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Covid-19: Economic Costs

Volume 805: debated on Tuesday 28 July 2020


Asked by

To ask Her Majesty’s Government, further to the paper by Professor David Miles, Mike Stead and Dr Adrian Heald Living with COVID-19: balancing costs against benefits in the face of the virus, published on 26 June, what plans they have to ensure that in the future fuller account is taken of the economic costs of any measures adopted to address the COVID-19 pandemic such as lockdowns.

My Lords, it is a pleasure to be here in the House and I beg leave to ask the Question standing in my name on the Order Paper.

My Lords, in March the Government ordered the closure of certain sectors to control the virus, save lives and protect the NHS. Alongside this, the Government delivered an unprecedented package of economic support. The Government have set out a phased approach to reopening our economy to minimise the risk of a second peak of the virus. Public Health England, the Joint Biosecurity Centre and NHS Test and Trace constantly monitor levels of infection across the country and will work with local authorities to implement additional measures if needed.

My Lords, it is a great sadness to hear of the retirement of the noble Lord, Lord Darling. While I welcomed the Chancellor’s unprecedented package, the paper cited in my Question and UK experience in recent months show that the cost of the severe restrictions that we have imposed for medical reasons are large—indeed, much larger than the benefits. Does the Minister agree that the paper makes a strong case that the recent lifting of lockdown restrictions has been amply justified and that future measures adopted to counter any flare-up of infections should be carefully targeted rather than general, both geographically and of course as regards the protection of vulnerable populations?

My noble friend is absolutely right that, going forward, we want to use all the tools available to us to implement a targeted response to any local outbreaks. That would be first at an individual level to break the chain of transmission. Where that is not possible and there are local outbreaks, we will use the test and trace system to work with local authorities and local public health directors to contain the virus in that way. The national measures remain available to us, but we would not want to use them again.

My Lords, this is a complex matter, because economic, social and other community matters often go hand in hand. It is clear that many who have in these circumstances been bearing economic burdens are among those who are also the most socially disadvantaged. Bearing in mind the context of the forthcoming spending review, can the Minister give an assurance that the Government will take care to address the needs of such groups, including, for example, those affected by the benefit cap and those housed in the private rented sector, where repossession cases come before the courts again from later in August?

My Lords, I will not anticipate the spending review at this stage, but I can reassure noble Lords that analysis done of action taken by the Government until the end of May has shown that those interventions, alongside the existing tax and welfare system, have helped to reduce the loss of income of working households by up to two-thirds. The poorest households have received the most support as a proportion of their income. These measures have included, as noble Lords will know, the increase in the standard allowance of universal credit by £1,400 a year on top of existing uprating measures.

My Lords, I thank the noble Baroness for having the paper circulated to us. I briefly refer to the last paragraph, which talks about measures targeted specifically at groups most at risk but goes on to say:

“Such a policy should probably have been started before the end of June”.

I fear that the authors are not being realistic about the date for the targets and have not taken account of the difficulties for Ministers who wish to make a change but find that making changes is extremely difficult under our processes. I recall that, when Matt Hancock talked about increasing the targets for testing, he was met with derision. I hope that that will not happen here.

My Lords, I agree that the Government are in a different position in their response to the target now than they were at the start of the outbreak. We now know a lot more about the virus and we have developed in our research institutions the first effective therapeutic response to it. The test and trace system has been going for around seven weeks and has shown an increase in its efficacy week on week. We want to build on that so that we can have a more targeted and localised response to any future outbreaks.

My Lords, bringing in quarantine measures for different countries, such as Spain on Sunday, without any warning has severe repercussions for those businesses and families affected. Can the Minister say what rate of infection triggers such a rule change, or do the Government use some other measure before making their decision? If so, what can be done to give people more warning in order to lessen the adverse impact?

My noble friend the Minister in the Department for Transport will be able to give more detail about this subject in response to the Private Notice Question, but I can say that new data from the Spanish health ministry was published on Friday showing that new cases reported across the country on Thursday and Friday were up by 75% on those reported for the previous two days. This has been a fast-moving and changing situation in Spain to which the Government have reacted.

My Lords, my question is about specific localised job protection measures. Having read the report mentioned by the noble Baroness, Lady Neville-Rolfe, and taken note of its recommendations, and given the experience of managing the recent local lockdown in Leicester, what plans, if any, have Her Majesty’s Government for such specific localised job protection measures? If, as the report suggests, we move towards a more targeted approach, rather than the initial general approach, this will be critical.

I remind the noble Lord that many of the job protection schemes that we have set up remain in place, the biggest one being the job retention scheme, which will run until the end of October. We have also provided additional resources to, for example, Leicester, which has had to deal with a localised lockdown. As our test and trace data becomes even more detailed and accurate, we would like to target these measures even more in order to reduce any local economic impact.

What is the estimated cost to the public and private sectors of the decision by Public Health England to release Covid test data to local authorities on a weekly rather than a daily basis and without household identification?

My understanding is that local authorities get Covid data on a daily basis and that, since 20 July, individual-level data has been available to the teams that respond to outbreaks in local authorities.

Bearing in mind that this excellent paper is entitled Living with COVID-19 and that at the present time we have no idea how long we will have to live with it, and given that the paper concentrates on balancing, when do the Government intend to widen the debate to bring in advice from other academically qualified people such as economists and behavioural scientists, alongside the medical advice that they now receive?

I can reassure my noble friend that behavioural scientists make up part of the group of experts who are contributing to SAGE. In addition to that, the views of economists in the Treasury and elsewhere are inputted into Cabinet decision-making. My noble friend is right that we are going to have to learn to live with this disease for some time, so the safe reopening of our economy is focused on getting the public to make measures such as handwashing and social distancing part of their everyday lives until we find a longer-term solution, such as a vaccine.

My Lords, the original Question assumes a trade-off, yet the UK has the highest excess death rate in the world and is forecast to suffer the worst recession in the G7. Clearly, the last thing that the economy now needs is a second spike, so will the Minister consider extending statutory sick pay to the 2 million low-paid workers who still do not qualify for it but who may need to self-isolate even though they cannot afford to do so?

My Lords, the noble Lord is right that the UK has been hard hit by this virus, but I point out to him that that is also why we have one of the most generous fiscal responses in the world, at over £160 billion. The IMF estimates that UK tax and spending support in response to Covid has been greater than that in France, Spain or Italy.