6 March 2020

How Coronavirus will change British politics for good

By

Harold MacMillan never actually said “events, dear boy, events” are what blows a government off course. Nevertheless, like all the best apocryphal Westminster tales, it captures something essential about politics the Government might ruefully reflect upon in the coming weeks.

For make no mistake, the Government’s agenda lies in tatters. It is not just that grappling with Coronavirus will inevitably delay all other political business in the short to medium term (and yes, that includes Brexit). It is also that when we do finally emerge from this crisis it will be to a world turned upside down. What seems like cast-iron political logic now might prove somewhat brittle on the other side.

If this seems an overreaction, a sharp intake of epidemiological statistics should prove corrective. Earlier this week Health Secretary Matt Hancock suggested the Government’s “very best assessment” put the expected fatality rate at around 1-2%. Meanwhile, estimates suggest the rate of infection could, at the upper end of projections, be roughly the same as for the ‘Spanish’ flu outbreak of 1918, which killed around 50 million people. Even on a more optimistic reading, we may be talking about tens, if not hundreds of thousands of deaths here in the UK. We are in uncharted territory – this is emphatically not a drill. There is no modern-day precedent.

Politics however, must pretend to continue as normal. The Government faces a nightmarish balancing act; with one hand it must take social fabric-altering decisions – such as closing schools – with the other it must soothe a nervous country. This is the unenviable context for Rishi Sunak’s first Budget next week.

In the parallel universe where we still pay lip service to politics as usual, the preamble has been all about fiscal rules. Well, trust me Rishi – this year you can forget them. Before long, coronavirus will present a difficult demand shock – already you can see pubs and restaurants beginning to look empty.  Then, as the world’s workers go into social isolation, we might see a sizeable supply shock too. Fiscal stimulus feels inevitable, yet timing is everything. A spending splurge now might curtail room for manoeuvre later, not to mention frightening the horses.

Yet if there is one area of largesse the Chancellor must accept, it is the need for an urgent patch-up job on Britain’s creaking welfare state. This is not purely a matter of compassion, nor is it – yet – an expansionary economic necessity. Rather, action is needed simply to help delay the epidemic and save lives.

Already the Government has fractionally extended entitlements for statutory sick pay. But millions of workers – whether self-employed or in the gig economy – are ineligible even for what is, by European standards, still a paltry amount. Thus, many poor people will face a miserable choice between self-isolating and feeding their family. Which is, to put it mildly, not particularly helpful to the task of preventing the virus’ spread.

This is how crises like coronavirus transform political sentiments. For decades people are told we cannot afford a more generous welfare state, then all of a sudden we cannot get by without one. Other policy areas could change too – civil liberties, for example, if our freedom to move around the country is severely constrained. Meanwhile, it seems fairly safe to assume the NHS will do OK when the Government finally gets round to its spending review.

But for now, supporting flexible workers is the Government’s most pressing fiscal demand. Not only that, in the long term it might also be crucial for getting the Government’s radical economic agenda back on track. Because in a strange way, the Government’s political economy – its determination to use Brexit and technology to create an economy less reliant on global supply chains and, crucially, foreign workers – could feel less of a rupture post-coronavirus.

Yet even here, the welfare state shows up as the great lacuna in the Government’s thinking.  It is all very well trying to shock the economy towards a high-tech, high-productivity future of work. But, as coronavirus shows, the flexible working arrangements it might rely upon will still need better support.

There are ideas a plenty too. A Universal Basic Income might sound like terrifying science fiction to sound money Tories – but just imagine how much better prepared we would be for this epidemic in such a world. Equally, portable benefit schemes – where entitlements follow individual workers between jobs and accrue no matter how small the contract – have been successfully trialled in American cities like Philadelphia and can provide gig workers with a safety net to fall back on in a crisis.

That though is tomorrow’s urgent conversation. The Chancellors priority for next week’s budget must be to make sure Britain’s most insecure workers are protected enough to protect us all from the coronavirus.

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Alan Lockey is a former adviser to a Labour MP