16 April 2020


Article for the Times

This lockdown has been successful at saving lives and reducing the infection rate and spread of the virus. In doing this, the government has taken the right decision to implement it in full. Yet there is no escaping the vital point that it has come with a heavy yet understandable economic cost.

However, we are fast approaching the stage where the ability of the economy to bounce back from this shutdown becomes imperative. That is why it is also time to plan an exit process that keeps the virus under control, allows the economy to come back to life and gives people hope about the future.

Furthermore, some of the reporting of whether we should emerge from the lockdown has been wrongly cast as saving lives or saving the economy. There is no such distinction, both are about safeguarding peoples’ health . One in six people work in sectors directly impacted by the lockdown and one in three are exposed. The lockdown has also exacerbated mental health issues, domestic violence and loneliness and has led to increased stress as people worry about their jobs and livelihoods.

But we must keep the virus under control and in the absence of another measure, reported new cases below half their peak, is a good metric to use as the target to unlock.

In ensuring we unlock when medically sensible to do so, we must not rely solely on epidemiological models. While essential in outlining the case for a lockdown, these scientific models do not factor in behavioural change and so are likely to recommend leaving the lockdown in place for longer than is perhaps necessary.

As behaviours play a key role in all of this, economics and social science have a vital role to play in plotting a credible and safe route out of lockdown.

The government’s slogan on behaviour has been very effective in changing people’s normal patterns of behaviour, emphasising we act in ways which reduce the risk to others. This responsible behaviour must remain. Furthermore, in any exit strategy, increased testing and utilising tracing are essential but we cannot wait for these to determine when we unlock.

As there have been some ideas put into the public domain, it is appropriate first to explain what we do not believe works. The call for unlocking based on age groups would not be the best route to kick-start the economy. The argument that 20-year-olds would be immune and not infect others would require impeccable behaviour and perhaps take months.

Furthermore, innovation from 20-year-olds is not going to fill the economic void. Meanwhile, London’s predominance means unlocking by geography will be less effective than by economic activity and sector.

The only argument in favour of using age in the unlocking is focused on nurseries, schools and universities. Most advisors don’t believe that schools spread the virus, however they do play an important part in unlocking the economy as people with children, particularly at primary school once back will be freer to return to work. But again, this needs to be done gradually, allowing schools discretion.

We favour unlocking based on economic activity, keeping the virus under control. In a paper just written by Lyons and Professor Ormerod, a traffic light approach is advocated – Red, Amber, Green. This is easy to understand and gives a clear sense of direction, with economic activity, schools and shops opening in stages in a gradual and predictable way.

Influenced by medical data, the Red and Amber phases last three weeks, allowing time for the effectiveness and safety of each phase to be assessed, before proceeding to the next one.

In the Red Phase, people would still have to stop doing many things they did before the crisis, but a number of economic activities are allowed. Then the Amber Phase, where caution is still required, but more economic activities are unlocked. Private car use would be permitted for non-essential reasons. Masks would be mandatory on public transport. Then, three weeks after this would be the Green Phase, at which stage pubs and large stores would reopen, along with mass sporting events and religious services. Other macro-economic policy measures could then be unveiled, including cutting VAT rates, to help kick-start consumption.

If the lockdown works as planned, it is likely we would reach the start of the Red phase by the first week in May and Green in mid-June.

It is surely right that the government plans now for the way the British economy can rise once again while ensuring the virus is contained. Behaviours have clearly mattered in the lockdown and will continue to be critical going forward. Now, ensuring there is a plan in place when the moment comes will give people something positive to look forward to at the end of this coronavirus road to perdition.

Article for The Times by Gerard Lyons and Rt Hon Sir Iain Duncan Smith MP (16th April 2020)