Neil O’Brien: The demographic challenge – not of rising but of falling population

3 May

Neil O’Brien is Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

“The future is already here – it’s just not evenly distributed” – William Gibson

Over the last year, I’ve been around a lot to put our baby son to bed. Just before he’s finally tucked into his cot, he likes to go look at his little orange night light. We sit around for a bit in the dark, like cavemen around a campfire, with the warm glow reflected on our faces.

Sometimes I think about what the world will be like when he is old. Born in 2019, he has a decent chance of seeing the century’s end. What will the world be like?

Prediction is hard even in the short term. Decca records refused to sign the Beatles, believing that “guitar music is on the way out”. United Artists turned down Ronald Reagan to play the President in their 1964 movie “The Best Man”, insisting that he “just doesn’t have that presidential look.”

In 1996 a publisher rebuffed JK Rowling’s draft of Harry Potter, insisting “children just aren’t interested in witches and wizards anymore”. But there’s one bit of crystal ball gazing that isn’t completely balls: demographics.

Other things being equal, 43 year olds turn into 44 year olds.  While trends in migration, health and birthrates can swing the supertanker in different directions, we can see roughly where we are heading.

When my father was born, there were fewer than 2.5 billion people in the world.  When I was born there were 4.3 billion. When our younger one was born, there were 7.7 billion.

While for the world as a whole, the population is still rising, the pace of growth has slowed dramatically. Global population growth fell from two per cent a year during the late 1960s to one per cent now, and falling fast.

The UN suggests the world will arrive at peak population of about 11 billion by the century’s end. We’re already arriving at what Hans Rosling called “peak child”: while the global population is still rising, the number of children is topping out.  Over the last decade the total population grew 12 per cent but the number of under of five year olds by only five per cent, with growth slowing fast.

Of course, these numbers conceal massive shifts around the world. In the rich world, populations have levelled off – or would have done so if it weren’t for migration.

But in poorer countries, the population is still zooming up, fastest of all in Africa. In 2010 there were a billion people across the continent. Now there’s more than 1.3 billion.  The UN expects it to hit two billion by 2038.

The implications are massive.  Today, southern European states are struggling to control and deal with the movement of people north across the Med in search of a better life. Unless things can change for the better in Africa, the issues could soon be doubled in magnitude.

In the rich world, it’s the opposite story. Japan is the oldest country.  The population peaked in 2010 and has fallen since. The Japanese are rolling out robots in nursing homes, offices and schools to cope.

China is teetering at the point where the population will stop growing and start shrinking.  India will overtake it to have the world’s largest population in the middle of this decade, and by mid-century there will be 300 million more people in India than China.

Around the west countries face very different futures.  The UN’s central prediction sees the US population growing another 15 per cent by 2050. But in Europe it’s a mixed picture.  The UK population is expected to grow by nine per cent and France by four per cent.  But Germany is expected to shrink by four per cent, Spain by seven per cent, Italy by ten per cent and Poland by 15 per cent.  That’s one reason the French Institute for International Affairs warned the continent faces the “exit ramp of history” without change.

And the total growth is only part of the story.  Broadly speaking, when the share of the population of working age is increasing, countries get an economic tailwind, which turns into a headwind and slows them down when the share of working age starts falling. On average, and unsurprisingly, countries where the working age share is growing see GDP per head growing faster.

That’s something that we don’t take into account enough when we try and work out which economic policies work.

In Japan, in 1995 two thirds of the population were working age.  In about 20 years time, it will be less than half.  Japan’s had a rough couple of decades, but then again, it’s tough to grow your economy when fewer and fewer people can work.

While the share of the population who are working age will fall three per cent in the UK and US over the next 20 years (causing big challenges) in China the decline will be steeper – eight per cent.

One of the reasons Beijing are trying to grab for dominance in every industry now is that they are in a demographic race against time. Meanwhile, neighbouring India will see a growing share in the working age, and Africa massively so.  The tailwinds will be with them.

Similar tailwinds and headwinds are facing different parts of Britain too. Local authorities which had larger proportions of pensioners 20 years ago saw their proportion of pensioners grow faster: we are diverging by age, with the young clustering in cities and older people heading for the coast. Today, there’s just one local authority where more than a third of people are pensioners. By the 2040s there will be 53, with big implications.

One influence will be migration. Polls in the U.K. suggest few people want more migration, and more want reduced migration.

Many countries have some kind of population policy.  China has unwound its famous ‘one child’ policy, but it’s now making little difference. Getting richer has reduced the birthrate more than formal rules did.

Countries in Eastern Europe facing depopulation such as Hungary and Poland have launched a raft of pro-natal policies, while Greece last year launched a 2,000 euro ‘baby bonus’, described as a measure for “national preservation” by one minister. France has introduced some measures to help larger families while In the US, there is a lively discussion about the falling birth rate.

After a bump up in the late noughties, the U.K. birth rate here has fallen back over the last couple of years to near record lows – so perhaps some of the same debates will come here as we try to cope with our ageing society. In England, about 29 per cent of births are to mothers born overseas, and higher fertility rates among those born abroad have propped up the birth rate till now – but in recent years the gap has been shrinking.

British people are currently having fewer kids than they say they would like to, and policy can make a difference to how many children people have.  And for many decades policies in the UK have not been particularly child-friendly.  We used to recognise children in the tax system until the 70s.  Perhaps by the time my son has grown up we’ll have gone back to the future.

Some say the ageing of the global population will lead to a “geriatric peace” with less conflict. Others worry about global population decline in the longer term. Though we can’t be sure what impacts all these demographic trends will have, we can see in them a bit of what tomorrow’s world will look like.

Neil O’Brien: Covid. We should stick to the plan, and finish the job.

19 Apr

Neil O’Brien is co-Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

“Over the land freckled with snow half-thawed /

The speculating rooks at their nests cawed /

And saw from elm-tops, delicate as flowers of grass, /

What we below could not see, Winter pass. /

Thaw ” – Edward Thomas

Britain is vaccinating faster than anywhere else in Europe.  Covid cases are staying low here, even as global infection rates hit new record levels. We’re abolishing restrictions and getting back to normal, as the rest of Europe is forced into new lockdowns by surging infection rates.

Spring is in the air. Undaunted by the recent snow, the trees hold up bright new green leaves. Hawthorns in the hedges are clouds of blossom while red tulips shoot up in gardens.

Schools are back, shops open, pubs about to fully open.  The economic outlook is for economic recovery and falling unemployment: the IMF predicts we will grow faster than the euro area over the next two years. The outlook for the country is definitely looking more sunny, after such a bitter year.

So many have died, and more have suffered.  Out leafleting the other day I met a gentleman whose wife is in a wheelchair and clinically vulnerable.  She’s been out and about just three times in the last year. For her – for all of us – the final taming of the coronavirus can’t come soon enough.

We’re in the last stretch out of the pandemic. But we’re not out of the woods yet. We should stick to the plan the PM set out for four reasons.

First, the roadmap for reopening is working.  The number of people hospitalised with Covid is down from 4,000 a day at the start of the year to 200 a day now, even as we’ve reopened schools and shops and started households meeting up outside.

Second, voters solidly support the plan.  They have done right from the start, and the proportion saying the pace is right has gone up. 54% now say we have it just right, 27 per cent say we’re going too fast and just 10 per cent too slow.

Third, people like it when politicians do what they say we will. After the awful opening / shutting see-saw of 2020, people like the fact that Prime Minister has set out what will happen after what date, and that we’re delivering on that. They want opening-up to be irreversible, rather than take risks and then be forced backwards.

Now, some say there’s no risk of a third wave. They’re often the same people who confidently told us there was no risk of a second wave. They’re wrong again – at least for now.

The risk of a new wave will indeed go away soon: at some point during the coming months, our vaccination programme should take us to herd immunity. After that point, so many will be vaccinated that new outbreaks of Covid will tend to fizzle out like a wet bonfire, rather than spread like wildfire through dry tinder.

But we’re not there yet.

Four in ten have not yet been jabbed. And vaccines don’t offer 100 per cent  protection to the other six in ten who have been. If we tear up the plan and drop our guard prematurely, the population at risk is still plenty big enough to sustain a new wave. We’ve seen how quickly a surge can take off.”

And if we have one, it will reach those who are vulnerable, or older. We just reached the milestone of having offered vaccinations to all over 50s.

But five per cent of them haven’t taken it, including five per cebt of the over 80s. Amazingly, only 68 per cent of care home workers in London have had it, despite being offered top priority. Those people who are vulnerable-but-not-vaccinated, plus the fact that vaccines don’t protect everyone, would cause a final spike of completely unnecessary deaths and hospitalisations if there was another surge now.

Soon, that risk will be squashed by herd immunity.  But not quite yet.

The Prime Minister was quite right to point out the other day that it has been lockdown measures, rather than the vaccine that’s done the heavy lifting so far. As Chris Snowdon points out, 80 per cent of the decline in cases had occurred by mid-February when the vaccines could have had only a marginal effect. Case numbers also fell sharply among the under-60s who had barely been vaccinated at all.

That brings me to a fourth and final reason to stick to the plan: keeping the threat of new vaccine-resisting variants in check.

I am desperate that we never have to go into lockdown again.  The nightmare scenario is that some vaccine-dodging variant emerges and sets us back massively. So far, that doesn’t seem to be the case, but until we get a handle on the risk they pose, we should keep the new variants at lower levels by sticking to the roadmap.

There’s good news and bad news on new variants.  The one from South Africa (B.1.351) which drove a recent outbreak in South London, seems to reduce vaccine efficacy a bit, but not catastrophically.

The bad news is other new variants are coming thick and fast.  In India, cases have increased tenfold in less than a month. This seems driven by the new B.1.617 variant found there, which appears more infectious and more resistant to the body’s immune response.  Seventy-seven cases of it have recently been found in the UK.

Likewise, Brazil’s P1 variant is twice as infectious. Deaths per day there have tripled over the last two months. P1 can reinfect people who have had other Covid strains. The most recent estimate is that having had a previous Covid infection provides only 54–79 per cent of the protection against infection with the new P1, and it’s now mutating further.  Potentially cutting prior immunity by a quarter to a half would be a big deal indeed if that proves to be the case.

But we don’t yet firmly know how much these variants will reduce our current vaccines ability to cut serious illness, and we definitely don’t know what they will do to their ability to cut transmission.  These variants are small in numbers in the UK for now, but are growing as a percentage of cases. Given the ballistic growth of these new variants in the developing world, the case for tough border controls is strong.

The good news is that we have a longer-term plan to deal with new variants, though investment in new, broader-spectrum vaccines.

In a nutshell, these vaccines will contain more bits of the virus, teaching our immune system to zap a wider range of variants. One such, the Valneva vaccine (setting up production in Scotland) should come on stream this Autumn, assuming it passes the regulators tests.

So again, timing is everything. If we stick to the roadmap we should keep new variants under control until the point where summer weather will then help hold them down, and then as we go into next winter we can be ready with new vaccines to clobber them without lockdown measures if they do become a problem.

At Easter, we were finally able to get friends round for a cuppa in the garden again.

The return of such basic freedoms feels amazing, but also reminds us what a bizarre and awful year 2020 was. Here comes the sun: but for so many it really has been a long cold lonely winter. I don’t ever want to go back into lockdown. That’s why we should stick to the plan, and finish the job.

Neil O’Brien: I can laugh off China sanctioning me, but we can’t shrug off the threat it poses

5 Apr

Neil O’Brien is co-Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

Typical, isn’t it?  You’re trying to get the kids off to school and nursery, running late as you hunt around for your son’s snuggly giraffe. You have a busy day planned, meeting the local paper and a café owner threatened with eviction.

The next thing you know, a communist superpower declares war on you personally.

I’m one of nine people sanctioned by China. It’s tempting to laugh it off. After all, seizing my assets in China will leave the Communists no richer. And after they kidnapped two prominent Canadians, I wasn’t planning to go there anyway.

The next morning, the Chinese embassy still sent me their regular propaganda email to MPs, which began: “Dear friends…”  It seems joined-up government is impossible – even under dictatorship.

But it’s no laughing matter. The goal isn’t really to intimidate me or the other MPs, but business people, academics, and others. To create uncertainty, fear and self-censorship – memorably described as the “Anaconda in the chandelier” strategy.

More and more businesses are having to grapple with it: Beijing’s currently threatening to destroy Nike and H&M in China for raising concerns about slave labour.

It’s now coming up on a year since we launched the China Research Group.  Over the last 12 months, things have changed in lots of ways.

First, there’s growing global awareness of China’s human rights abuses: particularly against the Uighur people, but also in Inner Mongolia, Tibet, and across China as a whole. Human Rights Watch says it’s the worst period for human rights since Tiananmen.

The brutal crackdown in Hong Kong and Beijing’s decision to tear up the Sino-British declaration and end “one country, two systems” showed how much Beijing will sacrifice to keep absolute control. All leading pro-democracy activists there are now in exile, in jail or on trial.

At least the world has started to notice and act.  Indeed, we were targeted by Beijing in response to coordinated sanctions on human rights abusers in Xinjiang, recently put in place by 30 democratic countries.

MPs around Europe and MEPs from all the European Parliament’s main political groups were sanctioned along with us, with various US politicians already sanctioned last year.

So we’re all in it together, and it was great to get strong support from the Prime Minister – and through him the US President – and also from friends around Europe.

The sanctions aren’t like-for-like of course. MPs like me are being sanctioned simply for writing articles like this. By contrast, the democracies are sanctioning Xinjiang officials for presiding over a regime forcing sterilisation of Uighur women on an industrial scale; using rape as a weapon to break dissenters in its vast network of detention camps; rolling out an AI-powered surveillance state that to identify and control minority groups; and physically erasing the Uighur culture and religion from the face of the earth.

Our sanctions are to protest against human rights abuses. Theirs to silence such protests.

What Beijing’s doing is at least as bad as Apartheid South Africa.  But by comparison, the international response has been more muted so far. Partly because China makes it hard for reporters to get access. But also because China is more powerful than South Africa was.

International pressure on South Africa grew over decades and became a huge cultural movement. It loomed large in the pop music of my 80s childhood: “Free Nelson Mandela”, “Something Inside So Strong”, “Silver and Gold”, “Gimme hope Jo’anna” were all hits.

These days Hollywood studios make sure that their films have the thumbs up from Beijing: they think it’s too big a market to risk losing.

I’ve written about China’s growing global censorship. Nonetheless, the truth is seeping out, and the global criticism getting louder.

That points to a second positive change over the year: new opportunities for democracies to coordinate in the Biden era.

Coodination is essential: China’s economic and political strategy relies on divide and rule.  Each free country fears losing out if it alone stands up to Beijing.

The communist regime singles out countries who challenge it like Australia, Sweden and Canada. Like all bullies, they are really trying to teach others to keep their heads down.

But while Trump had scratchy relations with other leaders, Biden’s election makes cooperation much easier.

It’s not just that we need to get the band back together again, and make the G7 work (though that’s important), but bringing together a wider group of democracies including India, South Korea, Australia and South Africa. The Prime Minister is right to push the “D11” concept.

The third big change is changing western attitudes on economic policy regarding China.

The single best thing about the recent Integrated Review was the clear-eyed understanding of the competition for technological advantage now underway between nations.

In the sunny utopianism of the 1990s, the world was going to be flat, borderless, and competition was between companies not countries. Technology was cool, but not a national issue: the UK could just specialise in professional services. Awesome new global supply chains meant you didn’t need to worry about where your supplies were coming from, whether it was vaccines; ventilators, PPE, silicon chips or telecoms equipment.

Beijing has a very different vision, and its rise means we must change our thinking  It promotes “Civil-military fusion”, and its imports have slowed dramatically as its import substitution policies develop.

Xi Jinping says he is “building a socialism that is superior to capitalism, and laying the foundation for a future where we will win the initiative and have the dominant position.” He explains that China must “enhance our superiority across the entire production chain… and we must tighten international production chains’ dependence on China.”

The US has woken up to this, and in Washington as well as Beijing there’s a shared understanding that the two superpowers are fighting to dominate the technologies of the future. Joe Biden talks about “winning the future”.

Japan, South Korea and Taiwan have long seen tech competition as a shared national endeavour, and have policies to match.  No wonder: meeting politicians from these countries through the China Research Group, I’ve come to understand the level of constant threat they have to live under.

We too must adapt to this more national world.

First, we need to build a powerful innovation system. During the 1960s and 1970s the US and UK invested similar amounts in R&D.  But Reagan grew federal support while we let it wither, and we have been operating on different levels since.  I’ve banged on before about how to make government funding do more for our economy.

Second, we need to protect ourselves from the Beijing’s hoovering up of technology.  More help for business to resist cyberattack from the National Cyber Force.  Somewhere to get advice on not losing your intellectual property if you do business in China.

And as well as the very welcome National Security and Investment Bill we need to make sure that the new Investment Security Unit has the same resourcing and input from the security services that CFIUS enjoys in the US – and we need to be prepared to use the new powers.

Likewise, Jo Johnson’s recent report highlights the risks to our universities from poorly-thought-through partnerships with China. Investigations by Civitas and the Daily Telegraph revealed that UK universities are actually helping Beijing with new weapons technologies. We must get a firm grip of all such partnerships and where universities’ money is coming from.

Over the last year we’ve learned a lot.  The UK and governments across the west have started to act.  But we’re still just starting to figure out how to respond to a more aggressive China.

Neil O’Brien: The view that manufacturing is a relic of the past is itself a relic of the past

22 Mar

Neil O’Brien is co-Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

“Nothing so much contributes to promote the public well-being as the exportation of manufactured goods”. From the King’s Speech at the opening of Parliament, 1721 (drafted by Robert Walpole).

Here’s a funny thing.  Wages and productivity in manufacturing are higher than the average across the whole economy. Productivity has also grown more quickly in manufacturing. But places where manufacturing is a larger share of the economy have, on average, lower wages and productivity.

The answer to this seeming paradox is that manufacturing provides an outsized proportion of the better paid jobs in poorer areas. And that they typically started with even more manufacturing, and lost more from deindustrialisation. Might manufacturing now have a particular role in levelling up poorer places and getting private sector growth going there?

Put simply, if manufacturing is a bigger chunk of the economy in less affluent places, and if you could do some things that caused manufacturing to grow faster then, other things equal, that would tend to particularly help worse-off places.

That’s not to say government shouldn’t also work hard to grow other sectors – just that manufacturing might be particularly helpful in levelling up.

Between 1978 and 2019, output per job grew an average of 0.36 per cent a quarter across the economy as a whole, but not far off twice as much (0.64 per cent) in manufacturing.  It’s not just the UK: looking at 26 OECD countries since 1996, all but one saw faster productivity growth in manufacturing.

Why? Much of the economy consists of people-intensive local services.  While there’s productivity growth in cafes, pubs, gyms, leisure and so on, it’s harder to achieve. A café is quite like it was 50 years ago.

Your smartphone really isn’t. There is no theoretical upper limit to how atoms can be arranged in new and more productive ways. Physical goods can also be exported in a way that haircuts can’t: so they can be traded in a more dynamic global market with stronger competition and more transmission of knowledge. That’s why manufacturing accounts for 42 per cent of our exports and two thirds of business investment in R&D.

But manufacturing is particularly relevant for levelling up because that higher productivity in manufacturing is particularly marked in less prosperous areas.  For the UK outside London, output per hour is 20 per cent higher in manufacturing than the economy as a whole.

Reflecting this, wages are also higher.  For example, in the North East the median wage in manufacturing was 22 per cent higher than average, in Wales 16 per cent it was higher and so on.  This earnings premium applies across qualification levels too: it’s not just more workers in manufacturing having higher qualifications, they’re earning more than similarly qualified people.

You might say, that’s all very well, but isn’t UK manufacturing doomed to shrink? Isn’t manufacturing too small to drive the wider growth of the economy much?

Having declined relentlessly as a share of the economy between the 1970s and 2010, manufacturing’s share has actually held pretty steady since then.

While it is now a relatively smaller share of employment (nine per cent of hours worked), manufacturing accounts for a larger share of output and a much larger share of productivity growth in poorer regions of the UK – accounting for more than 40 per cent of productivity growth between 1997 and 2017 in places like the West Midlands, Wales and the North West, creating a big multiplier effect on incomes and jobs in their local area.

Growth in manufacturing might particularly help places outside our large cities. As the UK economy has deindustrialised, higher productivity jobs have tended to be in professional services, typically located in large city centres. Across Europe, capital cities have grown faster than their countries.

The rise and then fall in manufacturing as a share of the economy since the Second World War was mirrored by a fall and then rise in differences in productivity: the shift to services has caused the richest region, London, to forge ahead, while deindustrialisation has seen poorer regions fall back.

The same effects are underway in smaller cities.  Between 2002 and 2018 productivity grew 76 per cent in Glasgow and Edinburgh and 62 per cent in the rest of Scotland. In Cardiff and Swansea it grew 59 per cent compared to 47 per cent in the rest of Wales. And in Belfast it grew 72 per cent compared to 49 per cent in the rest of Northern Ireland. Productivity grew 54 per cent in England’s large cities and 49 per cent in the rest of England outside London – even including the relatively prosperous south east.

It’s great to see our cities revive, powered by services growth. But we need to make sure places outside city centres grow faster too. Manufacturing is space-intensive, so more likely to locate outside the centres of the largest cities. It’s one high productivity activity in which less urban areas may have a natural advantage.

And those are just the sort of places our new majority is built on.  Nationally about one in twelve jobs are in manufacturing – but in the seats we gained in 2019 it’s higher: one in eight jobs.

Some say deindustrialisation is inevitable for all rich countries, so emphasising manufacturing is pointless.

While many richer countries have deindustrialised, almost none did so as much as the UK.  In 1970, the UK had the sixth largest share of manufacturing in the economy in the G20. Today, it is second from bottom.

Countries as diverse as South Korea and Ireland have caught up or overtaken our living standards while growing the share of manufacturing in their economy. Rising countries like India and China have seen manufacturing growing as a share of the economy share.

And many other rich countries have deindustrialised far less: manufacturing is about 10 per cent of GDP here, about 22.5 per cent in Germany.  In the Blair years this was actually seen as a UK strength. But post financial crisis it doesn’t look so smart, as productivity there has grown faster.

Another objection might be of principle. What would Margaret Thatcher think of all this?

Well, while Mrs T (rightly) let go lossmaking industries, it’s worth remembering she also worked hard to replace them. She used taxbreaks, factory start up costs (and lots of her time) to woo Japanese carmakers here.

She backed life sciences, founding a government-backed biotech company (Celltech) and using pharmaceutical pricing to lure pharma businesses to the UK.  In telecoms, Thatcher drove the adoption of the GSM standard at an EEC summit in 1986 to help create a huge market for equipment makers, and then let UK companies like Vodaphone charge yuppies a fortune for calls, meaning tha they had pots of cash to buy up more heavily regulated rivals overseas.

In 1981, she appointed the world first minister for IT (Ken Baker) and funded the “micros in schools” programme.  That put rocket boosters under the company that won the government contract to manufacture the computers, (Acorn), enabling it to create ARM, now one of the UK’s largest tech firms.

In aerospace Thatcher moved heaven and earth to sell British Aerospace products overseas, flying to Saudi Arabia to secure their biggest ever order. Visiting the factory, she said she would love to have flown a harrier.

Today, there are still massive security arguments for keeping the capacity to make things, underlined by EU threats over vaccine supply. But even without those arguments, the 1990s/2000s view that it would be fine if British manufacturing became a thing of the past now seems like… well – a thing of the past. The truth is that in many parts of the UK, making things goes hand in hand with making a decent living.

Neil O’Brien: Imperfect vaccines, new variants, domestic mutations. Why there must be no rush out of lockdown.

8 Feb

Neil O’Brien is co-Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

At last, the happy ending.  As EU politicians squabble, we’re vaccinating faster than anywhere else in Europe. The Church of England is allowing cathedrals to be used as vaccination centres, and the footage of orderly queues in Salisbury and Lichfield made me feel like we were in the happy ending of Powell and Pressburger’s patriotic war movie, A Canterbury Tale.

But whenever a movie has a happy ending, I worry someone will make an awful sequel: 2020 the revenge. As the Prime Minister said, alluding to The Great Escape, it would be tragic to “tangle ourselves in the last barbed wire” just as we escape from the pandemic.

He’s right. Ministers face two uncertainties.

The first: how fast we can go in opening up without triggering an upsurge in conventional Covid.

The second: how to manage the risk of new, vaccine-resistant Covid strains being imported – or equally importantly, developing here.

Armour with holes in

Clearly, we can’t just open everything tomorrow. Until mid-February we’re vaccinating the over 70s. But half of Covid patients in intensive care are under 60. Even once we vaccinate younger groups, it takes up to three weeks to fully kick in.

And the vaccination programme is a suit of armour with holes in. Some older people won’t get jabbed, and no vaccine is 100 per cent effective. The Oxford vaccine showed a 59.5 per cebt reduction in the symptomatic cases in clinical trials. A more recent paper suggested a 67 per cent reduction.

Currently, older people are protected not just by growing vaccination rates, but national lockdown and their very high levels of social distancing. Only over time, as we open up, will we really find out how big the holes in our armour are. And we don’t yet know how long we’ll be in this tricky phase between vaccinating the most vulnerable, and getting to the full benefits of herd immunity.

We need to pace ourselves. We don’t want to go for a big bang reopening only to trigger a new wave and be forced backwards. In the coming weeks we’ll start to fully reopen schools – quite rightly – as the first step back to normality. Reopening schools will increase virus transmission. The uncertainty is by how much.

A study in Nature looked found closing educational settings was the second most effective intervention to reduce transmission. A study in The Lancet found school closures cut transmission. A study from the US showed statewide school closures reduced new cases. In December SAGE concluded that “overall, accumulating evidence is consistent with increased transmission occurring amongst school children when schools are open, particularly in children of secondary school age (high confidence)”.

The Nature paper found similar effects for both primary and secondary schools, and the number of school based outbreaks in the UK is similar for both, though ONS data (about to be updated) suggested older children were much more likely to be exposed to the virus. There’s options about how we reopen in areas where rates remain high: primary and secondary; different rotas or protective measures – there are lots of choices if needed.

Given the uncertainty about the effect of schools reopening, we should allow time between opening one thing (schools) and the next, so we can judge their effects.

It’s time for Burkean conservatism: As Burke wrote: “By a slow but well-sustained progress, the effect of each step is watched; the good or ill success of the first, gives light to us in the second; and so, from light to light, we are conducted with safety through the whole series”.

New variants

The harder question is how to manage the risk from new variants. We’re seeing lots of them around the world, but also within the UK. There was the Kent variant, now there’s Bristol and Liverpool variants. A variant from South Africa sadly made its way here, but one from Brazil seemingly hasn’t.

How big is the risk from vaccine-evading variants?  Evidence is emerging. The Kent variant has a less dangerous N501Y mutation, which makes it more infectious, but doesn’t let it dodge vaccines.

The South African variant has that plus the E484K mutation, which may reduce vaccine efficacy.

The Financial Times reported last week that in clinical trials Novavax’s new vaccine was found to be 89 per cent effective in its UK trial (where the E484K mutation is rare), but had just 49 per cent overall efficacy in South Africa.  Lab evidence also suggests it may make the holes in our armour much bigger. The paper also recently reported that the South African strain reduced the effectiveness of the Oxford / AstraZeneca strain too.

Concerningly, the Liverpool variant adds the E484K mutation to “old” Covid, while the Bristol variant combines the Kent variant with the E484K mutation, making it like a home grown version of the South African strain. We’re still learning how coronaviruses evolve to dodge immunityhow they do it, and how we should respond.

I support the measures the government is taking to tighten our borders for starters: requiring negative tests pre-travel, hotel quarantine from risky countries, making sure travellers do isolate. It’s a monumental task to set these systems up. But worth it. Covid is likely to bounce around the world mutating for some time. Once in place, we can steadily toughen these border controls as appropriate.

The prize of us getting back to normal life in the UK seems worth the price of inconvenience for travellers: if you hate lockdowns, you should back the toughening of borders.

Sadly, managing the risk from new variants isn’t only about borders, because we’re seeing new variants originating in the UK. As vaccinations rates go up, the evolutionary incentive to mutate and dodge them increases. It’s like anti-microbial resistance. The reason doctors tell us to finish antibiotics courses is that it is dangerous to wound but not kill bugs: that way you end up breeding superbugs.

The less of the virus we have in circulation, the fewer new variants we will see, and the lower the risk of a really bad vaccine-dodging variation emerging inside the UK.

Manaus in Brazil shows the dynamic in extreme form. The Covid-sceptic government failed to act so, in spring 2020, it became the Covid capital of the world. They buried huge numbers of people in vast mass graves, but never reached herd immunity. Instead, uncontrolled spread has made it a hothouse for new more dangerous strains: a new local variant has emerged to re-infect survivors.

So there’s a second consideration for ministers. It’s not just that we have to pace ourselves to avoid a new wave of “old” Covid.  Driving down infections more also reduces the uncertain risk of a vaccine-dodging variant which could set us back a really long way.  And small differences in the timing of opening measures can make big differences to infection rates.

The Prime Minister set out a clear timetable and set of criteria for making decisions on reopening, one of which is that nothing game-changing emerges to blow us off course. We should stick to the plan.  The other day, he said we were making progress but it’s too soon to “take your foot off the throat of the beast”.

As a classicist, the mutations of Covid-19 might remind the him of the mythical beast Hydra, which grew two new heads if you chopped one off.  Heracles eventually solved this problem by cutting them all off, burning the stumps, and burying the last head under a giant rock. We might not need to take quite such drastic measures.  But so close to a happy ending, it’s wise to keep controlling the virus while we gauge these emerging risks.

Neil O’Brien: Five lessons from the pandemic

25 Jan

Neil O’Brien is co-Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

Planning for disaster

Years ago I was rummaging around in the basement of the Treasury and came across an old copy of the “War Book”: a big red tome setting out what to do in the event of nuclear attack.

Time had made some details rather quaint: if the Soviets were about to drop a trillion megatonnes of instant sunshine on Britain, I’m not sure “nationalise Girobank” would be the first thing on my to-do list.

But it was a huge, thorough plan. Each department had something similar.

Since the end of the cold war, thinking about civil contingencies has been lower priority. But our more connected world creates potential for new, faster crises.

Not just pandemics, but the financial contagion we saw in 2008. Our reliance on the internet, cloud, electric grid and GPS is increasing. More specialisation, plus more global chains of just-in-time production increase efficiency, but also fragility. You don’t have to be Martin Rees to think there’s new risks that we must plan against.

State capacity

It’s striking that the countries that did best in the Covid pandemic are those, like Taiwan and South Korea, which live under threat of annihilation by their neighbours. They’re dense, urban countries, but per head they had just three per cent and 0.1 per cent of the rate of cases seen in the EU.

Though we’re fastest in Europe, the world’s fastest vaccine rollout is in Israel – a country also under constant threat.

Other top performers include New Zealand and Australia.  They aren’t under such military threat, but have long been used to tough bio-borders. Australia went from one idiot releasing a couple of rabbits for fun, to having 600 million bunnies and having to build the world’s longest fence.  That was a pretty good early lesson about the exponential growth of a new organism introduced where there’s no predatorial ‘immune system’ to keep it in check.

New Zealand and Oz also imposed tough lockdowns in response to relatively few cases. At the time sceptics here said it was “absurd” and “out of proportion”. But our cousins were right, so they’ve been able to get back to normal faster. They basically followed the advice of Ripley in the movie Aliens: ‘nuke it from orbit – it’s the only way to be sure’.

Right across South East Asia and Australiasia, successful states have made their borders very tough. As vaccinations power ahead in the UK, we’re quite right to further toughen our borders against potential new vaccine-resistant variants. The cost of a vaccine dodging variant coming here would just be too high.

But there’s something more to learn from states that live under threat, about the need for state capacity.  Another top Covid performer is Singapore, where civil servants are very highly paid – but small in number, and low performers are managed out fast.  One reason the state shouldn’t be too big is exactly so that it can be strong and focussed.

China as number one

As people have pointed out, coronavirus has accelerated lots of trends: we’ve woken up in 2030. Paying for things is contactless. Videocalling friends is normal. More stuff is bought online. And China is closer to being number one.

Though some democracies managed the same feat, China’s brutal suppression of Covid-19 has been successful, meaning faster reopening, meaning the point where it becomes unambiguously the world’s largest economy is now only a few years away.

The last twelve months have seen Beijing start to throw its weight around more.

The west needs to get its act together urgently. There’s an internal economic challenge, to match their all-conquering innovation-industrial system. And a diplomatic challenge too, to reunite the democracies. At a China Research Group event last week with people close to the new Biden administration, it was clear that there’s an important role for the UK in making that happen.

Making a living

First it was the global scramble for masks and PPE.  Then ventillators.  Then diagnostics and testing kit. Now the global surge of demand for vaccine production and glass vials.

Again and again, the pandemic demonstrated why we need advanced manufacturing capacity: in a crisis, nations are utterly dependent without it.

To be sure, there were always other good reasons to back manufacturing.  Along with professional services, it’s the other part of the UK economy that really drives productivity growth: since 1997, manufacturing provided 40–50 per cent of productivity growth in places like Wales, the West Midlands and the North West.

But the pandemic underlines another reason to want such capacities here. When the international going gets tough, countries must be able to provide for themselves (topped up with firm agreements with allies for complex products).

This lesson is not lost on President Xi, who in a speech in April set out his “dual circulation” plan:

“we must build on our advantages, solidify and increase the leading international positions of strong industries, and forge some “assassin’s mace” technologies. We must sustain and enhance our superiority across the entire production chain… and we must tighten international production chains’ dependence on China.”

In case you were in any doubt, Xi also talked about “forming powerful countermeasures and deterrent capabilities based on artificially cutting off supply to foreigners”.

Since Margaret Thatcher left office, Britain has deindustrialised more than any other G20 country.

Perhaps it’s another area where we should learn from Asia: South Korea has nine times more robots per manufacturing worker than the UK, yet since the Lawson era the UK has slashed capital allowances which support such investment.

As a recent report for the Levelling Up Taskforce found, such allowances also tend to help poorer areas more.

Staying nimble

The Government was panned at the time for not joining the EU’s joint procurement of the vaccine.  But the team who secured more vaccine orders for the UK than any other large country showed the benefits of being small and agile.

We need to apply the same agility and flexibility to our exit from the pandemic.

I totally understand why people want to set hard dates to reopen. We are all desperate to get back to normality.

But there are so many unknowns: how fast cases will fall; what effect school reopening will have; how much protection people get from their first and second vaccinations; how much that stops the spread, not just symptoms; whether new vaccine-resisting strains come here; and how fast we can go on vaccinations…

Given all this we need to stay nimble in the final phase of this. On Friday we delivered 425,000 vaccination doses in England alone. Huge numbers of people are being protected each day.

We will soon jab our way to victory, and end this pandemic.

Afterwards, there’s all kinds of lessons we must learn from it.

Neil O’Brien: Trumpism in Britain. It’s time to call out those in the media who cynically feed the cranks, rioters and conspiracists

11 Jan

Neil O’Brien is co-Chairman of the Conservative Party’s Policy Board, and is MP for Harborough.

“Defoe says that there were a hundred thousand country fellows in his time ready to fight to the death against Popery, without knowing whether Popery was a man or a horse.” William Hazlitt, 1830

When supporters of Donald Trump stormed the Capitol building last week, many people in Britain probably thought that it was just the latest manifestation of a special sort of craziness that has gripped America. That sort of thing surely couldn’t happen here. Or could it?

The same evening, to far less fanfare, the Metropolitan Police arrested 21 people outside Parliament. On new year’s day, doctors leaving St Thomas’s hospital were greeted by a large crowd of protestors chanting “Covid is a hoax”.

These things are connected. They show that the same forces at work in the US are in some ways, already at work here.

Let me wind back a bit. Obviously, I mainly blame Trump for what happened in Washington. He did everything he could to incite the riot, in a brazen attempt to reverse his election defeat.

But other people made this possible too. The ragtag army of wannabe revolutionaries smashing up the seat of Americas democracy were radicalised by a whole ecosystem of shock jocks, social media cranks and conspiracy theories.

They’ve ended up living in a world of alternative facts, in which Trump is the sole bulwark against diabolical global conspiracies, and the President is the victim of an election “stolen” by a shadowy “elite”. In a world of such illusions, almost anything can be justified.
None of this is new. Trump was in a sense following the playbook of Lord George Gordon, who in 1780 whipped up fears of shadowy Catholic conspiracies, sparking vicious riots that left hundreds dead or wounded.

New forms of media often fuel revolutions. The printing press led to the reformation and wars of religion. The Cahiers to the French Revolution. The “Big Character Posters” spread the madness of Mao’s Cultural Revolution.

New technology has again changed things. First, Twitter, Whatsapp and online news have simply made political organisation much easier. The ‘colour revolutions’ in eastern Europe and ‘Arab spring’ were early demonstrations of their viral power.

But now the second shoe is dropping. What we are seeing now is the power of these technologies to create communities of radicalisation. Islamism is the most obvious example. A constituent of mine who lives in a pretty, sleepy village (with a lovely tearoom) was recently charged with seven terrorism offences. More and more, attacks come from those who have radicalised themselves online.

But Islamists are just one community of radicalisation. I was chatting to an apparently normal man this summer, when conversation turned to the coronavirus. He told me, with a matter-of-fact air, that it was all a hoax, set up by the New World Order who were planning a Great Reset, in which Big Business would take over and we would all be microchipped. I’ve had several similarly alarming conversations.

When people got their news from mainstream TV and radio news with strong legal obligations to be neutral, people were exposed to both sides of most stories. As has often been pointed out, people can much more readily be wound into a frenzy if they get their information from Whatsapp groups, people they follow on twitter and from agenda-driven ‘news’ sites.

But the idea of “filter bubbles” doesn’t really do justice to what new media is enabling. People aren’t just passively consuming news they agree with. People are building communities. People they ‘know’ from chat and comment threads. Making likeminded friends on twitter.
Indeed, conspiracy theories like QAnon represent a kind of enjoyable ‘game’: crack the code to understand the shadowy conspiracy!

The US has gone further down the road of polarisation than other places. People increasingly live with in neighbourhoods with likeminded people. The national conversation has been curdling for decades into extreme left and extreme right bubbles, with disastrous effects on politics.

The same technologies are having similar effects here. If we had faced the current pandemic in, say, 1992, how would you have got news about it? Perhaps there would have been a “Covid-92” page on Ceefax.

But if you’d wanted to spread the idea that vaccines are poisons, dreamed up by Bill Gates, you had nowhere to go but Speakers Corner really. So the man I met this summer, who so readily absorbed all this nonsense, would simply have been unlikely to encounter such ideas. These days, someone like Toby Young can set up a website to give people a dose of covid-sceptic propaganda every day. Crank “scientists” can rapidly gain a huge following on twitter.

Social media has changed how we live. In my first job in politics, working for Business for Sterling in 2000, I used to fax a press summary each morning to about 20 people. At the time, there was a well-written Eurosceptic newsletter called Eurofacts, which was photocopied and posted around to about 1,000 people once a month.

Until the next month, that was your hit of single-currency-scepticism. You had to go off and think about something else. Sure, some newpapers campaigned hard on both sides of the euro question. But reading the papers, even daily, just couldn’t absorb your attention in the way social media does.

Looking back, those were the mild-ale days of political communication. These days, people can become hooked on the crack cocaine of issue-driven social media.

Take the SNP cybernats. They can read a daily newspaper promoting Scottish independence, then go on a website or twitter all day to chat with other cybernat friends and wind each other up.Did you hear the one about the “secret oilfields” the UK government is mysteriously covering up, to do down Scotland? When people form such intense groupthink bubbles, they can come to believe almost anything.

We can’t uninvent social media, which also has many benefits. But we do need to adapt to it. In the US, fringe ideas like the QAnon conspiracy theory built up online. But their spread has been accelerated by the willingness of broadcasters and politicians to flirt with them to gain clicks and exploit their energy.

If we are going to avoid our national conversation going the same toilet, we need strong mainstream media. But we also need those in positions of power in the media to behave responsibly.

For example, one of the best selling papers in the UK recently ran a piece promoting the views of an “NHS worker” who claimed hospitals were “empty” and Covid was a “hoax”. If it had taken a quick look at her Facebook page, they’d have seen her celebrating the burning down a Jewish-owned bank, as part of a “great awakening”.

We need people in positions of power in the media to practice some basic hygiene about whose views they are promoting. Parts of Britain’s media have spent the Coronavirus pandemic doing everything they can to downplay the seriousness of it and set bogus stories running by publishing the claims of cranks. Professional contrarians have fed people misleading nonsense to get clicks: carrying on their business-as-usual, even in a life-or-death situation. As hospitals hit crisis point, they should reflect on their actions.

The attempted putsch in Washington didn’t come out of nowhere. It has been decades coming. It happened not just because of one man, but because people in positions of power made short-termist decisions to feed the beast, and play along. Don’t think it couldn’t happen here.

Neil O’Brien: How can we make the economy grow faster?

14 Dec

How can we make the economy grow faster? That’s going to be a big question in 2021 as we bounce back from an unprecedented recession, and start trying to make up lost ground.

There’s lots of things we need to look at. Obviously the big questions are about whether we get an EU deal and how fast we recover from the virus. But one of the other places to look is how we turn our savings into investments.

Rishi Sunak’s clearly interested. Recent weeks have seen him announcing a new infrastructure bank; reviewing Solvency II (regulating insurance firms investments); creating Long Term Asset Funds and extending a tax break to encourage investment. During his first weeks as Chancellor, he mandated the Bank of England to work on “the supply of productive finance, in all regions and nations of the UK” to “assist the Government’s levelling up agenda.”

They’re all welcome moves, because this is a huge issue for the UK.

One recent review noted that “the proportion of UK start-ups which scale into large businesses lags significantly behind the US”, and lots of start ups complain about access to finance. From a macro point of view, Britain has long had a lower stock of capital than other similar countries – at least when it comes to tangible, physical stuff. More machinery, better IT, more automation and stronger infrastructure would help us be more productive.

These are long-running challenges. Previous attempts to address them include the Myners Review (2001), Kay Review (2012), and Patient Capital Taskforce (2017) plus various select committee reports.

So what might be getting in the way of successful matchmaking between opportunities and funding?

1) Regulation and market structures

Riskier, longer term investments have higher returns. Pensions, banks and insurers face complex rules governing their investments, to control the share of their investments in such things.

In some cases, UK investors are putting less of their money into these growth areas than firms elsewhere. As Anna Sweeney from the Bank of England notes, “UK insurance companies only allocate around two per cent of their assets to unlisted equity. This is a smaller share than many of their European peers.”

By reviewing regulations like Solvency II, as the Chancellor is, we could refine the rules to safely enable more growth, not least because it was designed to fit the EU as a whole, not tailored to each country. We could also reshape regulations to make it easier to invest in long term funds. That’s the thought behind the plan to create Long Term Asset Funds.

And on top of the regulations, there might be related factors we could fix. As the Bank of England Financial Stability Report notes, the current industry norm is to value pensions (a long term investment) in ways that force them to behave like short term investors: “Daily trading and pricing is also common practice for [Defined Contribution] schemes, which is another constraint on investment in illiquid assets.”

The Bank should be prepared to act radically: tackling these barriers could mean more money for long term investment and more in your pension because of it.

(2) Public listed companies & short termism

We shouldn’t be too doomsterish about short termism. Plenty of money is being piled into tech firms that have never turned a profit, so clearly there are investors out there prepared to wait and accept risk in the hope of a good return.

But there is a real problem, particularly for public companies. It’s striking that privately owned companies invest somewhere between four to eight times more than public listed companies of the same size.

There’s long been concerns that relentless quarterly scrutiny of returns faced by public firms pushes managers towards short-termism: cutting investment in R&D or entry into risky new markets means profits will be better today, but worse tomorrow. But if your remuneration is based on your share price today, its tempting to go short term.

Managers agree there’s a problem: A survey of over 400 executives found three quarters would give up a project with a positive value in the longer term to smooth out earnings.

Investors agree too: in a CFA Institute survey of European investors 70 per cent said short-period evaluation cycles by asset owners are an impediment to long-term investing. Two-thirds of members of the National Association of Pension Funds said investment mandates encouraged short-termism.

If the investment gap between public and private firms reflects short termism, the economic costs of it would be pretty huge. As a paper by Andrew Haldane, the Bank of England’s Chief Economist and others, notes: “the elimination of short-termism would then result in a level of output around 20 per cent higher than would otherwise be the case.” That’s a big number.

Trying to escape short termism has led to two trends.

First, more and more public firms being taken private. “Public-to-private” deals where publicly-traded firms are taken private, plus fewer public listings (at least until this year), has been leading to “de-equitisation”. Across the US, UK and Eurozone the number of public listed companies has declined. But publicly listed firms remain a huge part of the economy, so if there is a short-termism problem there, it’s still going to have a huge economic impact.

Second, in the US new tech firms increasingly set up voting structures to keep founders in charge through dual-class share structures. Mark Zuckerberg has special shares with ten times more votes than ordinary shares. US firms like Google, Lyft, Pintrest and Snap use this kind of structure, allowed there since the 1980s. But in the UK dual class structures aren’t able to get premium listings. If this model particularly suits tech firms with hard to value intangible assets, perhaps that should change?

3) Tax?

One of the biggest, but hardest to fix distortions is the differential taxation of debt and equity. The fact that you can get tax relief on debt but not equity means firms load up on debt more than they otherwise would, and invest less overall. The Institute for Fiscal Studies’ landmark Mirlees Review suggested creating an “Allowance for Corporate Equity” to fix this.

But the cost to the Exchequer of such taxbreaks would be huge. Alternatively, any rebalancing by reducing the tax relief on debt would probably have to grandfather this debt somehow, as firms have borrowed heavily on the assumption of relief. It’s a very, very hard problem to crack, but that doesn’t mean a (very) long term solution is impossible.

4) Small business lending and equity

The most common financing problems MPs hear about is bank lending to small businesses. The problem’s a long running one.

The truth is that it’s a low-margin business for banks to analyse the finances of zillions of small firms, yet the provision of such loans has wider benefits to the economy. That’s why over decades governments have created a succession of bodies to support lending: from ICFC to 3i to the British Business Bank (BBB) we created in 2012. With the Bank of England predicting large numbers of unlisted firms will need to raise equity to grow (given their post-pandemic debts), it’s encouraging to see the BBB now growing its role in providing equity too. It’s a success story, and we should continue to support its growth.

As the economy bounces back next year, lots of firms will be in debt. But there are also real opportunities to reform regulation and market structures to help money flow into new opportunities. It’s a great place for the Chancellor to be looking to get growth going.

Neil O’Brien: Tomorrow’s Covid vote. We must stick to the plan – and stick together.

30 Nov

Neil O’Brien is co-Chair of the Conservative Party’s Policy Board, and is MP for Harborough.

I can’t believe they’ve gone. One, a local businessman. Not much older than me. Full of plans, things to do, a business to build. The other, a party supporter. Retired, but larger than life, and full of fun. Coronavirus got them both before their time. There were tens of thousands like them this year.

Tomorrow night, we face a choice about how we handle the final months of this pandemic. We still have a lot of winter and spring to get through until mass vaccination, the time when the NHS comes under most strain. And we must avoid a third set of national restrictions.

If we start from rules strong enough to keep driving down transmission of the virus, we can relax later. In contrast, going in the other direction will test the patience of voters.

Nor do we want to grind along with infection rates stable but not falling. We want infections coming down decisively, so we can loosen up. With the vaccine so close, people dying unnecessarily in the final months of the pandemic would be tragic.

And though polls show strong support for the measures we’ve taken, it would be much better to head towards the finishing line with good news about infections and restrictions falling.

Every MP wants to make sure restrictions in their area are as limited as possible. As infections fall, we’ll have regular reviews. But overall, we have to stick together, and stick to the plan. With Labour and the SNP not voting against, the new Government’s new regulations will pass. But we should remember the electorate brutally punishes divided parties.

Of course, there are a lot of legitimate debates about policy. Some ask whether restrictions do more harm than good. It’s a reasonable question, but I think sometimes the arguments are put back to front.

For example, during the second wave here in Leicestershire, the numbers hospitalised shot up, rising above the level we saw in the spring peak.

But after the national restrictions came in, the infection rate turned round, and started falling. Hospitalisation rates turned round too. That meant that while non-urgent procedures were postponed, the measures we took came just in time to allow life-and-death services like cancer treatment to keep running throughout.

If we’d waited or done nothing, those services would have been forced to shut. Restrictions saved not just coronavirus deaths, but other patients too.

It’s wrong to assume current restrictions are having the same effects as the emergency measures in spring. And some claims are wrong: it’s said suicides have shot up, but the best data suggests that’s not true.

People ask what the economic cost is of restrictive measures. The difficulty here is knowing what the counterfactual should be. For example, if we’d let the virus rip in spring, pretty much all MPs acknowledge that the NHS would have been overwhelmed.

With TV news showing people dying in hospital car parks across the land, how many people would still have been heading down to the pub? Or out to work? Any estimate is guesswork.

We can see that countries like Sweden which went for looser policies had a bigger hit to their economy than their neighbours, as well as much worse health outcomes. So it isn’t obvious that there has been a trade off between the economy and controlling the virus.

Sweden has had ten times the death rate of their Scandinavian neighbours, with a dramatic second wave and 397 Covid deaths in the past nine days. “Sweden’s strategy has proven to be a dramatic failure,” says Lena Einhorn, a Swedish virologist. The country’s Prime Minister recently made a rare televised address, and has been forced to introduced a “rule of eight” on gatherings plus locally tiered restrictions.

And Sweden is far less densely populated than the UK, with more people living alone than any other country, two massive advantages. So what has proved merely disastrous in Sweden, was arguably never even really an option for us. So what’s the counterfactual?

Some arguments are over. Media pundits pushed the idea that we had hit “herd immunity”, and that rising cases were just “false positives”.  They’re still peddling these ideas, but we can now see how badly they got it wrong.

In June Toby Young wrote: “there will be no second spike – not now, and not in the autumn”. He claimed 91 per cent of cases were “false positives”: claims repeated by some MPs. In reality, according to the Office for National Statistics, true number is microscopic.

Alistair Haimes, a Covid-sceptic, wrote in August that “it’s over”; and in September that there was “no second wave.”

Leading Covid-sceptic Michael Yeadon wrote that thanks to “prior imminuty”: “the pandemic is effectively over.”

Sunetra Gupta, a lead author of the “Great Barrington Declaration”, promised in May that “the epidemic has largely come and is on its way out in this country” … “due to the build-up of immunity”.

In August, Karol Sikora, another Great Barrington leader, said “The gloom and doomsters are predicting another wave of it. Where’s that going to come from? I just don’t believe it.”

With over 2,800 now dying a week with the virus, we can see these rosy theories were catastrophically wrong. Other myths pushed by the media include the idea that flu has “disappeared”, or that Coronavirus is just displacing it. That’s simply not true.

Others say the victims are “dying with” the virus, not “dying of” the virus. But the Office for National Statistics looked at the data, based on doctors’ assessments, and found: “of 50,335 deaths between 1 March and 30 June… 46,736 had Covid-19 assigned as the underlying cause of death.” That’s 93 per cent.

The argument I most dislike is that the victims of the virus were all old or would have died anyway. It’s true older people are more at risk. True that many people who died had other conditions. But a study by academics at the University of Glasgow suggested people typically had over a decade to live based on their age and prior conditions.

A decade is worth a lot. For my parents, the last decade involved the wedding of one son; the birth of two grandchildren; two others becoming young men; adventures exploring Europe and hiking with my sister; learning French and how to drive a canal boat; amazing summer flowers in their little garden; charity work, friends – and being here for everyone who loves them; like my daughter (four).

An angry man emailed the other day to say I was obsessed with “saving granny”. Well, I want to live in a culture where we value older people, not belittle their worth or regard them as an inconvenience. A culture that would kick the old and ill into touch on grounds of efficiency would be a profoundly ill culture.

We’re close to the end of this thing now. Let’s not fall near the finish line. No-one wanted to have to bring in these tiered restrictions. But they are more tailored than countries like France, where all restaurants everywhere are shut till next year, and all bars are shut with no date to reopen.

Yes, we must keep supporting those for whom this year has meant hardship. But there’s been more than seventy thousand excess deaths linked to the coronavirus here since mid-March. If you read out all those people’s names one after another, it would take you more than four months.

We have to see the bigger picture. We have to finish the job, and beat this killer virus.

Neil O’Brien: The plans we must make now to ensure that our ship doesn’t hit the rocks

16 Nov

Neil O’Brien is MP for Harborough.

I’ve been thinking about endurance. HMS Endurance specifically. It was a little ship the Royal Navy used to send down to the South Atlantic.

A friend used to serve on it, and I’m haunted by his description of life out on a tiny ship in some of the world’s roughest seas: the vast winds that endlessly circle Antarctica, with no land anywhere to slow them; the huge waves down in Drake Passage, with the green water coming over the bow and even hitting the bridge; and of wondering whether the ship would be broken by the sheer power of the ocean.

A bit after he was on it, the ship nearly sank following an accident. It filled up with freezing water, and with all power lost, amid a gathering storm, it started drifting towards the rocks. The crew spent 24 hours fighting for their lives: bailing out the ship by hand, and eventually escaped from a gathering hurricane in the nick of time. While the story of how they survived is an inspiring one – the account of the mistakes that were made that led to the accident in the first place is an informative one.

As so often with disasters, the warnings were all there: the wrong sort of ship; no proper maintenance; too many key staff absent; major problems with the culture…

As with so many disasters, in retrospect the warning signs were all there.

One of the great arts in politics is to see the problems and the big choices coming, so that you can solve them before the ship starts sinking. 2021 is shaping up to be a year where we make some very big choices that will define the coming years.

And I what I really want is readers’ views on what the big choices are. But let me start with my own mental list for later next year.

Let’s assume for a moment that we have come out of the other side of Coronavirus and Brexit. It’s 2021, the vaccine is rolling out, the virus is dying out, the economy is recovering. Still a long way to go, I know. But what will happen then? I think there are four really big choices:

First, the big fiscal choice. At present the focus is rightly on helping support the economy until we get into sustained recovery. But it seems likely there will be some kind of structural deficit afterwards, because the economy will be behind where we hoped it would be. We won’t know how big or small the deficit will be for quite a while. It may be small enough that we can take some time. Or so big that we can’t. So we may face some big choices on (a) how fast to try to close any gap, and (b) what mix of tax and spending decisions to use to fix it.

The second choice is our plan for growth. Western countries have had a rough decade, and some economists worry about “secular stagnation”. How do we get the economy moving faster? How can the tax system better support investment and innovation? How can we change the composition of government spending on research to better support business growth? How attract more inward investment in higher skill, higher tech, higher wage industries?

Third, we face big choices about the future of the UK. The Scottish Parliament elections on 6 May may herald a dramatic new phase in the debate. The bookies (though they’ve been wrong before) give the SNP a 95 per cent chance of being the largest party and a 66 per cent chance of an outright majority, either of which they would use to rev up their demands for another referendum. The breakup of Britain would lead to a decade or more of catastrophic paralysis. Years of arguments over currencies, pensions, debts, mortgages and state assets. Officials working to unpick hundreds of years worth of stitching. All parts of the UK would suffer economically, and it would make the Brexit rows of 2016-2019 look like a walk in the park. Yet even with the virus raging, the SNP are preparing to go into overdrive to force a second referendum. An equally strong campaign will be needed to fight back. How do we fight it?

The fourth big choice is about the levelling up agenda: and how far and how fast we can go. The lead times on getting things done can be daunting. For example: in 2014/15 we decided to phase out rubbish “pacer” trains in the north. But last won’t leave service in the north until next month. We need policies which will genuinely help poorer places catch up, but also need to show significant progress by 2024.

Then there’s all the other things.

Decisions to take about the future of devolution and local government in England, with a White Paper out in the spring.

There’s a second year of tough decisions to take on school exams. The Welsh government has already cancelled next year’s exams. Assuming we can still hold them in England, there are unavoidable choices on how to mark them. Given the disruption to schooling, mock results will likely be worse, but not evenly so across different types of schools – for example, the crisis has affected state and private schools very differently. So how do universities assess potential? And should we measure pupils against each other with the same distribution of grades as earlier years? Or maintain comparison with previous years, which would likely see grades drop across the board?

There’s a long-expected decision to take on universities. Do we keep the current system? Or build up technical education, and try to reduce the number of students on low value university courses which lead to low earnings while consuming lots of taxpayer subsidy?

At the start of November next year, the UK will host the UN Climate Change Conference in Glasgow. There are big choices to make about how and how fast to pursue decarbonisation at home, and lots of questions about what the UK should be pushing for at the conference.

MPs voted for net zero, but massive questions about how to do it remain open. Are we aiming for heat for people’s homes to come from electricity in future, or by pumping hydrogen through the current gas grid? If more and more vehicles will be electric, what mix of (and how much) electricity production are we aiming for?

Then there’s big questions in foreign and security policy. The Integrated Review is due out, which (sensibly) combines the questions of our future defence and security spending with questions of economic security – given a world where we face ruthless technology competition, not least from China.

But there are other big security questions: France is suffering a wave of brutal Islamist terror attacks – is there more we need to do to pre-empt such atrocities here? The Prime Minister and President-Elect Joe Biden have both floated new ways to get the world’s democracies working together, including those like India and Japan that are outside NATO. Can something new be brought together?

These are just my starters for ten – so readers, it’s over to you. What are the biggest choices? What are the problems that we have to get ahead of to keep this ship afloat?