Coronavirus: Government paper offers no assessment of economic impact of restrictions on areas in different tiers

Uncertainties of pandemic means estimate of economic impact would not be 'meaningful’

Boris Johnson is facing a substantial Tory revolt over his plans for new coronavirus restrictions, after a government assessment of their economic impact failed to win over sceptical backbenchers.

MPs in Westminster said the document - issued on the eve of Tuesday’s crunch vote - did not answer the demand of the Covid Recovery Group (CRG) for a full cost-benefit analysis of the damage the three-tier system will do to businesses and jobs on a regional basis.

And there was anger over a suggestion from newly-appointed vaccines minister Nadhim Zahawi that pubs, restaurants and other venues might in future demand proof of vaccination as a condition of access.

Rather than setting out the social, economic and health justification of allocating areas including Greater Manchester, the West Midlands and northeast to the toughest tier 3 band, the paper said it was impossible to make “meaningful” predictions of the impact of particular restrictions.

It acknowledged that controls have had “major impacts” on the economy, but said that the alternative of letting the disease grow exponentially would be “much worse for public health” and the prospect of the NHS being overwhelmed was “intolerable”.

More than two-fifths of England’s population is due to go into tier 3 when lockdown expires on Wednesday, with 57 per cent going into tier 2 and just over 1 per cent into the least stringent tier 1. The proposed arrangement has sparked fury among Tory backbenchers who say it will wreak havoc on jobs, particularly in the hospitality sector.

Despite expectations that 50 or more Tories may rebel, Mr Johnson was assured of winning Tuesday’s vote, after both Labour and Liberal Democrats announced they will abstain.  

Sir Keir Starmer said his party was acting “in the national interest”, but a Downing Street spokesperson said the Labour leader was “offering no leadership at all”.

Speaking at a press conference in No 10, health secretary Matt Hancock said that the “light of dawn is on the horizon” after a sharp fall in coronavirus infections during lockdown.

In figures released on Monday, the government said a further 205 people had died within 28 days of testing positive for Covid-19. There were a further 12,330 confirmed cases, down from a second-wave daily peak of 31,500 at the start of the month.

But Mr Hancock insisted the tiered restrictions were still needed, saying: “While we can let up a little, we can’t afford to let up a lot.”

The impact assessment document “demonstrates this action is necessary to avoid a much worse outcome”, he said.

However, a leading CRG member dismissed the document as “rather less substantial than we were hoping for”.

And Commons Treasury Committee chair Mel Stride said it was “rehashed” from last week’s report by the Office for Budget Responsibility, with little information on how different tiers would affect specific sectors and regions.

“Those looking for additional economic analysis of the new tiered system will struggle to find it in this document,” said Mr Stride, a former Treasury minister.

Veteran backbencher Sir Desmond Swayne said that after reading the document he was still planning to vote against the government.

He told The Independent: “It doesn’t appear to offer any new data. It has the feel of being cooked up to meet the demand from the CRG, rather than to inform ministers in their decision.”

The influential chair of the backbench 1922 Committee, Sir Graham Brady - whose Altrincham and Sale seat has been placed in tier 3 along with the rest of Greater Manchester - told an Institute for Economic Affairs seminar: “I am pretty certain to vote against the government.

"My concerns about the impact on civil liberties and fundamental human rights are there regardless of how the tiers are drawn, but my own constituency has been put in entirely the wrong tier.”

The government’s impact assessment pointed to last week’s central OBR forecast of unemployment surging to 7.5 per cent and a permanent hit of 3 per cent to GDP as a result of the Covid-19 outbreak and the controls imposed in response.

It noted that this forecast assumes that the average level of restrictions in the UK are equivalent to England’s pre-lockdown tier 3, and said that harsher measures are likely to result in larger associated short-term economic costs.

But it gave no details of the expected impact on areas in each tier, saying only: “Any attempt to estimate the specific economic impacts of precise changes to individual restrictions for a defined period of time would be subject to such wide uncertainty as to not be meaningful for precise policy making.”

The document said the alternative of allowing Covid-19 to grow exponentially “is much worse for public health” and stressed the importance of keeping the R number – the reproduction rate of the virus – below one.

“At the outset of the most difficult time of year for the NHS, and with hospital admissions already high, a sustained period with R above one would result in hospitals rapidly becoming overwhelmed,” it warned.

“This could lead to many more Covid-19 and non-Covid-19 deaths that would have been preventable were the NHS to remain within its bed capacity.

“Cancellations to non-emergency and elective care would also result in loss of lives and years of healthy life.”

The government’s view is that the “severe loss of life and other health impacts” would be “intolerable for our society”, it said.

Mr Johnson defended the return to a regional tier system during a visit to a north Wales pharmaceutical firm.

“We can’t afford to take our foot off the throat of the beast, to take our foot off the gas,” said the prime minister. “We can’t afford to let it out of control again.

“The tiering system is tough, but it’s designed to be tough and to keep it under control.

“I know that lots of people think that they are in the wrong tier and I understand people’s frustration.

“I particularly understand the frustration of the hospitality sector that has borne so much and been through so much in the last few months, and we will do everything we can, as we have been doing, to protect and to encourage that sector throughout the weeks and months ahead.”

CRG chairman Mark Harper said he was “disappointed” the government’s assessment had arrived with so little time to spare before the key vote.

Declaring that the CRG would analyse the material before making their judgement on Tuesday, the former chief whip said: “This information is what ministers should have been insisting on before they made their decisions, so it surely could have been made available earlier.”

Cambridge University economics lecturer Dr Flavio Toxvaerd said: “The government's analysis falls well short of a full impact study and will be of limited use to justify either the lockdown or a return to a tiered system of regional restrictions. This is regrettable, as a careful impact study could help take the sting out of an unnecessarily polarised debate over how to contain the disease."