Economic costs

Too Many in Politics and the Civil Service Had No ‘Skin in the Game’ When They Destroyed Livelihoods and Frightened the Nation into Compliance

Businessman and journalist Luke Johnson (who is one of the Daily Sceptic‘s directors) has given a must-watch interview to Jeffrey Peel on his New Era website. Jeffrey writes:

Luke Johnson has been the force behind many of the U.K.’s most successful hospitality and retail businesses. Early in lockdown Luke appeared on BBC Question Time and was one of the first leading business people to question lockdown as a response to the COVID-19 outbreak. In this video I gave Luke the chance to elaborate on his view that too many in politics and the Civil Service had little or no “skin in the game” when they were making decisions to destroy livelihoods and to frighten the nation into compliance.

Luke argues, very effectively, that lockdowns were so devastating a means of ‘controlling’ a virus that they should never be contemplated again.

Watch it here.

The Abandonment of Good Government in the COVID-19 Crisis

A new lockdown analysis by David Campbell and Kevin Dowd, entitled “Disregard of the Empirical; Optimism of the Will: The Abandonment of Good Government in the COVID-19 Crisis” has been published in the prestigious Studies in Applied Economics series from Johns Hopkins Institute for Applied Economics, Global Health and the Study of Business Enterprise. If this series sounds familiar, it is the same series that published the now famous article by Jonas Herbe, Lars Jonung and Steve Hanke that showed lockdown had little or no impact on COVID-19 mortality.

The accumulation of evidence that lockdown is a deeply ill-advised public health response threatens to leave the policy without anyone who will acknowledge their responsibility for it. Campbell and Dowd’s paper shows how shamefully slipshod the argument for lockdown was even at the time, in summer 2020, when it enjoyed the most powerful ideological and political support. Campbell and Dowd ask how it could be possible that a policy of this abysmal quality could ever be adopted. A widespread ignorance of the problems of determining whether the policy was needed or could even be implemented was, they suggest, subsumed under a fanatical commitment to political ‘will’ as the supposed solution of such problems.

The reason Campbell and Dowd’s paper appears only now is that, though it was originally commissioned for a special issue of a U.K. law journal, it was rejected by the permanent editorial board of that journal after what Campbell and Dowd describe as a wholly suspect reviewing process, which ended in no explanation for the rejection. Thus we have what appears to be yet another example of how the Covid disaster has involved a fundamental breakdown not only of good government but of public and academic debate, as views which challenge the manufactured consensus of ‘the Science’ are denied entry to such debate.

Read Campbell and Dowd’s paper here.

Smokers Are Not a Burden

There follows a guest post by John Staddon, Professor of Psychology, and Professor of Biology and Neurobiology, Emeritus at Duke University, which is an extract from Chapter 4 of his book Unlucky Strike: Private Health and the Science, Law and Politics of Smoking.

I have discussed the morality of smoking, its supposed lethality, its addictiveness and its effects on nonsmokers. The evidence shows that if smoking is a sin it is a pretty venial one; nor is smoking as lethal as its critics charge and many smokers imagine. The health effects of passive smoke are almost impossible to measure. The best attempts have failed to find significant effects. 

This chapter deals with the most serious policy-related charge against smoking: that it costs non-smokers money – smoking has a Public Cost.  Smoking-related disease is “a profound burden on our national health care system”, wrote Judge Kessler. As we’ve seen, the National Socialists agreed (all those lost Volkswagens). “Smoking imposes a huge economic burden on society – currently up to 15% of total healthcare costs in developed countries,” says an article in the BMJ in 2004.  The case seems unarguable. A substantial fraction of smokers die of smoking-related illnesses. Treating illness, especially if the treatment is protracted and often ineffective, as it is with COPD and many cancers, is always expensive. 

But “obvious” is not always “correct.” The smoking-costs-us folk seem to forget (brace yourself!) that we all die, even non-smokers. As the bumper sticker reminds us: “Eat right, exercise – die anyway.” The facts about the health-care cost of smoking are in fact the opposite of the common preconception. For the 24-50 age range, smokers cost a bit more, thereafter they cost quite a bit less because smokers die a bit earlier than non-smokers. Overall “smoking actually saved the Medicare program money, $2,800 per male smoker aged 24 and $600 per female”, concluded Sloan and colleagues from a database up to 2002. Data gathered since, which I discuss at more length in a moment, confirm this conclusion: smokers save society on health-care costs. Silberberg, using a different set of data, concludes similarly in the Appendix.

‘Plan B’ Restrictions May Cost £4 Billion Per Month

With the announcement of ‘Plan B’ restrictions expected imminently, a study conducted by the Institute of Economic Affairs (IEA) has unveiled that the measures, which include the imposition of vaccine passports and work from home guidelines, could cost the British economy £4 billion a month. Toby, quoted in the article below, has said that part of “the financial cost would be the constant demand from petty officials to see evidence of our vaccination status”. The Express has the story.

Boris Johnson is expected to announce the introduction of new restrictions against Covid at some point in the next 24 hours. A Government source told the Guardian that “new Covid rules are imminent” after a video emerged of Downing Street staff laughing about a Christmas party held last year.

Reports suggest that Mr Johnson could reintroduce work from home guidelines and introduce Covid vaccine passports.

Three senior Whitehall officials told the Financial Times that the Government has decided it will impose these winter ‘Plan B’ measures.

But new analysis by the IEA has revealed that these measures would have a damning impact on the British economy, at a time when the financial recovery from previous lockdowns is already pulling at taxpayers’ pockets.

The think tank has predicted that the restrictions could add fresh costs of £4 billion every month.

Julian Jessop, Economics Fellow at the IEA, said: “Even without a full national lockdown, the additional Covid restrictions apparently being considered in Whitehall could easily knock two percent off GDP – costing the UK economy £4 billion a month – and force the taxpayer to stump up billions more to prevent a new wave of bankruptcies and job losses.”

It is also understood that the costs of new measures would not stop at the economy.

Toby Young, Editor of the Daily Sceptic, said other impacts will be “even worse” than that on the economy.

He told the Express: “It is right to recognise the ruinous economic impact of ‘Plan B’, but even worse than the financial cost would be the constant demand from petty officials to see evidence of our vaccination status.

“Britain is not and never should be a ‘papers’ please’ country.”

Jessop added: “[The economic cost] is on top of all the social costs and harms to people’s wellbeing and liberties, as well as the risk of further disruption to children’s education.

“Some will argue that this would be a fair price to pay to clamp down on Omicron. However, this would require much stronger evidence that the new variant is more deadly, not just more transmissible.

“This is a particularly high bar to clear in the U.K., where most experts agree that the population has now acquired a high degree of immunity due to past infections and from the vaccine booster programme.”

Worth reading in full.

Leaked Government Report Claims That Vaccine Passports Would Fail to Stop Covid Transmission

A Government investigation into the potential impact of a vaccine passport scheme has concluded that the measure would have a negative impact in halting the transmission of Covid. The report has put forward the unintended consequence of those unwilling to comply with the mandate attending more poorly ventilated venues instead of larger, more open space ones. In addition, the report dwells on the economic damage of such a policy, acknowledging that businesses would need to fork out more money into policing the entrance combined with a decrease in the number of customers. The Telegraph has the story.

The Telegraph has seen an internal analysis of the economic and social impact of Covid-19 certification, written by the Department of Digital, Culture, Media and Sport (DCMS).

Across the 13 pages, marked “official sensitive” and dated from early September, are a series of concerns about how the policy would work and its knock-on implications.

One section of the impact assessment responds to whether the policy could have “any displacement effects to other types of venues not included for certification”.

The document reads: “There is potential displacement between live events venues and hospitality venues. A core concern in the sector is that certification could displace activity and business away from music venues to, say, pubs with music and late alcohol licences, etc. which could be counterintuitive and potentially counter-productive.”

It goes on to state: “Similarly, if certification displaces some fans from structured and well ventilated sports stadia, this could lead to them attending unstructured and poorly ventilated pubs instead, where they will have access to more alcohol than if there were in the stadia. Evidence from the Euros showed spikes in cases associated with pubs even when England were playing abroad.”

Worth reading in full.

One in 16 U.K. Businesses Could Close In Next Quarter

A million jobs are at risk due to the ending of lockdown support schemes, with a new study suggesting that one in 16 U.K. firms are poised to close permanently in the next quarter following more than a year of forced temporary closures. The Guardian has the story.

One in 16 firms say that they are now at risk of closure in the next quarter, the study by the LSE’s Programme on Innovation and Diffusion (POID) has found. While it marks a major rise in confidence since the worst depths of the pandemic in January, there are warnings that the risk to so many workers coincides with the planned end of the furlough jobs scheme and a cut to universal credit by £20 a week.

There are also concerns that some industries are still being hit disproportionately by the fallout from Covid, with the entertainment and travel industries still making heavier use of the furlough scheme than other sectors. The number of people being paid through the U.K. scheme stood at 1.9 million at the end of June and it is due to close at the end of next month.

Huge uncertainty remains over the economy’s direction in the next six months. While confidence has risen, there are warnings over complacency. Former Prime Minister Gordon Brown, who founded the Alliance for Full Employment group to promote jobs protection and work creation programmes, said “a new jobs crisis point is approaching as furlough ends”. …

Peter Lambert, one of the authors of the POID research, said the end of the furlough scheme would be “an inflection point” where the economy could go either way. He added: “I think there will probably need to be some continuation of support in specific sectors. My bet is there’ll be more targeted support, because unless the economy really, really picks up, there’s going to be lots of people still left in the lurch in specific sectors.”

There are also concerns over the impact on families switching from furlough support to universal credit, especially as the £20-a-week increase brought in at the start of the pandemic is to be withdrawn this autumn.

Worth reading in full.

£2.1 Billion Wasted on Useless PPE – Five Times Higher Than Official Estimate

Over the past year, the Government has wasted more than £2 billion on personal protective equipment (PPE) that could not be used in the NHS. The figure is five times higher than initial official estimates and still under-estimates the true cost. The Sunday Telegraph has the story.

Some 2.1 billion items of PPE have so far been deemed unfit to keep doctors and nurses safe in clinical settings – with 10,000 shipping containers-full still to be unpacked as of May this year, said the Commons Public Accounts Committee (PAC).

The amount of unusable kit is five times higher than the number estimated by the Department of Health and Social Care (DHSC) in January, said the select committee, which monitors public expenditure.

The wasted sum forms part of the estimated £372 billion spent by the U.K. on pandemic-containing measures which will expose taxpayers to “significant financial risks for decades to come”, the cross-party committee warned in two reports published on Sunday.

MPs say they “remain concerned that despite spending over £10 billion on supplies, the PPE stockpile is not fit for purpose” with potential levels of waste “unacceptably high”.

As of May this year, out of 32 billion items of PPE ordered by the DHSC, 11 billion had been distributed, while 12.6 billion pieces are on standby at a cost of around £6.7 million a week in storage, the PAC said.

Some 8.4 billion pieces on order from around the globe have still not arrived in the U.K.

For excess PPE that is suitable for medical use, MPs said they are concerned the Government is “yet to create any robust plans for repurposing and distributing this essential stock in a way which ensures value for money and protects staff and patients”.

A public inquiry scheduled to start next spring into the Government’s handling of the pandemic will not come swiftly enough to ensure lessons are learned, the PAC added.

Ministers also risk undermining public trust by failing to swiftly publish the full details of contracts awarded, the report said.

The PAC noted that details of three-quarters of the 1,644 contracts over £25,000 awarded up to the end of July last year were not made public within the 90-day target.

Worth reading in full.

Pub Takings on Match Days Massively Lower Than Pre-Lockdown Levels

Around 17 million pints would be sold in pubs on Sunday during the Euro 2020 final if it wasn’t for the continuation of social distancing restrictions. Instead, nearly 13 million are expected to be sold, according to the British Beer and Pub Association (BBPA), as pubs across the country struggle to break even. The Guardian has the story.

Billed as the closest thing to being in the stadium itself, sales in bars or pubs showing sport are usually 200-300% higher on big match days during a normal year. However, capacity constraints mean although sales during Euro 2020 are up about 60% on match days, that is only in comparison with poor takings over the past Covid-hit [lockdown-hit] year.

“We are seeing an uplift in drinks sales on match days but because of capacity constraints it is nowhere near as much as it would usually be,” said Kate Nicholls, the Chief Executive of industry trade body U.K. Hospitality. As a rule, pubs were only taking 70% of their usual sales which was not enough to break even, she said.

In Norwich, Dawn Hopkins said her pub, the Rose Inn, will be full, although at the moment that means just 30 customers. “We are obviously fully booked,” she said. “I’ve been turning away people for weeks who want to watch the football but social distancing and the need to be seated limits our capacity. I think everybody’s grateful to be trading again but it’s still very difficult.”

The BBPA estimates nearly 13 million pints will be sold on Sunday, with 7.1 million during the match itself. That total would be nearer 17 million but for Covid restrictions, which mean venues are at 50-60% of normal capacity.

Fuller’s, a pub owner in London and the south-east, said most of its 209 venues were fully booked on Sunday but it could have “taken a lot more” were it not for the “disappointing” restrictions. “It has brought people together though and pubs are the next best thing to being there,” the company added.

Greg Mulholland, of the Campaign for Pubs organisation, said the Euros had brought welcome extra trade but pubs were struggling, with table service challenging and costly. Some landlords said they had been warned by licensing officials they could be fined if fans got carried away, and he hoped the authorities took a “common-sense approach”.

Worth reading in full.

Up to 350,000 Young People Could Lose Their Jobs as Furlough Comes to an End

Young people have been the most reliant on furlough and will likely be the hardest hit as the scheme comes to an end, according to the Institute of Fiscal Studies (IFS). There are already 50,000 more unemployed people aged 19 to 24 compared to pre-lockdown levels, and the IFS says in a new report that a further 350,000 people in this age bracket may lose their jobs in the coming months as job support money dries up. The Telegraph has the story.

In a new research report, the IFS says the age group saw the biggest increase of any age group in the numbers not working any hours, including those who are furloughed. 

The number rose by 25%, or around 400,000 people, from the last quarter of 2019 to the first quarter of 2021 – a significantly higher increase than those seen in older age groups.

The vast majority of those jobs have, so far, been saved by the furlough scheme, with only 50,000 additional 19 to 24 year-olds without any job at all in early 2021 compared with pre-pandemic.

But this means the 19 to 24 year-old age group is especially vulnerable as the furlough scheme is wound down.

At the same time, unlike for older workers, earnings growth among younger employees (aged 19 to 34) who have continued to work has been lower than prior to the pandemic. 

This may not have large immediate consequences, but if this ground is not regained then the longer-term effects on their incomes will be significant, said the IFS.

Xiaowei Xu, a Senior Research Economist at IFS and co-author of the report, said: “Young adults have been especially likely to be furloughed during the crisis, though relatively few have completely lost their job.

“Many have responded to this by staying or moving back in with their parents – providing temporary protection for their living standards. 

“But we know that shocks early on in people’s careers can have negative effects on their future job prospects. Without effective support, there is a risk that young people today will bear the scars of the recession for years to come.”

It follows previous research by the IFS which found that young workers are twice as likely as older colleagues to have lost their jobs, although graduates were less than half as likely as those without degrees to have fallen out of work. 

By the autumn, the number of graduates in paid work had fallen seven per cent, a drop of about 800,000 people, but the number of non-graduates was down by 17%, or 1.5 million, showing the much more severe impact on those with less education.

Worth reading in full.

Lockdown Pushes Gap Online As Clothing Retailer Announces Closure of All of Its British Stores

Following 15 months of draconian lockdown restrictions, Gap has announced the closure of all its 81 stores in the U.K. and Ireland, with an estimated loss of over 1,000 jobs. The U.S. clothing retailer is also considering reducing store numbers in both France and Italy and blames “market dynamics” for massive losses last year. MailOnline has the story.

Phased closures will start in August and continue through to September, the U.S. chain revealed.

It comes after a year of coronavirus lockdowns battering the U.K. high street, with other popular chains including TopShop going under. …

[Gap said in a statement]: “In the United Kingdom and Europe, we are going to maintain our Gap online business.

“The e-commerce business continues to grow and we want to meet our customers where they are shopping. We’re becoming a digital-first business and we’re looking for a partner to help drive our online business.

“However, due to market dynamics in the United Kingdom and the Republic of Ireland, we shared with our team today that we are proposing to close all company-operated Gap Specialty and Gap Outlet stores in the United Kingdom and Republic of Ireland in a phased manner from the end of August through the end of September 2021.

“We are thoughtfully moving through the consultation process with our European team, and we will provide support and transition assistance for our colleagues as we look to wind down stores.” …

For the year from February 1st, 2020, Gap’s U.K. retail sales fell by 9.5% to £195.1 million. Its operating losses were at £40.7 million. …

Founded in 1969 and headquartered in San Francisco, the firm has struggled in recent years and like most retailers saw store footfall slump during the pandemic. …

It comes just months after high street giant Debenhams confirmed the last of its stores would close for the final time.

The department store launched a post-lockdown fire sale before the chain shuttered its stores, marking the end of a 242-year presence in Britain’s towns and cities.

The outlook for Britain’s high street is dire. More than 11,000 outlets permanently closed in 2020 and the Local Data Company expects that this will be followed by 18,000 more closures in 2021.

The MailOnline report is worth reading in full.