ALEX BRUMMER: No10 is flying blind

ALEX BRUMMER: When it comes to the economic impact of the coronavirus tier levels, No10 is flying blind

Finally MPs, the business community, employees and the rest of the country are discovering a terrible truth.

When it comes to the economic impact of the tier levels that will determine the future of enterprise up and down the country during the coming months, the Government is clearly flying blind.

Yesterday’s ‘impact statement’ was designed to persuade dissenting Tory MPs it was right to place almost the whole country under tough Tier 2 and Tier 3 measures.

Yet it did not even begin to weigh the economic and health costs against those of the pandemic.

Left: Prof Stephen Powis, medical director of NHS England. Britain’s Health Secretary Matt Hancock. Right: Gordon Messenger, head of operations for the community testing programme

Instead, a feeble, regurgitated 48-page report was dished up that simply referred back to last week’s economic forecasts from the independent Office for Budget Responsibility – which itself admitted it ‘does not model the precise detail of specific restrictions’.

In spite of spending more on fighting the pandemic than any other G7 Western economy (bar Canada), the UK is heading for the worst outcome.

Output has been savaged and is projected to tumble by 11.3 per cent in 2020. 

That is not only the biggest decline in national wealth for more than 300 years, it is even worse than Europe’s sickest large economy, Italy.

Japan, which avoided both a full lockdown and anything as intrusive as Britain’s higher tiers, will see a slump half that size.  

President Trump is mocked for his cavalier, free-wheeling approach to the pandemic, but the death rate per 100,000 people in the US is still lower than in Britain, with output hit nowhere near as badly.

ALEX BRUMMER: Yesterday’s ‘impact statement’ was designed to persuade dissenting Tory MPs it was right to place almost the whole country under tough Tier 2 and Tier 3 measures. Pictured  the Christmas lights on Oxford Street

It is not as if the British Government lacks the tools to analyse these things properly.  

The Office for National Statistics admirably produces weekly data which can be used to make credible economic assessments of different degrees of shutdown.

In the past week, it found the footfall – the number of people visiting shops and other outlets – plunged almost 55 per cent, while the furloughed proportion of the workforce climbed 6 per cent.

Government policy zig-zags, determined by the R rate and fears about pressures on the NHS, have shattered the high street, pubs and the hospitality sector.

The practical difficulties of opening and shutting firms, dealing with staff and cash flow – let alone making decisions about the future – have been absolutely neglected.

The impact document makes it all too clear that Sage and the Government see the appalling economic damage of tiers and lockdown as of secondary consequence. 

Yet all around us is commercial desolation.

The road to the collapse of Philip Green’s Arcadia empire and the threat to 13,000 jobs may have been paved over the past decade. 

But the final stretch was created by the pandemic response that took Debenhams and Edinburgh Woollen Mill (owner of Peacocks and Jaeger) down with it.

In the hospitality sector, the cries of anguish from Greene King and Wetherspoon, which spent tens of millions of pounds Covid-proofing their premises, are heart-breaking, as is the sight of innovative new brewers pouring hand-crafted ales down the drain.

The Government cannot be unaware of the tremendous damage done to accommodation and food services. In the first quarter of this year, these shrunk by 98 per cent. 

Between January and November they collapsed by 68 per cent, in spite of the generosity of the Eat Out To Help Out scheme. 

ALEX BRUMMER: Government policy zig-zags, determined by the R rate and fears about pressures on the NHS, have shattered the high street, pubs and the hospitality sector

Yet destroyed livelihoods and the appalling impact on Britain’s general and mental health seem not even to have crossed the minds of Sage’s blinkered health fanatics.

One can understand scientists living in fear of taking their foot off the brake in the fight against the virus. 

But the Government is tasked with balancing the science with the economy.

The flimsy acknowledgement yesterday that Covid has ‘had major impacts on the economy’ comes nowhere near to explaining how we can continue to maintain restrictions in the face of surging unemployment and a black hole of £394billion in public finances.

Britain’s services-dependent economy has been dealt a nasty blow and the tier system, imposed without real analysis, is another catastrophic jolt.

As an optimist, I am hopeful that despite the ghastly mistakes, the initiative and resilience of the UK’s citizens – together with the dynamism of our entrepreneurs and wealth creators – will see us through this and our eventual return to prosperity. 

But the nation deserved so much better.

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