Covid-19: Economic Impact of Lockdowns

Esther McVey Excerpts

Tuesday 29th November 2022 Westminster Hall

[Mrs Sheryll Murray (in the Chair)]

The debate may continue until 4.9 pm.

[Esther McVey (Tatton) (Con)]

I beg to move,

That this House has considered the economic impact of covid-19 lockdowns.

It is a pleasure to serve under your chairmanship, Mrs Murray, and to be able to debate the economic impact of covid-19 lockdowns, because so often during the pandemic we did not have the opportunity to question key decisions that were taken. In those early days of covid, much was done in a rush. Although it was understandable then, with the passing of time analysis needs to be done of the measures and decisions taken. No matter how painful and difficult the conversations will be, we need to have them. Open and frank conversations are made more difficult by the fact that the vast majority of MPs voted for continued lockdowns and most of the media was reluctant to question them.

Although everyone supported the first lockdown—March to June 2020—no one knew what we were confronting. As knowledge of covid and medical treatments grew, so should the debate have grown, particularly about subsequent lockdowns, but that was not the case. Prior to March 2020, how many of us had heard of the concept of lockdown? Blanket, stay-at-home policies were an unknown and unevidenced method of trying to control the virus.

Although lockdowns will have saved lives from the virus, many experts predicted from the start that they would also cost lives, through the unintended collateral damage they inflict. A Government report in July 2020 found that more than 200,000 lives could be lost due to lockdown. Well-rehearsed pandemic protocols, including those endorsed by the World Health Organisation and the Department of Health and Social Care had not previously recommended lockdowns because, quite simply, they are a blunt instrument.

In addition, it was felt that such drastic restrictions would not be tolerated by western democracies. As Professor Neil Ferguson infamously put it, after observing entire communities in China in lockdown,

“We couldn’t get away with it in Europe, we thought. And then Italy did it. And we realised we could.”

That poses a question. If people assumed that the UK population would not tolerate lockdowns, was messaging hardened and questions against lockdown not tolerated, in order to force compliance? We might never know the answer. Ongoing lockdowns were achieved, but at what price? Interestingly, only the other week, Andrew Gilligan, a former No. 10 adviser said on GB News that, looking back, the ongoing lockdowns were wrong, but politically we could not have got away with not doing them.

Why was that? How was an environment created in which even asking questions and providing alternative suggestions could get someone demonised? And those people were. I wrote an article for The Daily Telegraph in November 2020 saying, regretfully, that politicians had been guilty of a dereliction of duty. Instead of just listening to the one-dimensional approach of Public Health England and the scientists, they should have factored in all competing consequences. They did not and ploughed on, without questioning those other factors.

[Chris Green (Bolton West) (Con)]

Does my right hon. Friend share my concern that, during the pandemic and lockdowns, Parliament was not given the opportunity during certain phases to debate the impact lockdown was having on our constituents, and that we should never lockdown Parliament again?

[Esther McVey]

My hon. Friend and near neighbour raises an important point. This House is about debate and questioning things, and I am afraid that that did not happen. As he rightly says, we should ensure that Parliament never closes down again, as it did under the pandemic. Even back then, the figures from the Office for National Statistics pointed out that lockdowns and anti-covid measures would lead to the deaths of 200,000 in the medium to long term, due to missed treatments, under-diagnosis, loss of jobs and tax revenue, with disadvantaged people suffering the most. Bristol University in 2020 put that figure much higher, at 560,000 deaths.

Debates are now occurring on the unintended consequences of lockdown, from the mental health issues suffered by our children, to increased deaths of dementia patients, and the lack of visiting rights in care centres and hospitals still happening, even now. A big thank you has to go to the academics and scientists who initially raised concerns in those areas, including Professor Townsend, Professor Carl Heneghan and Professor Robert Dingwall, who asked those all-important questions.

Today, however, our focus is on the economic consequences of lockdown: rising financial hardship; increased poverty levels in the UK; the hundreds of thousands of people since lockdown now classed as economically inactive; the impact on them, their families and local communities; and the economic impact on the next generation’s wealth and earning capacity. It is estimated that school closures and lockdowns will lead to £40,000 being lost from lifetime earnings for each individual. A report by UNESCO, UNICEF and the World Bank finds that students now risk

“losing $17 trillion in lifetime earnings, or the equivalent of 14 percent of today’s global GDP, as a result of COVID-19 pandemic-related school closures”

and economic shocks.

Let us look back at some of the economic shocks of lockdown. The House of Commons Library notes explain that

“The magnitude of the recession caused by the pandemic is unprecedented in modern times.”

GDP declined by 11% in 2020, the steepest drop since consistent records began in 1948 and, based on less precise estimates of GDP going back further, the contraction in 2020 was the largest since 1709. During the first lockdown, UK GDP was 26% lower in April than only two months earlier in February. More than 8 million workers were furloughed during April and May 2020, peaking at 8.9 million—roughly a third of all employees—in May 2020. Overall, 11.7 million jobs were furloughed.

In response, the Bank of England cut interest rates to 0.1% and more than doubled its quantitative easing programme by £450 billion, taking the total value of assets it owned to a peak of £895 billion by December 2021. The total amount of public money calculated to have been spent on tackling the pandemic ranges from £376 billion by the National Audit Office in June 2022 to £407 billion by the International Monetary Fund in September 2021. In 2020-21, Government had income of £794 billion in tax receipts and other revenues, which is £79 billion less than forecast, and spent more than £1,107 billion. The budget deficit was £312 billion, or 15% of GDP, which is a peacetime record. The financial cost for every man, woman and child in this country has been estimated at £5,500.

Former Supreme Court judge Lord Sumption, writing in The Daily Telegraph on 18 November, said:

“Compare the modest financial hit experienced by Sweden, the only European country to see through the hype by which other governments sought to justify their measures. Sweden operated a largely voluntary system and refused to lock down. Pandemic-related measures cost 60 billion kronor in 2020 and 2021, according to government figures. This works about at about £460 a head, less than a tenth of the UK figure. Yet their results in terms of both cases and deaths were a lot better than ours.

We are paying the price of panic, populism and poorly thought-out knee-jerk decision-making. At least the current Prime Minister can point to his warnings as chancellor that lockdowns were unaffordable if extended over any significant period of time. Boris Johnson’s indifference to mere money ensured that the cost was not even considered. All that can be said in his favour is that, if the Labour Party had had its way, the lockdowns would have been even longer and more costly.”

Let us look at the inflationary pressures we are now suffering from. As the country and world opened up after lockdown, there were sharp increases in the cost of essential goods and energy as the world emerged unprepared for such rapid demand, putting prices up, from the fuel pumps to the goods on supermarket shelves.

[James Gray (North Wiltshire) (Con)]

I congratulate my right hon. Friend on her speech. Although I do not necessarily subscribe to all her views about lockdown, she is right to say that the hospitality sector in particular is suffering dreadfully from energy price increases. I bring to her attention a particular case in my constituency, where we have many pubs and restaurants that are suffering. The energy bills of a large country house, which is open to the public, have gone from £16,000 a week to £60,000 a week. That is entirely and totally unsustainable. Does the right hon. Lady agree with me that the Government have to do something now to ease the pressure on the hospitality sector?

[Esther McVey]

I welcome my hon. Friend to this debate today. He might be one of those who voted for continuous lockdowns, but it is important that we are all together in a sense of open debate and conversation. The point he raised is correct. If subsequently, after the Government had intervened to close things down, there were effects on otherwise viable businesses, the Government had to step in and support them. Indeed, the Government have given unprecedented support, but I wish we could have had discussions beforehand so that when people voted for lockdown, they knew what would befall them. At the time, too many colleagues did not want to do that.

[Patricia Gibson (North Ayrshire and Arran) (SNP)]

May I ask the hon. Lady a question about a comment she made a few moments ago? She talked about populism and said that was a factor in deciding to implement lockdowns. I am confused by that because lockdowns were, at best, tolerated; they could never be described as appealing to populism.

[Esther McVey]

I was quoting Lord Sumption, the former Supreme Court judge, who was talking about the way governments were led at that time—those were his words. What we need to take from them is the question of why those decisions were not questioned or challenged by Members of Parliament. Why were those decisions not challenged? If we look at the record of the House, the decision appears popular because MPs voted for it pretty much unanimously, when there should have been greater debate.

[Sammy Wilson (East Antrim) (DUP)]

Does the right hon. Lady accept that Lord Sumption was right, although maybe not according to the common use of the term “populism”? First, the use of fear encouraged people to think, “There is no alternative. I have got to do this.” Secondly, the lack of any examination of the measures by the media ensured that there was not any contrary point of view, so listening politicians heard people saying out of fear, “You’ve got to do something”, and the media, when questioning that, saying, “This is the right thing to do.”

[Esther McVey]

I thank the hon. Gentleman for making that point. That is why I quoted Neil Ferguson at the start of the debate, who said that he never thought a western democracy would lock down, and why I posed the question about whether a campaign of fear was then brought forward, creating an atmosphere in which no one could dissent or ask questions. Going back to the question raised by the hon. Member for North Ayrshire and Arran (Patricia Gibson), there appeared to be a giant consensus across all political parties, leading to that word “popular” at the time.

[Chris Green]

Does my right hon. Friend share my concern about the point made about fear? When people look at Parliament or much of British life, it appears that we have returned to normal, but not all British life has returned to normal yet, which is having a continuing impact on our economy.

[Esther McVey]

My hon. Friend makes the point eloquently; I hope he will make a speech later, fleshing out his comments.

By February 2022, inflation had already surged, with the consumer price index hitting 6.2% in February, after which, without doubt, the war in Ukraine added to the problem. As it stands today, we have unprecedented inflation and costs of living.

None of that should come as a surprise. In fact, the Imperial College report of March 2020 that recommended lockdowns specifically said that the

“economic effects of the measures which are needed to achieve this policy goal will be profound.”

While many people talk about the cost of covid, it is actually the cost of lockdown and lockdown rules that need to be questioned.

The Government have spent in the region of £400 billion on the covid-19 response, which has taken the national debt to over £2.1 trillion. To make matters worse, we know vast sums of money were wasted. For example, seven Nightingale hospitals were built in England, which was an impressive achievement completed in record time. However, most of them were hardly used in the way intended and they cost more than £530 million. The Yorkshire Nightingale closed before ever seeing a patient. Elsewhere, an eye-watering £673 million was spent on unusable personal protective equipment items.

The £70 billion spent on furlough and £84 billion on business support schemes softened the blow for a while. However, the Federation of Small Businesses still warned of a ticking time-bomb, with 500,000 owners of small businesses—the backbone of our economy—at risk of going bust within weeks.

[Taiwo Owatemi (Coventry North West) (Lab)]

In my city of Coventry, many small businesses were hit considerably by covid and are still being hit because of the cost of living crisis. Does the right hon. Lady agree that in order to continue to support our small businesses given the turbulent year that they have had, we need to reform business rates and invest in our high streets, and we also need to ensure that our small businesses are given the support needed for them to be able to compete effectively with online giants that have been able to make hay during the covid-19 pandemic?

[Esther McVey]

I am a massive fan of small businesses, enterprise and those people creating wealth in their communities, and we will have to support them. Also, I will pause for a moment to reflect on all those small businesses that did not get support during the pandemic, which are known as Forgotten Ltd, and they also need support going forward. We again have to create a dynamic world and a dynamic UK for these private enterprises.

Vacancies are now at a record high as people elect to resign from the labour market, which is known as “the great resignation”, and because there are those other people who are now classed as being economically inactive. This is something that we could not have foreseen as we furloughed and closed the country down, but again it is a consequence of the lack of debate, probing and questioning at the time.

It is finally time to publish the much talked-about but still missing cost-benefit analysis that led to the nation being locked down, and to have full disclosure about the facts that were available. Let us review the list of experts on the Scientific Advisory Group for Emergencies, or SAGE, and on other advisory committees. Going forward, let us ensure that there is transparency about the members of these groups, as we have for MPs, such as their political affiliation and the financial support they receive.

All eyes are on the covid-19 inquiry for impartiality and a diverse range of experts to give evidence. We need integrity and clarity, and the policy of lockdown needs to be assessed honestly and fully. However, today I call on the Minister—the Economic Secretary to the Treasury, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith)—to release the much-awaited cost-benefit analysis of lockdown.

[Mrs Sheryll Murray (in the Chair)]

Before I call the next speaker, may I just apologise for the background hum? I understand that staff are trying to resolve it. In the meantime, however, if Members could speak very clearly, I think we can continue with the debate.

--- Later in debate ---

[Esther McVey]

I thank everybody for such a constructive debate, which was the start of our being able to look at the cost of lockdown in an open-minded way—being able to take challenge, being able to take rebuttals and answering things as honestly as possible—because when £400 billion is spent, we know that cannot be done without having long-term impacts.

We see the impact in the vulnerability of our country now—in the cost of living, the cost of jobs, the cost of inflation and the cost of poverty. We heard about the cost in terms of our health and our mental health. We should think before we ever introduce such profound policies again, particularly when the World Health Organisation and the Department of Health and Social Care have conceded that we should not use lockdowns because they are such a blunt instrument. We can never live in an atmosphere where just to ask questions is condemned. I thank everybody for participating in the debate.

[Mrs Sheryll Murray (in the Chair)]

Order.

Motion lapsed (Standing Order No. 10(6)).