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12 October 2020updated 14 Oct 2020 3:24pm

The new Covid-19 tier system doesn’t fix the government’s real problem

The public’s uncertainty over local lockdown rules was caused by the government’s own confusion – and that hasn’t changed.  

By Stephen Bush

Boris Johnson will unveil a new system of lockdown “tiers” to simplify the complex thicket of local lockdowns that have arisen across England. The exact details of the scheme have been the subject of fraught negotiation and, as a result, they have been regularly leaked: but whether or not the new system ranks lockdowns from one to three, medium to very high, or Lemon & Herb to Extra Hot, the important change, hopefully, will be that people will begin to understand what the rules are again.

[see also: Why herd immunity is not an option for the UK as it faces Covid-19]

Harder to understand are the perverse incentives and palpable unfairness created by the new furlough system. Where businesses are told to close, their employees will have two-thirds of their salaries paid by the state, and they will receive up to £3000 of financial support until they are allowed to reopen. There are two problems here: the first is that two-thirds of your salary for the average person working in the industries most likely to be shut is thin gruel indeed. The second is that it is far from clear why, to take the planned restrictions to come in Liverpool as an example, a restaurant that is allowed to remain open but where inter-household mixing is banned should receive no government support, while a pub that is prohibited from trading should.

And while plans to prohibit people in tier three areas from travelling outside of them other than for work and education – not least because how on earth would this rule be enforced – look to have been stymied, if people in a tier three (that’s Extra Hot) zone opt to follow the spirit rather than the letter of the rules, they will surely refrain from travelling elsewhere, which will further hammer the UK’s tourist hotspots. Why should my favourite pub in east London get government support but my preferred bolthole in Shropshire get nothing? It creates a perverse incentive for the devolved governments to compel businesses to shut and be protected for the long run, rather than keep them open in a different form.

[see also: Rishi Sunak’s middle way on Covid-19 is the worst of all worlds]

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The answer to that question is that Rishi Sunak is keen to reduce the level of subsidy for businesses, but has been defeated on the overall policy argument. These compromise measures are the product of that internal debate: the trouble is that the resulting compromise is the worst of all worlds. The economy can’t meaningfully “adjust” to the coronavirus while large parts of it are facing serious and geographically-uneven restrictions. The government can’t bring a halt to its mounting debts while extending further subsidies in a piecemeal fashion, and added to that, the subsidies are being delivered in an unfair way that will cause hardship and bankruptcy to millions. The new system of tiers may be easier to communicate, but the cause of the initial confusion, that the government itself is confused about what to do, remains in place.

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