The health policy says close more things down and stop people getting about unless it is essential to the NHS, basic utilities  and  the food supply that they do so. Keep them closed until the disease is tamed enough.  The economic policy says close less down, re-open as quickly as possible, try to limit the economic damage.

Judging when to lift the new restrictions becomes the crucial decision. Do it too soon and the disease presumably leaps up again. Leave it too long and big swathes of the UK private sector will be excessively debt ridden or bankrupt.

So it would be good to have a bit more explanation from the epidemiologists how accurate their models are and when they judge it might be safe to reverse these measures. Learning from overseas countries ahead of us on the upwards curve of this disease is a good idea, but we need to understand the different bases of their figures and the big imperfections in them.

Some countries concentrate on testing after death. This can give a high death rate, as many people who  get the disease and recover are never tested and counted, whilst many people who may die of something else can have death attributed to the virus they were carrying. There may also be false positives in the tests.

Some countries concentrate on testing those who declare symptoms, who mainly go on to recover. This may well produce a lower death rate, though the figures may still be way out as many people with symptoms or with the mild  version of the disease may never report or seek a test. Some countries test key workers and patients at risk, yet another different set of figures.

It  would be good to see test results based on a proper sample of the population to know how many already have it, compared to full testing on all those who have died from symptoms like the virus.  It is still a medical judgement if the virus killed them. It will also be better when the new test to find those who have recovered from it and now have antibodies against it is available.

In the meantime government faces a difficult dilemma. Which of the many reports of various death rates and rates of new infection does it  believe or does it think we are most likely to follow? At what point would it be safe to reverse these measures?  When will we have in place sufficient tests to make the numbers more reliable than many of  those from around the world using selective testing? People’s lives depend on these numbers . Millions of people’s livelihoods also depend on them, so they better be available soon and they better be reasonably accurate. The only justification for the economic  misery is that the measures save lives. Giving businesses a better idea of how long it may take would also assist their plans and their financings.

There is plenty of food but still some problems getting enough into shops. There is a shortage of home delivery capacity for the elderly and ill needing that.

I have put the issue to Ministers again and asked that they broker further talks between the catering and supermarket companies over diverting food from catering packs to retail packs, and possible use of catering delivery assets and drivers to shift more for supermarkets. The government should suspend competition rules to allow collaboration.

Now most non food shops are closing the government could also ask the logistics companies shifting non foods to shops to see what they could do to boost food deliveries, and to see if some of the home delivery capacity of non foods could be used for foods.

I am going to submit my scheme to help the self employed to the Treasury again, as we have still not had an announcement from them.

The epidemiologists advising the government have succeeded in  persuading them to lock down as much of the country as possible. The aim is to stop the spread, and so reduce the numbers needing hospital treatment. The earlier policy of trace and isolate did not prevent escalation, though it may have slowed the progress of the disease as the advisers hoped.

Given this, the best outcome now must be a severe but short lived clampdown with a resulting drop in numbers getting the disease, followed by some relaxations to get more people back into work.  The worst outcome would be little progress with getting numbers down and a decision to carry on with many closures in the hope that the policy will sometime start to work as planned. A middle course is likely with a longer period of clampdown and some success with braking the rate of increase.

What does this do to the economy? More than 40% of it, the private sector not involved in food and food retail , pharmaceuticals, utilities and other basics will take a big hit. The obvious sectors that have been closed down will lose all their revenue, but it is likely new cars, new homes, discretionary purchases will all be cut back, some severely. We will see falls in output and incomes of a magnitude we have never seen before in a recession. They have come on us suddenly.

If the government aid for companies is administered well and promptly, and extended to the self employed, then many businesses will survive and be available to supply and serve us again as soon as restrictions are lifted. If the banks use the government guarantees well and make some of the ample liquidity to them available as affordable loans, that too will help see many more companies through the low or no turnover phase.

It is going to  be much easier for companies to revive and bounce back if the gap is not too long. More visibility on timetables would be helpful to those deciding whether their business can battle on and on how much they need to borrow to bridge the gap.

The government should give us scenarios based on better control of the virus to give some hope that these restrictions are temporary.  They can say that the short term closure model is more likely if we all co-operate and observe as much social distancing and isolation as our roles allow.

As of today we face the loss of a large number of self employed businesses without more financial support, and even  the loss of businesses  covered by the financial support scheme announced who nonetheless are losing so much  business from virus related effects and have large non employee costs..

It is nonetheless the case that the UK economy will lose a lot of  output from March onwards and that cannot return until the bans are lifted. Jobs will also be lost if the government financial support is not readily available at scale. The longer the closures and bans continue, the more businesses will give up and make their staff redundant to stop the losses.

Commercial rents will fall, dividends will be cut, pension funds will have much bigger deficits and businesses in trouble will have problems raising capital. There will be large falls in investment.

This is now happening all over the advanced world where similar policies are  being followed. I wish the experts and governments every success in limiting this disease . They also need to  recognise that the serious economic damage being done to try to arrest the progress of the disease is going to get very severe unless there is a relatively short time limit on the shut downs and financial help for all in the meantime.

 

The new Governor and the Bank of England have risen to the task in the last few days. They have thrown everything into keeping banks and markets liquid. They are offering huge facilities for banks to lend on to the many individuals and companies that will need credit, and have now signalled they want gilt yields to stabilise. They have announced substantial new buying of government bonds, and operated at scale on  Friday to stabilise the market of gilts where prices had been falling. The commercial banks must  now show speed and purpose in offering loans to companies that need them, and need to curb their appetite for ultra high rates on the money they advance as overdrafts.

The government last week upped  their fiscal response to try to match the challenge. I have always argued the priority is to avoid mass unemployment from widespread redundancies. The new scheme to burden share on wages should go a long way  to help businesses keep their teams together while we await an upturn in demand.  The business rate holiday for the worst affected sectors and the direct cash grants also help. We still have not seen any decent response for the self employed, who are also an important part of our economy and should be helped.

Some argue that the large sums the government plans to borrow and the huge sums the Bank of England is committing to this task are excessive and dangerous. In a situation where there would  be a very large fall in economic output some offsetting action is needed. Millions of people are temporarily banned from working in their jobs or have to stay at home to look after children or to isolate themselves so  the government and Bank do need to offset some of this unprecedented hit to jobs, incomes and activity.

As the government has decided to close down a large part of the private sector, banning tourism, leisure, much travel, entertainment and hospitality, it needs to see it has to do more to plan for the consequences. Lots of discretionary spending areas from new homes and cars to clothes and many household appliances and furnishings will also drop sharply or effectively be banned.

Meanwhile there will be a continuing surge in demand for more food, food retail and home delivery.  As many people used to have more than 5 out of their 21 meals a week at their place of work or in a restaurant of fast food place there will be a big transfer of food demand to the supermarket as they eat at home. This requires switching food from caterers products to retail products and needs volume changes to the delivery system to households. There will be strong demand for smartphones, laptops and digital services, for home entertainment and for business digital systems. There will be more strain on domestic utilities as families stay home and load the broadband and electricity networks.

The government is  busy trying to divert more resources into NHS and social care. It  is buying up bed spaces, hiring in more medical staff, offering to buy huge quantities of tests, ventilators, pharmaceuticals and  protective clothing to handle a big outbreak. It also needs to help the private sector direct resource to home deliveries for all who have to self isolate, to ensure quick adjustment to the new patterns of food buying and consumption and the delivery of drugs where prescribed..

As the government is discovering, if it disrupts one thing like closing schools it has to help ensure enough people can still get to work in all the areas that do need to continue. As it closes restaurants, school lunches and works canteens it has to ensure all that food can be replaced through supermarket purchases. As it takes out train and tube travel and slashes services, it has to leave enough working for the key workers to get to the hospitals, broadband systems and electricity grid to keep things working.

Following extensive lobbying by many people the FCO has said it hopes Peru will now allow a flight to get UK citizens home who want to soon. They are trying to sort one out.

Dear Matt

         When you briefed MPs this week you stressed that the government does not have all the answers and is open to good ideas from colleagues that could alleviate the problems emerging. MPs are well placed to pick up details of what is going wrong or what needs government help or clarification.  There are four main  areas where I would like to offer some suggestions.

1. The need for volunteers to help where services are overwhelmed. We have the promise that many people in jobs where the business has effectively been closed will be able to keep their jobs pending re-opening thanks to  pay mainly from the state. We could ask some of them to spend part of their time helping in the community.  Immediately we need more people capable of doing shopping for the elderly or self  isolated. Maybe some could be lent to logistics and food companies  and food retailers under strain from extra demand. I doubt there would need to  be any compulsion, with many companies and individuals in enforced idleness being willing to help in positive and appropriate ways. There would need to be definition of what should be unpaid volunteer work and what work should be paid for by the temporary alternative employer.
2. The need to match the scheme for the employed in affected areas with a top up income from the Tax and National Insurance system for the self employed.  The Tax Authorities know who they are, what they earned last year, and the number of their  bank account. The self employed should be able to notify the authorities of the extent of the downturn of their income from turnover loss and get a tax rebate or reimbursement to top their income up to 80% of past levels as long as they were still offering their service and relying on it for their livelihood. Any self declarations that turned out to be false would result in subsequent tough penalties and their publication.
3. Food supply. It looks as if the main problem is aggressive hoarding, with stories of people buying abnormally large quantities and buying up new freezers to store it in. On top will be some genuine increase in supermarket demand as people who before had some of their meals out in a staff canteen or at events and working meals  instead eat all those meals at home. This latter does not expand the total demand for food but means diverting food from catering trade wholesalers to supermarket retailers immediately. The government should toughen its advice to supermarkets to impose appropriate controls on volume buying, and state that the police will stand behind the supermarkets in enforcing sensible measures to limit greedy behaviour. If necessary the Bill should grant enforcement powers for temporary supermarket ration rules.
4. Greater conversion to on line and remote solutions to service provision. You  have done a great job persuading the NHS to do much more on line or  by phone at a time when exposing ill people to others who may have this virus would not be helpful. I would suggest that  state education makes  a more concerted effort to put educational materials and lessons on line so this generation of GCSE and A level pupils do not miss out on the remaining weeks of their courses and formal revision.  There would need to be help for those pupils who lack internet access at home through the loan of machines or opening school IT areas for their attendance with suitable segregation of pupils.

I will set out more detail behind these proposals in letters to the lead secretary of State in each case. I am writing to you in the first instance knowing how central you are to the total policy and responding to your invitation.

Yours ever

John

People are mainly sociable. Most of us enjoy company, and like leisure pursuits based on sport or culture, dining out or drinking, adventure or romance.

The decision to ban these leaves a big hole in people’s lives. Governments have to allow people to go out to buy food, so the trips to the supermarket become more frequent as they represent one of the few reasons to allow people to go out as they wish.

The pressures on the supermarkets are mainly from the demand side. There are five principal reasons

1. Some  have to buy more food more often because we are no longer eating in works canteens or attending working meals when working from home. Many people have to replace missed meals out with home cooking. This means food that used to go to wholesalers for the catering trade now needs to be diverted to supermarkets. This must now be happening and will help. Supermarket models of true demand need adjusting for the increased home meals effects. There is no overall increase in food demand.
2. Some people have decided to greatly increase their stocks of food. Some have cleaned the stores out of new freezers to increase their storage capacity. Some have written unhelpful articles telling people what can be frozen, to swell the phenomenon. Most saw this as anti social and refrained, but a significant minority cleared whole shelves of items they liked .
3. The government’s stronger guidance on 7 and 14 day isolation at home, and long term isolation for the elderly and ill, led more people to feel they had to lay in food for a longer stay at home, which increased the number of people building abnormal stock piles.
4. The media fanned hoarding by highlighting empty shelves at periods of the day furthest from the restock deliveries, to encourage a feeding  frenzy.
5. The statement that one of the few legitimate reasons to go out is to buy food meant people became likely to do it more often. Having got there they proceed to buy things they cannot eat anytime soon.

The government and supermarkets need to agree a tougher approach to limiting purchases, so we deter people from further large stock build. Once this can be achieved supply and demand should come into better balance, reducing the tensions and showing people we are not about to run out of food. Astute farmers will be watching all this and see an opportunity to plant and rear more food this spring and summer given the appetite for it.

I have been told that a few people have been aggressive with my staff who are trying to provide answers at a time of great demand. Please  understand they are trying to do their best for you. Keep your anger for a strong email to me or the government  if you must let off steam about the current difficult situation.

This is not the letter I wanted to be writing to you this Spring. I had been working hard on an agenda with the government to boost our economy, speed up our growth, create more better paid jobs and improve public facilities in Wokingham. We were making progress when the virus struck.

Now I have to report to you that the economy will shrink substantially as a result of the measures being put in place to combat the epidemic. I am only too well aware that many of you are now experiencing severe difficulties in your businesses, with activity drying up or with the business effectively closed by cancellation of events, eating out, tourism and the rest.

I have switched my main activity to pressing for a comprehensive economic package to keep more people in jobs and to mitigate the worst of the impact of the enforced closures and big decline in demand in many areas. I am pleased that the Bank of England under a new Governor is working closely with the government and has come up with major injections of cash and support to the banking system so commercial banks have the means to help their customers through a difficult time. I have asked for a wide range of financial measures to support business and  the self employed , with the stress on grants rather than loans where businesses have lost much of their revenue through no fault of their own. I welcome the emphasis on trying to avoid redundancies, as businesses need to keep talented teams together ready for the upturn when restrictions are lifted on normal life. Yesterday’s measures help but do not do enough for the self employed in particular.

I am very conscious that the government has no election mandate for the economic measures it has taken with the purpose of cutting the spread of the virus.  Indeed, they are the opposite of what we wished to do and talked about doing. So far I find a minority of you think the government should be taking more and tougher measures, whilst another minority think the fear of the virus is overdone and we should treat it more like winter flu and let it run its course. The majority seem to be in support of the government’s tightening of controls as the virus started to spread, to seek to limit the strains on the NHS. I am urging the government to proceed only with measures which command cross party support. The government’s chosen way of battling the virus is to limit human contact to limit spread. This requires buy in from most people to succeed, so it cannot be done with just one main political party support where a significant constituency in the country fundamentally disagrees. The government is following an international consensus on how to respond, and drawing on evidence and guidance from the World Health Organisation.

The government is taking emergency powers, which include the right to quarantine individuals who are carrying the disease, and the power to prevent public gatherings. There are also powers to direct and flex the health and schools sectors to meet the extraordinary requirements on  healthcare. These powers expire after 2 years. Some in  Labour have been suggesting they should be reviewed and only  if necessary continued for a second year after one year. I am urging the government to accept that sensible advice.

I am posting on this website relevant communications from the government that might help people with difficult problems created by the new circumstances. In general terms the position is as follows

1. People caught abroad. The FCO has promised to work with the national governments involved to organise ways back home for all UK citizens wishing to return soon. They should contact the UK Embassy or Consulate near to them who will know if and when this can be organised in their case.
2. Self employed and businesses starved of customers and cash. Various grants, tax holidays and tax deferrals are listed on government websites and here. We await the details of yesterday afternoon’s package which I will also post, which was designed to put more help into business to ward off redundancies.
3. People’s right to a school place within the reduced educational provision. The list of occupations which qualify parents for places at school for their children has been published, based on the need of the parents to work away from home to maintain essential services. The list of key workers is available to view here.
4. Food supply. There is plenty of food available to feed us all. There have been temporary shortages on  the shelves of supermarkets pending extra deliveries. This has mainly been brought about by some people deciding to fill freezers and store cupboards with an unusually large reserve which leaves the shops temporarily empty for customers who need an evening meal. At some point presumably the freezers will be full and demand will return to more  normal levels. It would be neighbourly for people not to do this, and great if people who have stocked up  now kept away from the shops and used some of their stocks. Informal rationing is  being operated by the supermarkets, who are doing a wonderful job in difficult circumstances. If there are too many empty shelves too often they will need to tighten the ration rules.

I wish you all success in avoiding or overcoming  the virus yourselves and in your families. I and my staff will help where you need assistance with government rules or think government can do something to improve the situation. None of us have all the answers to this new disease which so far evades treatment and vaccination. Government policy is changing at pace and it sometimes takes a little time for the detail and implementation to catch up.

 The best advice I can give is commonsense. Try to avoid contact with anyone outside your immediate family at home as anyone may be carrying the virus or you may yourself be doing so. Behave towards others as if you did have the virus by keeping a respectful distance. Look  after the vulnerable in your family. Buy what you need,  but be  mindful of the needs of others.  This is a time when communities can come together to help each other. It is a time where if you have the capacity it would be great  to help those in need, and for local and voluntary efforts to emerge to take some of the strain . Lonely people in isolation would appreciate safe communications  by social media or phone.

Yours sincerely

John Redwood