In five key areas, the Covid pandemic has irreversibly and fundamentally changed our way of life
Source - Daily Telegraph 21/02/21
Boris Johnson announces the first cautious steps out of lockdown, the whole country is looking forward to that precious day when normal life can resume. But while schools will soon reopen, friends will meet and families reunite – in open air, at least – there will be no going back to the way things were. The pandemic and our response to it will change our economy and society forever, and the consequences will be profound. Just consider these five big examples.
The first concerns our immediate economic choices. Everybody knows that we face a fiscal hangover after the interventions of the past year. But it does not follow that austerity is what must come next. Unlike with the financial crash, which caused a credit crunch that undermined productivity and economic growth and reduced tax receipts, the end of lockdown should see a rebound and strong growth as families spend the record savings they have accrued.
While the Treasury will want to reassure markets about its fiscal responsibility, the Prime Minister will want to spend, not cut. Both his personality and his pre-Covid policy programme – requiring huge investments – suggest he will want to grow his way back to prosperity and sustainable public finances. This is consistent with international opinion.
The urgent risk is unemployment. For while many families have been able to save thousands of pounds during lockdown, the number of workers on company payrolls has fallen by more than 800,000. Getting Britain working again will be the first priority for ministers when the economy reopens.
And beyond lies the risk of inflation. Rishi Sunak, the Chancellor, has pointed out this forgotten danger, as have analysts studying America’s $1.9 trillion (£1.3 trillion) stimulus policy. But ministers might bring it about themselves if their solution to debt is to avoid paying back the hundreds of billions they owe the Bank of England after quantitative easing.
The second fundamental change is a long-term shift in production. One of the revolutionary changes of the pandemic has been the move, for many employees, to working from home. Most analysts and employers expect this to continue beyond lockdown, with many companies combining work in the office on some days with working from home on others. Some studies suggest Britain’s workforce could work remotely for one third of the time without undermining productivity.
The consequences are enormous. Reduced commuting times, typically almost four hours per week, or six and a half in London, are one obvious advantage. But there are risks. The potential for remote working is unequal: more concentrated among the highly skilled and highly paid; less among the low-paid and those whose jobs are already at risk from automation and digitisation.
There will be a huge effect on urban economies. Existing models of finance for public transport will no longer make sense. Restaurants and retail outlets in city centres will suffer diminished customer numbers. Demand for office space will reduce, leading to lower land values and rental costs, and the possible redesignation of property from commercial to residential.
And there will be changes based on geography, too. If some sectors can go almost entirely virtual, some might be offshored to countries with cheaper labour costs. At the same time, jobs might flow in the opposite direction, back home, as supply chain resilience and domestic production become more important in some sectors. And more high-skilled, high-paid workers might decide to move out from expensive cities. As ever, the places with better transport connections, cultural attractions, and amenities and services like schools will be the beneficiaries.
Third, just as the way we do our jobs is changing, so is the way we buy goods. According to KPMG, online sales have grown by more than 50 per cent in the past nine months alone, accelerating a trend that would otherwise have taken more than five years. After the pandemic, analysts predict that up to half of all non-essential retailing will take place online, up from 30 per cent before Covid.
This represents a looming disaster for high streets, which are expected to lose between 20 and 40 per cent of their retail provision, and hundreds of thousands of jobs. High-street shops in places with a broader cultural attraction are likelier to survive, but areas without such an appeal will continue to suffer.
Fourth are the changes in public services. After Covid there will be a greater understanding of the need for more spending on health and social care. But there will also be reform. Changes forced on the NHS through circumstance – such as virtual appointments with GPs – will continue. Attempts to marketise the health service will be reversed.
In education, thanks to the widely accepted need for many pupils to catch up on lost time, we can expect a new focus on school improvement. The abandonment of exams should not mean a lasting shift to ongoing teacher assessment, but there will be renewed interest in longer school days, shorter school holidays and post-qualifications admissions for universities. With undergraduates paying full fees with little or no direct teaching this year, new online-only courses – and even an online university – are also likely.
Fifth is the fact that, as we learn the lessons of our poor preparedness and mistakes as ministers wrestled with Covid, the state is only likely to grow more powerful. Already, plans are afoot to restore ministerial control of the NHS. Some ministers are growing more circumspect of devolving powers. Industrial strategy – supported only tentatively by Conservative MPs to date – has more support. Resilience, and not just efficiency, is the new watchword in government.
There are other changes, of course, from the acceleration of the rise of China to an increased recognition of the importance of mental health. But what these five great changes demonstrate is the sheer scale of the transformation in our economy and society that is just around the corner. As ever with great changes, there will be costs and benefits, and opportunities and risks to the Government’s ambitions for the country. Only one thing is certain: there will be no way back to how things used to be.
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