Secret dossier on coronavirus damage

The government has drawn up a secret dossier detailing the impact of coronavirus on the economy, with a dozen sectors rated “red” and facing significant job cuts and revenue losses, The Times has been told.

By Propiteer www.thetimes.co.uk

The Covid-19 sectoral impacts dashboard, which is prepared by officials from across Whitehall and frequently updated, gives “granular” detail on the effect of coronavirus on nearly 40 areas of the economy.

Among the sectors with a red rating are aerospace, the automotive industry, retail, hospitality and tourism, arts and heritage, maritime, including ferries and cruises, and sport.

Details of the document emerged as up to 70 Tory MPs prepared to rebel today over the government’s new tiering system, which is due to come into force tomorrow.

Ministers published an assessment yesterday of the health, social and economic impacts of coronavirus after weeks of pressure from Tory rebels, who have accused the government of failing to take into account the economic effect of the lockdown.

The 48-page impact assessment says that it is not possible to know the impact of the restrictions on the economy while warning that failing to control the virus would have “intolerable consequences” for businesses.

However, the unpublished dashboard provides a “deep dive” into the effect of coronavirus. For each sector it gives a red, amber or green rating for revenue, jobs and financial stability, with an assessment of the “overall trend” for the industry. A minister familiar with the document said: “There is a lot of detail in there, none of which is in the official impact assessment the government has published today.”

A government spokesman said: “The document referred to contains publicly available information and does not alter the fundamental analysis published today.”

Sir Keir Starmer, the Labour leader, will increase pressure on the government today by abstaining for the first time in the vote on the new tiered restrictions. The party wants more support for the hospitality sector.

The tier system will put 99 per cent of the country in Tier 2 and Tier 3, leading to bans on indoor socialising and the closure of many pubs and restaurants.

In an attempt to win over Tory rebels Boris Johnson will announce today that “wet” pubs and bars, which cannot open under Tiers 2 and 3 because they do not serve “substantial” meals, will be given additional grants.

The government’s official impact assessment did not include any new economic analysis. Instead it referred to modelling by the Office for Budget Responsibility, which suggested that the economy could contract by 11.3 per cent by the end of the year.

The document states: “It is not possible to know with any degree of confidence what path the economy would take if restrictions in place were not sufficient to prevent exponential growth, or in the absence of restrictions entirely . . . More widespread infections and the consequences of pressure on the NHS would affect spending in the economy due to voluntary social distancing, effects to confidence and impacts on businesses, including through high levels of employee sickness.”

Mel Stride, a Tory MP and chairman of the Treasury select committee, said: “This rehashed document offers very little further than that which the OBR published last week. It’s frustrating that there is little that sets out how the different tiers might impact on the specific sectors and regions across the country. Those looking for additional economic analysis of the new tiered system will struggle to find it in this document.”

Published analysis gives little insight into effects of tier system

Running to 48 pages, the government’s analysis of the economic, health and social effects of England’s new tiering system draws together existing facts and figures but also reveals ministers’ wider rationale and acknowledges what they still do not know:

Consequences for the NHS

The analysis shows just how far the NHS has come in treating Covid-19 patients since the start of the pandemic. Of the patients admitted to intensive care before August 31, 39 per cent died. In the second wave from September to November 19, this fell to 24 per cent. But the document does not try to assess explicitly what the consequences would be of the NHS exceeding its capacity to cope. Instead it simply concludes it “is clear” that a “much higher proportion” of patients would die.

Economic impact of no action

The document is most sketchy on what the effect on the economy would be if the current restrictions were relaxed. It simply states that it “is not possible to know with any degree of confidence” what the outcome would be. While fewer restrictions could allow businesses to operate as normal, increased infections could affect spending.

Health impact of the new tiers

The document cites evidence from Sage which, it says, shows that the previous tiering restrictions had not been enough to control rising case numbers except in those areas with the most stringent restrictions. This, it states, is why the new tiers need to be broader than those they replaced. Yet it warns that they may still not be enough to control the virus.

Economic impact of the new tiers

The document relies on previous national forecasts by the Office for Budget Responsibility, which are already out of date because they were compiled before vaccine trial results. These include an upside scenario in which most of the UK is in pre-lockdown Tier 2 restrictions until the spring when a vaccine becomes available, a central scenario in which most of the UK is placed in Tier 3 lockdown until the spring with an gradual easing of restrictions until a vaccine arrives later in the year. A downside scenario sees national lockdowns become necessary until well into next year.

In the upside scenario GDP falls 10.6 per cent this year but bounces back next year and unemployment peaks at 5.1 per cent. In its central forecast GDP falls by 11.3 per cent and recovers at the end of 2022 while unemployment hits 7.5 per cent. In the downside scenario, GDP levels do not recover until 2024.

It concludes that while it is “clear” that restrictions to contain the spread of Covid-19 have had and will have a “major impact on the economy and public finances” it is not possible to “forecast with confidence” the precise impact of a “specific change to a specific restriction”.