutical companies caution, will still take some time to conclude and then administer. And there remains the danger that Covid might mutate in ways that make the vaccines less effective. These are the reasons why, if we want to lift all restrictions on social and economic activity, we still need to develop the capacity to test hundreds of thousands of people on a daily basis.
This explains why ministers are now talking about restrictions lasting until Easter next year, albeit in a less stringent form. But however soon the measures are lifted, whatever magic medicine and science can deliver, we are not about to return to normal. We will be living with the consequences of this virus for years and decades to come.
Take healthcare. As the NHS has wrestled with the pandemic, other diseases and conditions have been neglected and vulnerable patients left untreated. Official statistics show that the number of people dying at home in England has risen by about a third this year. There has been a 25 per cent increase in deaths from heart disease among men, and a 75 per cent increase in deaths from dementia among women.
Waiting lists for treatment are also getting worse. According to the NHS target, 92 per cent of patients are supposed to be treated within 18 weeks, but this summer that was true for only 47 per cent: a total of
2.15 million people have been waiting longer for treatment. The number of cancer patients receiving prompt treatment has fallen from 86 per cent last year to a low of less than 13 per cent this summer.
A similar story of lost opportunity and human cost is playing out in schools. During the first lockdown, most young people lost around 12 weeks of face-to-face learning time, which is about a third of the school year. According to expert studies, the result is a “learning loss”, or reduction in academic attainment, of between 6 and 10 per cent. Teachers report children falling behind their expected progress, while learning difficulties are going unidentified and unaddressed.
And the problem is not only academic. Research suggests that, in England, 60 per cent of young people between the ages of 13 and 18 did not exercise regularly when schools were closed for lockdown. Mental health problems and cases of self-harm among children increased significantly. And even more tragically, suicides by young people rose by around 40 per cent during lockdown. “Many more young people will die from suicide”, government officials have noted, “than from Covid-19.”
Of course the people who are most likely to suffer the consequences of these problems are those who already need the most help. Prosperous families can buy private healthcare when necessary, and middle-class parents spend more time, on average, helping their children with schoolwork. A similar distributional effect applies to the economic carnage wrought by the virus.
About three quarters of a million people have already lost their jobs since the virus struck, and we know that among those hardest-hit are young people and the lower paid. And the pain will get much worse: some forecasters believe that next year unemployment will reach 9 per cent of the workforce.
But even alarming statistics like these do not show the full picture. Working out exactly who is losing out can be difficult when furlough distorts unemployment data, but studies of the total number of hours worked tell a familiar story. London has had the smallest fall, while the regions have suffered the most.
Rebalancing the economy between the prosperous South and the provinces is the Government’s stated domestic political mission. This task was tough enough already. But now, while Covid has made change and reform even more necessary to Britain’s future, it has made that change and reform harder to bring about.
From obesity to educational inequality, the virus has exposed some of our worst social problems. From public procurement to the delivery of social care, it has revealed many of our worst policy failings. It has demonstrated the lack of capacity in the British state, the chaotic mess of our devolved constitutional settlement, and the weakness of an economy that is over-reliant on London and under-performing outside a few dynamic sectors. Internationally, it has allowed China to steal a march on the West. At home, it has caused a budget deficit on a scale unknown in peacetime.
So what does Sunak do? He has already warned that tax rises, if not now then in the future, are unavoidable. And he has limited the Spending Review in scope, so it settles departmental budgets for the next year rather than the next three. This is far from ideal from the perspective of policy stability and political strategy, but reasonable given the radical uncertainty he faces. However, it does not prevent him showing the country the best way forward in a broader sense.
For we need to hear not only about the future of fiscal policy, but the Government’s wider economic policy. There can be no return to the economics or politics of austerity, so we need to learn how the Government plans to go for growth, returning to prosperity and cutting the deficit through higher tax receipts. We need a plan that recognises that levelling-up was not a luxury affordable only in good times, but a necessity that will bring greater fairness, opportunity and prosperity as well as, in the long-run, greater economic stability and stronger public finances.
Despite the virus, there is no need to lose heart and abandon the Government’s very purpose. But neither can ministers pursue that purpose as though the virus has not changed everything. Covid and its consequences undoubtedly make Sunak’s mission far harder, but they make it even more vital that he succeeds.