The government is divided: between ministers who want to go into a lockdown, and between ministers who want to bring the United Kingdom’s generous coronavirus subsidies to an end.
Because Boris Johnson has not chosen between those two schools of thought but has instead opted for a middle path, the UK’s current policy mix actively discincentivises businesses seeking to transition to operating in a covid-secure way – because it is only businesses who are forcibly shut down by the government that are eligible for the next round of wage and operating subsidy. Businesses who are trading will be able to use the new job support scheme, but its design makes it more expensive for businesses than simply cutting jobs and hours. The transformational policy levers are only available to your business if you are shut down.
That’s the lens, too, to understand the prohibitions placed on businesses under England’s new three-tier system. Bars, pubs and restaurants in “medium” or “tier one” areas – that is, the default setting – have to shut at 10pm and cannot accept parties greater than six. The same establishments in “high” or “tier two” areas face the same restrictions and, in addition, a ban on mixing between households.
But it is only pubs and bars in “very high” or “tier three” areas that will actually be forced to close – and even then, not if they serve a “substantial” main course. Restaurants will be able to remain open – and will, therefore, not be eligible for financial support.
A lot of the commentary around this has focused on how silly it is – on the fact that many pubs can escape the instruction to shut by increasing the amount of food they offer, and that people will be ordering “meals” consisting of the soup of the day, eight tequila shots and a pint of lager. This is good fun and I’ve done it myself, but it’s not quite accurate: in practice this is not an attractive future for most “wet” (that is, booze-only) pubs.
Firstly, someone who has had a square meal and a drink is more likely to observe social distancing when they leave the pub than someone who has just had a drink. It really doesn’t matter how many drinks those two otherwise identical customers have had: the one who has had a meal is less of a disease vector than the one who hasn’t. But secondly, and perhaps more importantly: the immediate effect of these loopholes is to sharply reduce the number of businesses which are eligible to seek government support.
A pub, bar or restaurant that has been deprived of its post-10pm trade is already under severe financial pressure. One that has been deprived of any custom that comes from mixing between households – from dates between new couples, catch-ups between friends, and so on – is under yet greater pressure. Frankly, any hospitality business that does a significant Christmas party trade is heading for a very painful winter – yet they will receive no additional financial support unless they are a very narrowly defined group of bars and pubs in tier-three areas.
These loopholes aren’t silly, or ill-thought-through: they are masterful examples of a Chancellor and a Treasury that might have lost the policy argument internally but that are finding ways to get their way at the implementation stage nonetheless: by sharply reducing the amount they have to spend in subsidy to businesses and to households even while superficially caving to internal and external political pressure.