22 October 2020updated 23 Oct 2020 10:54am

Rishi Sunak’s delay in offering further economic support reflects two important truths

The hesitation shows that the government thinks it can afford to lockdown with less support in Labour-voting areas.

Chancellor of the Exchequer, Rishi Sunak (Photo By Getty)

Rishi Sunak is set to introduce further economic support measures to support businesses in tier two areas.

Inevitably, the Chancellor will be accused of London-centrism, because he refrained from introducing bespoke tier two measures until London (and Birmingham, where the Conservatives have hopes of retaining the West Midlands metro-mayoralty in May 2021) entered into it.

Politically, that’s a good tune for Labour to play and one that may cause the Conservatives long-term electoral damage in the seats they won in 2019. But the policy reality is more complex than that: in truth, the economic support package for tier two areas from July to now is more generous than the provisions that will be extended to tier two areas later today, and indeed, more generous than the provisions that will be extended to tier three areas.

And at risk of sounding like a stuck record, the run-on problem – which is that lockdowns for the United Kingdom’s great cities come at a cost not only for the businesses within them, but for businesses across the United Kingdom – is much greater when you are locking down London (population of around nine million) than Greater Manchester (population of around three million). You may think that being in tier two over the summer and autumn was bad, but being in tier two and tier three over the winter will be worse.

But the delay in recognising those truths reflect a series of important facts about the government and its coronavirus response. The first, of course, is the split between the Prime Minister and the Chancellor. While today’s announcements are ones that Sunak hoped to avoid, they will be far from what most economists think are necessary if you want to support businesses through a second lockdown.

The United Kingdom’s lockdown policy is a result of the government’s attempt to ride two horses at once: to pare back economic support for businesses and to continue holding back the tide of fresh coronavirus cases via lockdown. This is the real-world consequence of the changes that are the subject of a new IfG report – the changes in how special advisers operate under Boris Johnson.

Weakening departmental ministers to the benefit of Downing Street hasn’t resulted in a government that can move fast and break things, but one that has forgotten that the way you implement policy is through either balancing conflicting interests, or discarding one interest in favour of another. In the age of coronavirus, you can’t prioritise debt reduction in the short-term and prioritise lockdowns. You have to pick one.

But the second is what you might call an electoral theory of economics: that you can have lockdowns with insufficient economic support in Greater Manchester, London, Liverpool, Nottingham and England’s great cities, because, after all, “they” don’t vote Conservative.

That might be true – though don’t forget that Greater Manchester’s nine Conservative seats and London’s 21 Tory seats are a non-trivial part of the government majority – but it ignores that ultimately, we don’t have a Remain economy and a Leave economy, a Labour economy in the big cities and a Conservative economy everywhere else. We have one economy, and no amount of comforting lies about Sadiq Khan change the need for an economic policy that protects all our engines of growth, whether they are in areas that backed Remain or Leave.