Worrying about the wrong things

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Whilst they obviously differ in the fine detail and the timing, the plans by the four governments within the UK to ease the lockdown restrictions all nominally start from a common principle, which is that the rate of easing of restrictions, and which restrictions can be eased when, are determined by the prevalence and rate of spread of the virus at any one time. It’s a sensible approach and tailoring it around the margins for differing needs and priorities in the different areas is also eminently sensible. The big difference in approach, though, is that while three of the governments are working to the plans which they produced, the fourth – England – is not. Moving between levels when the conditions have not been met and releasing restrictions at level 4 which they previously said could only be removed at level 1 is not what the plan said. And whilst setting indicative dates based on current knowledge at any point in time is sensible, turning them into firm target dates which must be achieved regardless is reckless folly. Yet that is exactly what the English government is doing.

Why the PM is behaving in such an arbitrary fashion is an interesting question. Some of it, no doubt, stems from his belief that the state should not be restricting liberties in the first place, a principle which he has been reluctant to breach from the outset, even if breaching it is in the greater public interest. Some of it stems from his assessment of what might be popular even if that popularity might turn out to be short-lived if the result is an increasing death rate. Some of it probably results from his well-known lack of attention to detail, and apparent belief that events can be bent to his will, even if his will changes more or less daily. But a lot of it seems to be coming from his – or rather the Treasury’s – assessment of the economic impact.

That certainly was the burden of this article in the Times yesterday (paywall). The Treasury seem to be still clinging to the outdated and fundamentally flawed view of the national finances as being like a household where ‘debts’ have to be repaid, as well as a very isolationist view of the world in which borrowing by the UK government will somehow uniquely ‘spook the markets’ here, even whilst other governments the world over are doing exactly the same thing. They worry that the extra money being created by the government will somehow spark inflation, despite the fact that the bigger danger at present is deflation.

They are right, though, to worry about the level of unemployment which is about to hit us. Many of the jobs which have been furloughed are likely not to exist at all after the lockdown ends, and many other companies are likely to fail as they fail to adapt to the new post-pandemic environment. Some of the decisions being taken by government, however, are making that worse not better. Expecting companies which have barely been trading (or even not been trading at all) for months to be able to start paying wages and NI at a higher level in August will force many over the edge. And setting an arbitrary and universal date for that change without any certainty that the companies will be able to restart trading will add many more to the list of casualties. Unemployment is likely to rise to at least 5 million as a result, and some are predicting an even higher figure. In that context, one of the findings in the recent YouGov/ITV Welsh opinion poll (analysed here by Dafydd Trystan) really surprised me – apparently, 67% of people in Wales are not worried about their job as a result of the crisis and 60% are not worried about their finances. I wonder if they understand the direction in which the London government is taking us. And if we have mass unemployment, with huge numbers of people reduced to the income levels associated with Universal Credit, inflation is the last thing we should be worried about.

Earlier on in the crisis, whilst announcing some of his half-baked measures to ease the economic impact on companies and families (I can’t remember which of his budgets it was – there have been so many of them by now), the Chancellor said that this was not a time for ideology. Yet ideology is exactly what is driving the government – an ideology based on the utterly wrong-headed idea that the government ‘cannot afford’ to run a deficit on the scale required to tackle the problem, and an ideology which puts the interests of capital ahead of those of ordinary people. Because of the limited fiscal and economic powers of the Welsh government, the opportunity to do something different amounts to little more than tinkering around the edges, even if we had a government with sufficient determination to want to take a different approach. If we want to put people first in Wales, we first need to break free of the crazy ideologues running the UK.