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15 October 2020

How England is heading for the worst of both worlds on Covid-19

The country risks being left with all the costs of lockdown and all the costs of not locking down. 

By Stephen Bush

Household mixing will be banned in any indoor space in London from midnight on Friday night, while the Welsh government is set to turn the British government’s guidance that people in areas with high (tier two) or very high (tier three) numbers of coronavirus cases should not travel to medium-risk areas (tier one) into law. London’s lockdown means ten million more people will be under fresh restrictions, taking the total number in the United Kingdom to around 30 million. 

Putting up internal borders to prevent the spread of novel, or even just especially virulent, diseases is not new. The British state did so to prevent during the outbreaks of mad cow disease and foot-and-mouth. ​​​​But of course, restricting movement comes with a hefty cost – and the costs that the internal borders placed on British farmers in the 1990s and early 2000s are now being felt throughout the UK. 

The challenge for the devolved administrations is that their powers are built around the public health crises of the 1980s and 1990s: pandemics that devastated livestock, not people, and the HIV-Aids pandemic. If you’re Mark Drakeford or Nicola Sturgeon, you have all the policy levers to combat that type of pandemic. Yet in the case of Covid-19, the First Ministers have the ability to close businesses or curtail their trading – but not the ability to support them. 

Most hospitality businesses rely on the trade that comes from two or more households mixing: they can’t live on the business solely driven by people living together. Yet businesses receive no meaningful support if they are in tier two – and most businesses will not receive support even in tier three, because only those that are compelled to close will receive wage and operational subsidy. As I’ve written before, this isn’t an accident, it’s because Rishi Sunak is trying to reduce the amount the Treasury pays out in wage and business subsidy. 

But the question is: what’s the point? The perverse consequence of the Chancellor’s approach is that the devolved governments are incentivised to shut things down, in order to maintain their eligibility for the furlough scheme and other measures, rather than experiment with new ways to keep the economy going in the age of lockdown.

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And in England, either businesses and households will follow the rules in tier two – and bars, restaurants and clubs will go bankrupt in large numbers – or they won’t, and cases will spike so they’ll end up in tier three. The most likely outcome is that a bit of both will happen, and that whether by a thousand local lockdowns, or through a panicked second national lockdown later this month, we’ll end up with all the costs of lockdown, and all the costs of not locking down too.