Yahoo Finance England's Covid tiers impact report: what it says and doesn't say
On Monday the government finally set out the economic and health impacts that it says are behind the tiering system for controlling the pandemic. The 48-page document does not include many new facts and figures, instead pulling together statistics and forecasts.
Using language likely to frustrate many MPs, it says it is not possible to assess whether the economic cost of the tiers system in England will be greater than that of taking no action. However, it argues that preventing the NHS from becoming overwhelmed has to be the priority. “The costs in terms of loss of life in such a scenario are considered intolerable for society,” it says.
The need for continued action
The impact assessment focuses heavily on the risks of doing nothing. It says the previous system, in which the rules were relatively light, let the pandemic get out of control.
“This resulted in a sustained period where R [reproduction number] was above 1 for several weeks” during September, the document says. “Without further ongoing intervention when the national restrictions end … R would again increase to a level that is significantly above 1.”
It highlights that there was “rapid growth in hospital admissions in England, with the 7-day rolling average jumping from 59 on 1 September to 364 to 1 October and to 1,276 on 1 November”. And it makes a stark warning about what would happen if a tough new tiered system is not introduced. “A sustained period of exponential growth, with R above 1, will result in hospitals becoming overwhelmed.”
The document says that if the pandemic was left unchecked, there would no longer be enough capacity in intensive care for both Covid patients and others needing emergency help. That would lead to “a much higher proportion” of deaths in intensive care.
It would also affect routine hospital work. A panel sets out what could be a risk: “In a typical month, the NHS delivers: half a million emergency admissions, 49,000 cancer treatments, 10,000 hip replacements, 7,000 knee replacements, 39,000 cataract operations, 2m first outpatient appointments, and millions of other treatments.”
The document argues: “Given the catastrophic health costs, both from increased Covid-19 deaths and due to the wider impacts across NHS services, the government is clear that a scenario of the NHS being overwhelmed must be averted, through proportional policy.”
Tiers and the ‘R’ number
No specific forecast is given for the impact that the incoming three-tier system of restrictions is expected to have on the R number, the speed of transmission of Covid-19.
Instead it makes a general and an uncontentious statement: “We are confident that it will be substantially lower than the counterfactual of no tiering or equivalent measures being in place,” so “reducing deaths in the short term as well as reducing the risk of an overwhelming of the National Health Service.”
But it does note that “the initial tier 3 restrictions agreed by local areas in October” may have been associated with “a reduction in R between a quarter to a half” relative to the lowest level, tier 1.
A shift from tier 1 to tier 2 was associated with “a modest reduction” in the transmission rate, although here no figure is cited.
Wider effects on health: the pros and cons of tiers
The document then goes through the new tiered restrictions as seen through the prisms of health and wider society, many of which are statements of the obvious.
Air pollution and road traffic accidents are expected to be lower, as are accidents at work. The rates of other communicable diseases, such as influenza, are expected to drop, as was seen during winter across the southern hemisphere.
Personal health is likely to be worse. “We anticipate physical activity will be slightly lower under the tiers,” the impact analysis says, and “alcohol consumption slightly higher”. There may also be more home accidents and “musculoskeletal disorders” because home workers will have “less access to professional ergonomic advice” and will be more likely to have cramped setups.
Every 1% fall in employment caused by the introduction of the tiers system is met with a 2% increase in “five categories of chronic illness” – musculoskeletal, cardiovascular, respiratory, mental health, and what are described as other conditions.
Mental health issues
There are expected to be “some short-term negative mental health impacts” associated with the tiers system, although social bubbles may help offset that to some extent.
But there is little detailed analysis here, other than to stress that “mental health could be worse in a counterfactual situation of Covid-19 resuming exponential growth”. And, in what may be a surprising finding, the assessment concludes there is “no significant worsening” in “generalised anxiety disorder scores”, which are monitored by Public Health England.
One aspect of public mood monitoring is highlighted as particularly important for justifying a return to the tiered model as opposed to remaining in lockdown. As of 9 November, according to University College London, “around 1 in 3 people report being worried about finances (up from 1 in 4 over the summer)”, thereby justifying a controlled opening up of the economy.
Crime and society
People “will not be able to undertake all the activities they ordinarily would” under the tiered system. But the ability of people to meet others from beyond their bubble outdoors in tier 2 “will go some way to addressing the issues of social isolation and loneliness seen earlier in the pandemic”, the document concludes.
The impacts on crime are mixed, and based largely on previous experience. “There was a reduction in theft and the overall number of victims of crime during the first national lockdown,” the assessment notes, following a 30% reduction in theft between April and June. But recorded crime “flagged as domestic abuse-related increased”.
It concludes: “We know that the health, societal and the economic effects are unevenly distributed, so the government has taken a range of actions to tackle this.” The particular focus has been “to mitigate the impact on children and young people – especially the disadvantaged”, which is why schools have remained open while so many activities have been suspended or curtailed.
Economic impact
The document says the economic damage from tiered coronavirus restrictions in England is impossible to quantify. Essentially it argues that it is too difficult to disentangle from other factors influencing Britain’s economic performance during the health emergency.
The economic impact is “not possible to know with any degree of confidence”, given the unprecedented nature of the virus and the restrictions that have been used to control it, it says.
Instead of setting out fresh analysis on the economic costs and benefits, the report republishes estimates for the UK economy made last week by the Office for Budget Responsibility, the Treasury tax and spending watchdog. Repackaging the OBR forecasts presented by the chancellor, Rishi Sunak, alongside last week’s spending review, the analysis says these estimates could illustrate the potential impacts of revised restrictions from Wednesday.
In the OBR’s central forecast, gross domestic product (GDP) falls by 11.3% this year – the biggest decline in more than three centuries – but gradually recovers next year, before the economy returns to its pre-pandemic size by the end of 2022. Unemployment peaks at 7.5% – as many as 2.6 million people – by the middle of next year.
However, although the OBR estimates take into account continued restrictions, they do not model the precise detail of specific restrictions or the impact they might have on the economy.
Setting out the ways in which restrictions can have both costs and benefits for jobs and growth, the document concludes that given “the unprecedented nature of both the virus and the restrictions that have been required to mitigate it, it is not possible to assess the balance of these effects.”
In a short section on the longer-term impacts on the economy, the document only notes: “Despite the substantive and unprecedented fiscal support given to support public services, households and businesses since March … both the central forecast and downside scenario do lead to economic scarring.”
