Boris and Sunak gamble on tough new tier system and a speedy Covid vaccine by the spring

Boris Johnson has made clear that much of England will remain in a state of semi-lockdown until at least the spring of 2021, even after England exits a national lockdown on 2 December.

Announcing an upgraded system of tiered restrictions in the Commons, the Prime Minister said today: “The scientific advice, I’m afraid, is that as we come out, our tiers need to be made tougher. In particular, in Tier 1, people should work from home wherever possible. In Tier 2, alcohol may only be served in hospitality settings as part of a substantial meal. In Tier 3, indoor entertainment, hotels and other accommodation will have to close, along with all forms of hospitality except for delivery and takeaways.”

Given that SAGE, the Scientific Advisory Group for Emergencies,  has concluded the second tier is “the minimum intervention required to maintain any degree of control on the transmission”, most of England’s population is expected to be placed under the top two tiers for the foreseeable future. The one cause for relief in all this is that SAGE’s recommendation of an extra, fourth tier with full lockdown measures, appears to have been rejected.

To avoid another national lockdown, the government will conduct a major testing surge in the coming weeks. All Tier 3 areas are expected to have access to mass community testing, with local councils able to draw on the support of the armed forces. In future, the hope is to roll this out to areas in lower tiers, with the prospect of a “freedom pass” system for those who test negative, allowing them to enjoy relaxed restrictions.

An extra £7 billion is being invested in NHS Test and Trace to pay for it, bringing total spending to an extraordinary figure – more than £22 billion.

It appears that Downing Street is betting everything on a vaccine being rapidly rolled out in the coming months. Johnson told the Commons today that he hoped recent scientific advances will “reduce the need for the restrictions we’ve endured in 2020 and make the whole concept of a Covid lockdown redundant.” Until then, he believes, the country will have to hunker down and prevent spreading the virus as much as possible.

The Chancellor, who over the autumn has become increasingly anxious about the state of the public finances, has been convinced to hold off on attempting to control the UK’s spiralling debt in his Spending Review this Wednesday. There will be no tax rises or spending cuts; instead, there will be tens of billions more in pandemic spending, on top of the continuation of furlough and self-employment support, which was announced last month.

There is some logical sense in putting life on pause until a vaccine is distributed, especially after today’s news that the Oxford/AstraZeneca candidate, of which the UK has already ordered 100 million doses, could be 90 per cent effective with the right regimen of doses and could receive regulatory approval within days.

But on a practical level, several factors in the vaccination process could lead to long delays, turning this risky strategy into an expensive nightmare.

It is not entirely guaranteed that regulatory approval will be granted before the new year, for instance, and given the government’s recent record of delivering large projects, the vaccine rollout may suffer from severe logistical problems and stall for several months. Under such circumstances, not only will Britons grow anxious and fatigued, but the government’s spending situation may become untenable. Even with interest rates at historic lows, there is a danger that the debt may get out of control.

If a vaccine were to be delayed for several months, Sunak would have no option but to extend the furlough scheme again, perhaps into autumn 2021, and continue to give the NHS billions in extra support. It is not clear whether the markets would be as generous as they were at the start of the crisis, given that this would likely be the consequence of government misjudgement rather than an unavoidable crisis. This would trigger dangerous volatility.

For Johnson, there is also the question of keeping his parliamentary party on side. Tory backbenchers are already growing restless: Steve Baker MP, an influential parliamentary operator, this morning requested that the government publish a cost-benefit analysis of its new tiered strategy; former minister Nus Ghani writes in the Telegraph today that she “won’t be able to support any restrictions – tiered or otherwise”; and former Tory leader Iain Duncan Smith writes in the Daily Mail that the tiers are a “bitter blow for business.”

It is believed that around 70 Conservative backbenchers are prepared to vote against the new restrictions this week. It won’t be enough to bring down the strategy now, but the number of rebels would likely expand rapidly if Whitehall bungles the vaccine rollout.

To be clear, this is the final stretch of the battle against the raging coronavirus epidemic in this country. There will be multiple approved vaccines at some point next year, and Britain has ordered more than does enough to be distributed throughout the population. It will take time, but people will eventually return to work, social lives will resume, and the economy will go gangbusters in bouncing back from a yearlong pause.

The risk for Johnson and Sunak is in the intervening period. In opting to double down with restrictions until the vaccines are administered, they have vastly increased the costs of potential delays. Time will tell whether their gamble will pay off.