Today sees the belated lockdown reckoning
This time last year, the country was still in the grip of a Covid pandemic panic. Despite the vaccination of much of the country, a surge in cases and a rise in hospitalisations caused by new variants led to the reimposition of mask wearing and other controls. At one point, it appeared that Christmas would be cancelled again until the Cabinet pushed back against scientific pressure for a new lockdown.
Rishi Sunak, then chancellor of the Exchequer, was among the strongest voices opposing further mandatory restrictions because of the impact on the public finances. But even so the Treasury had to dig deep into the national coffers again.
A year ago, Mr Sunak may have had his doubts about the wisdom of yet more spending but he had already presided over the biggest peacetime accumulation of debt, ostensibly to sustain the economy through the pandemic shock. His difficulty now that he is in No10 is that the bills must be paid. Today’s Autumn Statement, likely to be the most painful fiscal retrenchment for decades, is at least in part the consequence of a series of wrong decisions that has left the UK in a worse position than most other similar countries.
Of course, the war in Ukraine and its impact on energy supplies has hit prices across the board, forcing up inflation to 11.1 per cent by the latest CPI measure. It has led the Bank of England to start raising interest rates in a belated attempt to counter the inflationary pressures. Additionally, September’s ill-fated “go for growth” mini-budget spooked the markets and caused the cost of borrowing to rise faster than would otherwise have been the case. Jeremy Hunt, the Chancellor, will seek to revive confidence in the UK’S fiscal prudence in his package later today. The great danger is that he will tip the balance too far the other way and deepen the recession.
But the real context for his statement and for the country’s – and the world’s – economic woes is the pandemic and specifically the lockdowns it engendered. This strategy began in China and was emulated almost everywhere around the world. Countries that declined to follow suit, such as Sweden, were denounced for recklessness but actually ended up in a better position than those that did.
Here, Boris Johnson was castigated for locking down too late and the criticism caused ministers to become excessively cautious when it became clear that the risk to the wider population was smaller than feared. This continued even after vaccines were available. The government kept schools shut when they were open in the rest of Europe and created a confusing mess of restrictions, tiers and obligations.
This was principally carried out in the name of protecting the NHS, which it was feared would collapse under the pressure despite operating at well under capacity throughout. The growing backlog of routine treatments is now hindering the economic recovery because so many are off work. The pandemic mostly affected older people, with the age of death from Covid greater than average life expectancy. Yet now it is apparent that much younger people are dying as a result of late diagnoses of conditions that might have been treatable had they been caught earlier.
Mortality should be lower than usual now that the pandemic has done its worst and taken the most vulnerable; and yet figures show that more people on average are dying than would normally be expected. In seeking to protect the NHS, we have engineered a health crisis whose long-term impact will be greater than Covid.
Throughout the pandemic, we urged the government to consider whether the measures it was taking might turn out to cause greater damage than the disease itself. No government had ever planned for putting the economy into a coma and then expecting it to wake up raring to go.
Moreover, those in power were urged on by opposition MPS who would have locked down for longer and borrowed more. Their inevitable criticism of Mr Hunt’s announcements applies just as much to themselves.
The harm these policies have caused is probably incalculable, but some attempt should have been made to carry out a cost-benefit analysis of lockdowns, certainly within a few weeks of the arrival of Covid. Today’s Autumn Statement is that reckoning.