Analysis: Businesses and unions have doubts about big-bang approach to reopening economy
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Last modified on Mon 5 Jul 2021 12.14 EDT
Sajid Javid’s return from the political wilderness was sudden and unexpected, but as Matt Hancock’s replacement he quickly made his mark. The new health secretary has made his opinion clear that England has to learn to live with Covid-19.
Before his resignation in early 2020, Javid was Rishi Sunak’s boss at the Treasury, and supports his successor’s desire to remove the restrictions that are making life tougher for key sectors of the economy, such as hospitality and night clubs. Two members of the “quad” – the inner circle that makes the key decisions on how the pandemic should be managed in England – are now either current or former chancellors of the exchequer.
In truth, Javid’s arrival at health has made little difference to government plans for a bonfire of English restrictions on 19 July. For months, the Treasury has been pointing out that the success of vaccines in reducing hospitalisations and deaths has meant the needs of the economy should be given a higher priority.
Gerard Lyons, the former chief economic adviser to Boris Johnson when he was mayor of London, said: “The perception may be that with Hancock at health there would be more resistance to opening up. But even with Hancock there, the data would have been pushing in favour of unlocking.
“Javid has no baggage and is able to take a fresh look at things. The data has given him the ability to support unlocking.”
The Treasury’s case for ending restrictions is simple: despite the pick up in activity in recent months, the economy is still running well below its pre-crisis level and the financial cost is mounting by the day. Wage subsidies under the furlough scheme end in September, along with the stamp duty holiday and the reduced VAT rate for hospitality, so Sunak is keen to remove impediments to growth as soon as possible.
The chancellor backed the lockdown of the economy in the first few months of this year on the grounds that the NHS was in danger of being overwhelmed, but thinks that is no longer the case. The number of infections rose by 70% across the UK last week but the number of daily deaths averaged 15 in the past week, compared with well over 1,000 a day at the peak in January.
The idea of “learning to live with Covid” is not that contentious. The scientific community accepts that the benefits of restrictions in terms of limiting the spread of the virus have to be set against the costs, including the non-pandemic health costs, as does the Labour party, the TUC and business organisations.
But all have their doubts about a big-bang approach. The scientists fear a new variant of the virus may prove vaccine-resistant. The TUC and the CBI are both pushing for guidance on workplace safety and who will be legally responsible for staff who become infected. Labour thinks it is important to avoid a repeat of last year’s aborted reopening. As the opposition notes, we have been here before.
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