MICHAEL WHITE on the impact of COVID-19 and the unseen challenges that lie ahead.
Well, that was an unexpectedly good start to another tricky week for the government. The many millions who care about the arts in all shapes and sizes woke to find that movers and shakers in theatre, film, music and the rest were delighted by the scale of the last minute £1.57 billion bail-out, in loans and – mostly – grants, to the embattled culture sector. Even philistine economists were relieved through gritted teeth. Artistic uplift is also a big 700,000 jobs, tourism and exports business.
Every supportive step helps at a time when Britain is staring at a Covid-19 iceberg, desperate to restore optimism and a sense of normality, but unsure just how much ice lies below the surface. Near panic in Texan hospitals, renewed shutdown in Israel, Melbourne and Somerset pubs, no wonder employers are sacking staff instead of taking them off the furlough taper. Unsurprising too that many customers hesitate to ‘spend, spend, spend’ where the economy most needs it, despite Rishi Sunak’s polite invitation. Who’d have guessed that post-Brexit trade uncertainty could be so overshadowed?
It didn’t take the PM long to dispel the artsy feel-good factor in his own inimitable way. In Red Wall east Yorkshire he blamed care home managers for ‘not following the procedures’ and promised to organise them better in the future. Cue for outrage from frontline care staff who have been waiting for reform of the sector for 10 years longer than they waited for clear Whitehall guidance on Covid-19 procedures in March. ‘That’s not what he meant,’ bleated No.10, Trump-fashion. ‘Fantastic,’ says Boris. It’s his spray-on word.
Meanwhile the arts lobby’s initial enthusiasm must have been dented, not just by next day’s detail (‘not enough’), but by a ministerial car crash on Radio 4’s Today programme. Here the culture, media and sports secretary, Oliver Dowden, feebly dodged Nick Robinson’s repeated insistence that he explain the difference between people flying cheek by jowl in a sealed aircraft – or hugging drunkenly in Soho – and doing neither in a cinema, concert hall or theatre.
He’d obviously forgotten to ask Dom for the line-to-take. Do you hesitate to book that summer holiday in Greece? Don’t book your Christmas panto either. I am tempted to complain that Dowden’s anodyne political personality, an upwardly mobile Cambridge lawyer turned Cameron advisor at No.10, simply reflects his age and fast-tracked inexperience. He’s a pro-Remainer who quickly turned over his alleged campaigning skills to Boris (‘fantastic’) Johnson’s service when the wind blew in Brexit’s direction.
But Dowden is almost two years older than Sunak. Born just a year after Margaret Thatcher first won power on a promise to shrink taxes and the state, the chancellor turned 40 last month and is said to be a ‘Brexity Hezza’ like Boris. So watch out, Maggie. Today’s Tories are busy pulling down your statues, tipping them in the Thames and piling on the debt.
Instead of mouthing thoughtless clichés about being ‘a cultural superpower’ (arghh!), we might warm to Dowden if he cheerfully admitted this and reminded the Blessed Margaret’s disciples that the Iron Lady was actually more pragmatic than her ferrous reputation. She threw taxpayer billions at Canary Wharf to sustain the City’s ‘Big Bang’ reforms while preaching self-reliance to stricken pit villages.
Thatcher got away with it because she had earned her tough leadership credentials, as buck-passing ‘Fantastic’ Johnson has not. It’s no coincidence that he favours driverless trains. The difference is between an Iron Lady and a Plasticine Man with a plasticine cabinet. The likes of Dowden, Generic Jenrick and Alok Sharma are yet to show the political and personal skills which would sustain a career beyond the courtier stage, as much of Thatcher’s team did.
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We need at least a few of the current crop to do better because – probably until 2024 – this is the only government we’ve got. We need it to succeed, not merely to boast and bluster. Instead it is floundering on many fronts. That competence and credibility can be achieved in such unpromising circumstances is evidenced by Sunak. He was the stand-out success of Johnson’s administration – the only success – even before he waved the first of the Treasury’s hefty pandemic bills alongside Boris’s ‘build, build, build’ spending spree on Wednesday.
As has been endlessly pointed out, it is easy to be popular writing cheques. Infrastructure schemes, environmental projects and six month job placements for 350,000 18-24 year-olds, a spot of fiscal stimulus – stamp duty etc – to ease the path out of recession. Ambitious, costly stuff.
The real test of Sunak’s chancellorship was not Wednesday’s instalment. It will come in the months ahead as the Covid-19 iceberg’s shape becomes clearer – and its melt rate too. That comprises both medical and economic components. How far will unemployment soar? A niece of mine and a neighbour, both 30-something women, lost their furloughed jobs this past week. Some 10,000 jobs went in barely 24 hours. WFH has been a godsend for some, but not for Upper Crust’s baguette sales or Pret’s BLTs, not if their customers never commute again.
Analysts have become a little more hopeful of a V-shaped bounce back, just as the 35% predicted drop in second quarter GDP has now been modified. Unemployment may not peak just below a Thatcherite 10% after all. Whoopee! It may rise to 15%. As ex-chancellor, Phil Hammond, warned – trust him to spoil the party! – it’s not the 90% of the economy that will quickly come back that we need to worry about. It’s the last 5-10% that may never return, pubs, Prets and theatres as well as skilled aerospace jobs at Airbus or BA pilots.
Economics is partly about behaviour. Will we be bold or cautious? Some learned papers have suggested that voluntary restraint was the crucial determinant in the success of lockdowns. It seems that light-touch Sweden suffered almost as much damage (aggregate spending down 29%) as Denmark (25%) because Scandinavians follow social distancing advice. Other researchers suggest that ‘experience-induced frugality’ will make us all more cautious for a long time. To which the optimists reply that human beings have a genius for blotting out the nasty stuff, that more Americans took flood insurance policies after Hurricane Katrina in 2005 – but only for three years. It’s probably a bit of both.
Economic behaviour dovetails with the medical dimension of the iceberg. Optimism is predicated on global success – it must be global to work – in taming the virus that emerged from Wuhan, the Covid iceberg in the corner of every room, office and cinema. Britain’s behaviour since the easement began has – like other countries – been mixed: cautious and complacent. As Cathrin Schaer reported in last week’s TNE, solid Stuttgart suffered drink-and-drugs clashes with German police. It wasn’t just us, though it certainly felt like that in the street below our flat at the weekend.
But throughout the crisis evidence repeatedly shows how disproportionate is the damage that a few irresponsible people can do, in drink or wilful blindness that equates wearing a mask on the bus or in the shops with oppressive tyranny. It would be wrong and needlessly divisive to call it the ‘Take Back Control’ mentality, but the thought does keep occurring. And, of course, it is reinforced by the preposterous spectacle of the prime minister urging everyone to be responsible and stick to the rules – this from a man whose life and career have been built on rule-breaking , usually at other people’s expense.
Unfair, you say, when Covid-recuperating Johnson carries so many burdens? Perhaps, but that would require us to ignore the attention-seeking misconduct of Stanley Johnson. It wasn’t some sneaky tabloid that caught Stan popping off to check out the retsina at his Greek hideaway (whoops, ‘Covid-proof his holiday rental property’), he actually posted the grisly details on Instagram. How compulsive is that? Here was a perfect moment for Boris to grow up and play Prince Hal to Stanley’s Falstaff (‘I know thee not, old man’), but he fluffed it. That’s DNA for you.
It might almost be funny, if it wasn’t serious. Stanley’s sophistry is like the Cummings crowds which meet to celebrate their inalienable right to spread Covid-19. Their recklessness makes it more likely that the first pandemic wave will persist into the winter and a possible second wave. That ensures that the economic scars – the mental health scars, the rising death rates from neglected cancers, the domestic abuse and A Levels derailed – will be deeper and more lasting.
It piles on the pain at a time when the crisis has highlighted pre-existing conditions like obesity, deprivation and unfairness. Like Shakespeare’s Falstaff, our self-image is comforting, but untrue and fragile. These familiar failings carry a price tag and the bill is now due. Sunak’s initial three-month furlough has had to be extended from June to the autumn, albeit with tapered first-of-the-month reductions. It is costing £60 billion, half the annual NHS bill before CEO Simon Stevens warned that an extra £10bn is needed now to keep the exhausted service going.
The corporate credit lines for struggling-but-viable businesses and upskilling training schemes for those who are losing their jobs are what the chancellor rightly promised this week. They come with home insulation grants and other future-proofing measures to help decarbonise the planet. If we have felt helpless in the face of Covid-19 the ordeal is trivial compared with what climate change may have in store for us all. Do you hear that wind outside?
At least the relentless parallel march of artificial intelligence (AI) has a brilliant upside as well as profound challenges to our jobs and freedoms. But the prospect of global warming leading to Tuscan summer weather at Morecambe or Whitby is sheer delusion. Confronting these urgent challenges must be paid for. So will short-term cuts in stamp duty to stimulate consumer demand. Have you noticed that the wealth tax agenda is back?
No less a figure than Lord Gus O’Donnell, Treasury economist turned cabinet secretary, told a seminar at the sober Institute for Fiscal Studies (IfS) that the public mood is changing. It prompted Tory co-chairman, Amanda Milling MP, to make the knee jerk response that the savings of ordinary people would be at risk. No Amanda, that won’t wash any more, though it might upset some of Boris’s more exotic party donors.
To be effective a wealth tax will require global action against tax havens and other forms of tax-dodging, legal and fraudulent. The times look unpropitious, but they do change, as even tax-shy Donald Trump is being forced to acknowledge by his pandemic disaster and his psychologist niece’s devastating book. Covid-infected Bolsonaro of Brazil too.
Ah, did I rashly type ‘global action’ just now? Here Boris’s Covid iceberg (‘fantastic’) finds itself bumping into another menacing hulk that has broken away from the rules-based global order established after the Second World War, the spectre of populist nationalism in almost all directions.
The upbeat talk is of relearning the virtues of localism in the battle to tame the virus, in Leicester, Llandudno and Leith, in track-and-trace management and food sourcing. The downbeat talk is of zero-sum trade wars, of a further revival of mercantilism at the expense of retreating free trade and (Trump again) quitting the WHO.
Johnson’s swashbuckling vision of Global Britain surfing the world’s markets (‘fantastic’) was mostly self-deluding. But the counter-forces which now undermine it are increasingly ideological, albeit often disguised in the language of the rules-based world. Britain’s trade talks with the EU27 shuffle along slowly. That there is little to report again may be good news or it may take us closer to the cliff edge. Newspapers complain that their readers are having to pay higher insurance premiums because of Covid disruption. Why don’t they remind them that next year’s trips to Mediterranean beaches will likely be burdened by costly health insurance if the European Health Insurance Card (EHIC) is not rescued?
Barring another major U-turn – rule nothing out – sovereign Britain is self-isolating from its major trading partner. As polling guru, Peter Kellner, pointed out in last week’s TNE most Leave voters now think that a trade deal with the 27 matters, much more than a substitute one with the increasingly erratic US. Sovereign or not, Britain is falling into line with Trump over Huawei’s 5G technology while trying to steer a more measured course on wider problems with China’s increasingly assertive foreign policy and aggressive domestic oppression against its Uighur minority and now Hong Kong.
And what’s this? In his first substantial initiative as foreign secretary Dominic Raab has just targeted 49 named individuals for Magnitsky-style sanctions for assorted offences against human rights and international law. Not just Russians, but Saudi minions of autocratic Crown Prince MbS. Stirring stuff, and Lord Palmerston might well have done the same. But in the 1850s Downing St was backed up by the Royal Navy, the world’s most powerful military instrument. Beijing has not forgotten what it did to China even if we have. Nor have the Saudis betrayed by British promises in 1918. Moral posturing is all very well in realistic doses. But Boris’s Britain is making itself pretty friendless, acquiring enemies which can do us all harm and penetrated by clandestine Chinese campaigns of elite penetration as well as Russians ones, so it was alleged this week. The Americans have done it for decades, of course, but they are still on our side, more or less.
Would Raab dare impose sanctions against Chinese generals and oligarchs too? To alienate all three of our major trading partners – EU, US and now Xi’s China – plus our Saudi arms buyers may be tempting fate. It’s what Boris does. Closer to home he may have noticed that young Sunak has been profiled in the posh Tatler magazine, photographed in pubs, though he doesn’t drink. The unsackable chancellor has even revealed his childhood love of Lego and ongoing passion for Star Wars. Watch out, Boris. Uneasy lies the head that wears the corona.