Would the Government’s £100bn Covid testing ‘Moonshot’ be good value for money?

Let’s imagine this ambitious programme could be successfully delivered. Would it make economic sense, given the size of that estimated price tag? asks Ben Chu

£100bn would represent around £1 in every £10 that the government had planned to spend in the Budget earlier this year

At Wednesday’s press conference where he justified fresh restrictions on the number of people who can meet socially, Boris Johnson also spoke of a “Moonshot” plan to tackle the coronavirus with a mass programme of tests that would give 10 million people a day results in just a few minutes.

The idea is that people would not have to travel to testing centres and that the samples would not have to be processed in laboratories.

“Our plan, this Moonshot that I'm describing, will require a giant collaborative effort from government, from business, from public health professionals, scientists, logistic experts and many, many more,” said the Prime Minister.

“Work is under way now and we will get on at pace until we get there, round the clock. We're hopeful this approach will be widespread by the spring.” 

Government documents soon found their way into the media which suggested this programme could cost £100bn. This is, to put it mildly, a large sum.

It would be more than double the annual national defence budget and double the transport budget.

It would be roughly equal to the amount the government spends on education.

It would be more than half of the UK government’s health spending.

It’s doubtful that the Government would be able to physically spend that amount of money in a short period of time.

The Office for Budget Responsibility (OBR), the Treasury’s official forecaster, has stressed that Government departments frequently underspend their allocated capital budgets – money earmarked for infrastructure and building project – and the OBR makes allowances for this underspend when it makes its public finance forecasts.

Further, the OBR adds that “history….shows that ramping capital spending up quickly is particularly difficult, implying larger underspends than when spending limits evolve relatively smoothly.”

To believe that the Government could deploy £100bn of public spending on the infrastructure for a new testing programme between now and next spring stretches credulity on those grounds alone.

There would likely be questions about waste and corruption, as rushed attempts by the Government to ramp up supplies of Personal Protective Equipment (PPE) purchases by buying from non-proven suppliers in recent months attest.

But let’s imagine the programme could be successfully delivered. Would it make economic sense given the size of that estimated price tag?

There is certainly a theoretical case. If an effective and reliable mass testing programme allowed the economy to re-open fully, rather than being beset by local or even a national lockdowns there would certainly be large economic benefits from that.

The OBR tentatively estimates that the level of UK GDP by 2025 could be between 3 and 6 per cent lower than projected before the crisis as a result of scarring from higher unemployment and lower business investment by companies. In cash terms that equates to between £60bn and £120bn of foregone output in that year alone.

The cumulative output losses between now and then would be far larger.

So, if a revolutionary mass testing programme were to be rolled out and prevented that scarring the programme’s economic benefits could outweigh its costs. The investment might even pay for itself in the form of higher taxation from a larger economy than otherwise.

Yet even if the proposed scheme was broadly reliable the sheer scale of it would create complications.

As the statistician Sir David Spiegelhalter has pointed out, any test is liable to create some false positives – people who are told they are infections when they actually are not.

Scale up the testing and you also scale up the number of errors.

“Even if you only have 1 per cent false positives among the people who are not infectious, and you are testing the whole country, that is 600,000 people unnecessarily labelled as positives,” he says.

Sage, the Government’s official scientific advisory group, pointed out in a document last week that, given a 10 day isolation requirement, twice weekly testing of the population could result in around 3 per cent of people being in isolation at any given time. 

In other words, it’s possible the result of a mass testing regime could be additional economic disruption if potentially millions of people a week are compelled to stop working or travelling because the new test wrongly signalled they had the virus.

Public health experts are agreed that, until we get a workable vaccine, large scale coronavirus testing is an extremely important public health tool. And most support the extension of testing in the UK from the current testing capacity of around 350,000.

The problem with the Moonshot rhetoric from the government is that it risks drawing resources – and official attention - away from necessary efforts to increase the capacity and resolve problems in the existing testing infrastructure system in favour of some utopian and, possibly unrealistic, technological fix.