Longer lockdown based on hypotheticals would come with serious economic costs

The penny is finally beginning to drop. The health service’s focus on giving absolute priority to the treatment of Covid-19 generates costs and problems on a massive scale.

Chris Hopson, chief executive of NHS Providers, has warned of the huge pressures on the NHS from the backlog of non-Covid cases.  

Many of these are life-threatening in themselves.  

Cancer is an obvious example. But Hopson also warned of a significant increase in patients with “severe mental health needs.”

Looking solely at one disease out of many was always going to cause major problems.  

Economists warned about the costs of lockdown during the very first one, in spring 2020.

A key concept in economics is that of trade-offs.  

Trade-offs between alternatives have always been central to our economic policy and political debate. Lockdown is no different to any other policy. It has both benefits and costs.

More generally, lockdowns have imposed enormous economic costs.

In June last year, David Miles of Imperial College, along with a couple of medical experts, estimated the costs and benefits of the first lockdown. The benefits are the value of the lives saved.  

Placing a value on a human life may seem macabre, but it is a standard tool used by the National Institute for Health and Care Excellence to guide health care decisions in the UK public health system.

The authors stated that “we find that having extended the lockdown for as long as three months consistently generates costs that are greater – and often dramatically greater – than likely benefits.”

The same conclusions were obtained by other economists, such as Bob Rowthorn at Cambridge and Barry McCormick at Oxford’s Nuffield Primary Care Centre.

A real world “natural experiment” emphasises the strength of their results. Life in Sweden has gone on more or less as normal over the past year, with minimal restrictions.

But not only is Sweden’s Covid mortality, adjusting for population, just two-thirds that of the UK, GDP fell in Sweden by just under 3 per cent compared to a 9 per cent drop in Britain. 

Both within the health sector and more widely across the economy as a whole, an appreciation is growing of the costs of lockdowns.

The one group which is seemingly impervious to this is an influential one. Namely, the serried ranks of virologists and epidemiologists.

They remain firmly enclosed in their own silos of expertise, unable or unwilling to see the broader picture.

Hospitalisations and deaths remain low. But lockdown should persist because the more cases there are, the greater the chance of a dangerous new variant arising.

Public policy cannot be, and indeed in general  is not, based on hypothetical problems.  The Black Death might return. We might be hit by an asteroid.

Governments may usefully make some provision to deal with such scenarios. But they do not incur huge costs here and now just in case one of them might happen.

We have gone through a year when the population has had to protect the NHS. But the NHS and assorted health experts have not been protecting the population.

Paul Ormerod
As published in City AM Wednesday 2nd June 2021
Image: Elliott Brown via Flickr

Share this post



e: aobyrne@volterra.co.uk
t: +44 020 8878 6333

Alex O’Byrne, Associate at Volterra, is an experienced economic consultant specialising in economic, health and social impact, economic strategy, project appraisal and socio-economic planning matters.

Alex has led the socio-economic and health assessments of some of the most high profile developments across the UK, including Battersea Power Station, Olympia London, London Resort, MSG Sphere and Westfield. He has significant experience inputting to EIAs and s106 discussions as well as drafting economic statements, employment and skills strategies and affordable workspace strategies.

Alex is also experienced at economic appraisal for infrastructure. He was project manager of the economic appraisal for the City Centre to Mangere Light Rail in Auckland. He also led the economic and financial appraisals of the third tranche of the Transport Access Program for Transport for New South Wales, in which Alex developed and employed innovative methodological approaches to better capture benefits for individuals with reduced mobility.

He is interested in the limitations of current appraisal methodologies and ways of improving economic and health analysis to ensure it is accessible to as many people as possible. To this end, Alex recognises the importance of transparent and simple to understand analysis and ensuring all work is supported by a robust narrative.

Alex holds a BSc (Hons) in Economics from the University of Manchester and he was a member of the first cohort of the Mayor’s Infrastructure Young Professionals Panel.


Senior Partner

e: eevans@volterra.co.uk
t: +44 020 8878 6333

Ellie is a partner at Volterra, specialising in the economic impact of developments and proposals, and manages many of the company’s projects on economic impact, regeneration, transport and development.

With thirteen years experience at Volterra delivering high quality projects to clients across the public and private sector, Ellie has expertise in developing methods of estimating economic impact where complex issues exist with regards to deadweight, displacement and additionality.

Ellie has significant experience in estimating the economic impact across all types of property development including residential, leisure, office and mixed use schemes.

Project management of recent high profile schemes include the luxury hotel London Peninsula, Battersea Power Station and the Nova scheme at London Victoria. Ellie has also led studies across the country estimating the economic and regeneration impact of proposed transport investments, including studies on HS2 and Crossrail.

Ellie holds a degree in Mathematics and Economics from the University of Cambridge.