Ryan Bourne: It’s time to admit that Eat Out to Help Out was a mistake – because it boosted the resurgence of the virus

30 Sep

Ryan Bourne is Chair in Public Understanding of Economics at the Cato Institute.

It will be tougher for many in Westminster to swallow than the subsidised food, but it increasingly looks as if the August Eat Out to Help Out scheme (EOTHO) was a costly economic and public health mistake.

Evidence now suggests that restaurants are important vectors in our current case uptick. More than that, the scheme has entrenched dining behaviours that threaten more transmission today. It is bizarre then that Rishi Sunak has avoided more critical scrutiny of the policy.

The Government’s most recent weekly coronavirus surveillance report says “eating out was the most commonly reported activity in the two to seven days prior to symptom onset” for infected individuals in the contact tracing system.

Figure 23: Events and activities reported by people testing positive, prior to symptom onset (enhanced contact tracing), England, NHS Test and Trace (as at 04:30am on 24 September 2020)

People do a lot of things during a week, so this doesn’t necessarily show where infection occurred. But that “eating out” appears more than “shopping,” “living alone or with family,” “holiday,” “visiting friends or family,” or “travel or commuting” suggests a high relative risk of restaurant dining.

This chimes with evidence from American states and the U.S. Center for Disease Control too. The latter’s recent study found adults testing positive for Covid-19 were twice as likely as those testing negative to have reported dining in a restaurant before becoming ill. Subsidising that activity in a pandemic seems a huge error.

That indicative data won’t convince everyone. When I Tweeted it last week, people demanded firmer evidence that (a) areas with more EOTHO meals had more cases, or (b) cases were actually seeded in August, when EOTHO was running.

But this level of precision may hide more than it reveals. In areas where prevalence of the disease was low in August, the risk of any activities would be low, meaning correlations between cases and meals in the scheme may not be particularly informative (as it happens, there is a correlation between meal numbers and Covid-19 cases by region). What matters is whether restaurants led to more transmission between infected and susceptible people in areas where prevalence was already there.

Accurately thinking through that counterfactual is tough. You have to (1) disentangle the scheme’s impact on dining numbers from any pent up demand returning after restaurants reopened in July; (2) account for the scheme’s longer-term impact of normalising eating out again. Examining August data alone therefore risks understating the scheme’s significance.

Basic network economics suggests activities like indoor dining might “link” more people in riskier circumstances who otherwise wouldn’t cross paths, particularly if packed into, passing through, or queuing on subsidised meal nights. Most restaurants took appropriate precautions to mitigate these risks. But sustained time indoors likely worsens the spread of the virus compared with other activities undertaken absent the subsidies. Case studies from Thailand, China, and Korea show restaurant’s risks. The scheme’s design also encouraged “superspreaders” – infected people visiting many outlets over time to take advantage of discounts.

Figure 22 of the Surveillance report shows that the overwhelming majority of “named contacts” given by infected people are those in their households or household visitors. Many faultily read this, and other information about where most transmission occurs, as showing that restaurants are insignificant vectors compared to domestic settings.

Figure 22: Contacts by exposure/activity setting in week 38, England
(Data source: NHS Test and Trace)

But this is misleading. People don’t know strangers in restaurants to give them as named contacts. And once the disease gets into a household, those most likely to be in contact with it are obviously others living or visiting that household. The problem is that restaurants seem more likely to be a place where a household member might catch the disease and then bring it home than other places they might otherwise spend lunchtimes or evenings. As the chart below shows, as EOTHO went on (Weeks 32 through 35), the share of “Covid-19 incidents” in food outlets or restaurants increased significantly.

Figure 20: Number of COVID-19 incidents by institution from week 27, England

What’s more, the Government didn’t just want to give restaurants a temporary boost in August. They wanted to encourage more economic normality. Data from OpenTable and others suggests they were successful, on this basis.

Diner numbers averaged 28 percent below last year for the week before EOTHO began. By the end of EOTHO, people were eating out excessively relative to previous years – averaging 44 percent per day above last year’s “normal” levels in EOTHO’s final week. Now numbers are back to around last year’s – i.e. dining is back at the good old days pre-Covid days of last year, despite the pandemic. This is in stark contrast to the U.S., where dining levels are still down over 40 percent.

It’s difficult not to conclude that, because of the message the scheme sent out or the habits it entrenched, EOTHO proved far more than a gimmick to give restaurants a temporary fillip. Instead it made people think restaurants were a-ok for people to party like it was 2019. That becomes more problematic now schools are open and more people are back to work too, bringing clear evidence networks of transmission have densified.

Unfortunately, people respond to this as if pointing it out means critics wanted restaurants permanently shuttered until a vaccine was available. But there’s a wide range of options between enforced closure and actively subsidising restaurants, including, well, not subsidising them, or subsidising outdoor dining and takeaways, tax breaks for investments for patios or delivery, and more.

What’s baffling economically is the thought process behind actively subsidising indoor gatherings. Social interactions right now impose negative externalities – risks on others beyond the diners themselves, for which the affected cannot receive compensation. Basic economics, if anything, suggests imposing taxes rather than handouts on these activities, to account for this social cost. Social distancing protocols and regulations seek to proxy for these taxes, of course. But it made no sense to undo this by overcoming people’s voluntarily choices and risk preferences in this world through taxpayer incentives.

Covid-19 debates, sadly, are more defined by culture wars and crude commercialism than economics these days. Many who usually oppose state subsidies backed this scheme loudly, not least because its use generated “buzz” about getting people out and about.

But that’s the problem. During the summer, many deluded themselves that the virus’s threat was deterministically and consistently falling, and we were on a one-way street to economic normalisation. Rather than adapting to live with the virus at the lowest overall cost, people thought that “restoration” should be the aim of government policy.

That was a grave error, of which EOTHO was Exhibit A. And with restaurants now facing restricted hours and a potential lockdown, even those short-term commercial benefits look a pyrrhic victory for the businesses who lauded the Chancellor at the time.

The latest developments in contact tracing – and why the Government is not alone in having problems with its system

11 Aug

Yesterday there was uproar over the fact that the Government has made another change to its contact tracing strategy. “Troubled test and trace system to be scaled back”, read one headline, and The New York Times was particularly unflattering. “England’s flawed virus contact tracing will be revamped”, began one of its articles, which also accused the system of “faltering” and being “one of many missteps that have contributed to Britain’s having the worst outbreak in Europe.”

These reports followed a press release from the Department of Health and Social Care, which was generally worded in quite a positive way, but whose opening text was taken as an admission of failure. It said that “NHS Test and Trace and Public Health England (PHE) will extend its partnership with local authorities in order to reach more people testing positive and their contacts”.

Previously the companies Serco and Sitel had been managing a centralised version of the UK’s contact tracing process. The Government, however, changed its approach after new research came in showing that only 56 per cent of close contacts had been reached online or through call centres.

In comparison, it was found that local teams managed to contact 98 per cent of contacts, with there already being successful council-led trials for contact tracing in Leicester, Luton and Blackburn with Darwen.

Going forward, councils will be much more involved in contact tracing, with workers knocking on doors to follow up contacts. Clearly this will make a difference, as one of the main reasons it was suggested that call centres failed to get through is that people believed they were receiving cold calls (as the number started with 0300) and did not answer.

As is so often the case in the Coronavirus crisis, the latest move will no doubt lead to accusations that the Government is chaotic, and the rest, as it had already come under huge criticism in its approach to contact tracing. Having wanted to use its own app to carry out the process initially – while shunning Apple and Google technology it has since been forced to try theirs out after running into difficulties.

There’s also the fact that the move is expensive, meaning that 6,000 of the 18,000 call handlers will be axed) from a system that cost £10 billion.

Speaking about the NHS Test and Trace system, Boris Johnson has previously said it was “world-beating” and that the UK is “now testing more per head of the population than virtually any country in Europe”; words which were not readily believed.

The truth, however, is that even if the system has had issues, the UK is strong in regards to testing, with capacity at 338,413 since August 2.

One of the best metrics for understanding a country’s ability to test is “positive rate”, which is described as “the level of testing relative to the size of the outbreak”. In May, the WHO said that a positive rate of less than five per cent is an indicator that Covid-19 is under control in a country; the lower the better, in essence.

As of August 8, the UK’s figure stands at 0.60 per cent, a better rate than that of Belgium, Greece, Italy and Sweden, among other countries.

There’s also an element of realism missing around the contact tracing debate, with Keir Starmer giving the Government “a month” to fix its programme and teaching unions deciding that schools need the system to be completely fixed before a return to classrooms – despite the fact that children seem to have some of the lowest transmission levels.

The country is not alone, however, in having difficulties implementing this technology. Singapore’s app, as one example, was only used by 35 per cent of the population, and its government admitted the tech hadn’t been as successful as it had hoped. Australia’s system, which reportedly cost $2.75 million, has also had serious flaws, and there have been other problems and adaptations elsewhere

Clearly rolling it out is a logistical challenge of unprecedented levels, and there needs to be some patience and expectation management – not ideological point-scoring, as so often is the case in the media.

With the UK’s testing capacity having gone up so rapidly, far from being “faltering”, it may be the case that the country has more of a headstart than we think.

The latest developments in contact tracing – and why the Government is not alone in having problems with its system

11 Aug

Yesterday there was uproar over the fact that the Government has made another change to its contact tracing strategy. “Troubled test and trace system to be scaled back”, read one headline, and The New York Times was particularly unflattering. “England’s flawed virus contact tracing will be revamped”, began one of its articles, which also accused the system of “faltering” and being “one of many missteps that have contributed to Britain’s having the worst outbreak in Europe.”

These reports followed a press release from the Department of Health and Social Care, which was generally worded in quite a positive way, but whose opening text was taken as an admission of failure. It said that “NHS Test and Trace and Public Health England (PHE) will extend its partnership with local authorities in order to reach more people testing positive and their contacts”.

Previously the companies Serco and Sitel had been managing a centralised version of the UK’s contact tracing process. The Government, however, changed its approach after new research came in showing that only 56 per cent of close contacts had been reached online or through call centres.

In comparison, it was found that local teams managed to contact 98 per cent of contacts, with there already being successful council-led trials for contact tracing in Leicester, Luton and Blackburn with Darwen.

Going forward, councils will be much more involved in contact tracing, with workers knocking on doors to follow up contacts. Clearly this will make a difference, as one of the main reasons it was suggested that call centres failed to get through is that people believed they were receiving cold calls (as the number started with 0300) and did not answer.

As is so often the case in the Coronavirus crisis, the latest move will no doubt lead to accusations that the Government is chaotic, and the rest, as it had already come under huge criticism in its approach to contact tracing. Having wanted to use its own app to carry out the process initially – while shunning Apple and Google technology it has since been forced to try theirs out after running into difficulties.

There’s also the fact that the move is expensive, meaning that 6,000 of the 18,000 call handlers will be axed) from a system that cost £10 billion.

Speaking about the NHS Test and Trace system, Boris Johnson has previously said it was “world-beating” and that the UK is “now testing more per head of the population than virtually any country in Europe”; words which were not readily believed.

The truth, however, is that even if the system has had issues, the UK is strong in regards to testing, with capacity at 338,413 since August 2.

One of the best metrics for understanding a country’s ability to test is “positive rate”, which is described as “the level of testing relative to the size of the outbreak”. In May, the WHO said that a positive rate of less than five per cent is an indicator that Covid-19 is under control in a country; the lower the better, in essence.

As of August 8, the UK’s figure stands at 0.60 per cent, a better rate than that of Belgium, Greece, Italy and Sweden, among other countries.

There’s also an element of realism missing around the contact tracing debate, with Keir Starmer giving the Government “a month” to fix its programme and teaching unions deciding that schools need the system to be completely fixed before a return to classrooms – despite the fact that children seem to have some of the lowest transmission levels.

The country is not alone, however, in having difficulties implementing this technology. Singapore’s app, as one example, was only used by 35 per cent of the population, and its government admitted the tech hadn’t been as successful as it had hoped. Australia’s system, which reportedly cost $2.75 million, has also had serious flaws, and there have been other problems and adaptations elsewhere

Clearly rolling it out is a logistical challenge of unprecedented levels, and there needs to be some patience and expectation management – not ideological point-scoring, as so often is the case in the media.

With the UK’s testing capacity having gone up so rapidly, far from being “faltering”, it may be the case that the country has more of a headstart than we think.