UK told to be 'wary' of another 'extraordinarily costly' lockdown

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·3-min read
Britain's Prime Minister Boris Johnson returns to Downing Street after attending a Cabinet meeting in London, Tuesday, Oct. 20, 2020. (AP Photo/Kirsty Wigglesworth)
Britain's prime minister Boris Johnson returns to Downing Street after attending a Cabinet meeting in London. Photo: Kirsty Wigglesworth/AP

MPs have been told that the costs of the UK’s harsh lockdown earlier this year outweighed its benefits.

Two professors told the Treasury Select Committee on Wednesday that the government should avoid further national shutdowns, citing research carried out in the UK and Australia.

David Miles CBE, a professor of financial economics at Imperial College London, and Professor Gigi Foster of the University of New South Wales in Australia told MPs that their analysis suggested lockdowns did more damage than good.

“It’s very difficult to find benefits exceeding cost,” Professor Miles told MPs.

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Both professors conducted separate studies of lockdowns, pitting the cost of saved lives against negative health and economic outcomes. Considerations include collapsing GDP, rising joblessness, worsening mental health and other measures of physical wellbeing like access to education for children.

“It’s welfare and quality of live versus welfare and quality of life,” Professor Miles said. “There are no easy answers. There are formidably difficult trade offs here.”

His analysis of Britain’s three month lockdown concluded it came “at an extremely high price relative to the health benefits”.

“A short, sharp lockdown might have been more favourable on a cost benefit analysis but for three months it looks like it went on too long,” Professor Miles said.

He warned the government against pursuing a second national lockdown.

“One would have to be convinced that the scale of lives saved would be enormous and probably much larger than is plausible for that to be a sensible policy,” he said. “Government should therefore be wary of going down the road of thinking that we have to keep imposing very harsh lockdowns.”

Professor Miles said the current policy of regional lockdowns to tackle local outbreaks may make more sense.

In separate evidence, Professor Foster said her analysis of a six week lockdown in the Australian state of Victoria found the cost of the policy was three times higher than the benefits it delivered.

Both studies were based on the concept of a “quality adjusted life year,” or QALY. The measure is used by the NHS to evaluate whether the cost of new treatments justify their adoption. In the UK, a QALY is worth £30,000 ($38,966) per person per year of extra life.

Professor Miles said his analysis of various scenarios found the cost of saving a life through lockdown was between three and five times higher than the QALY figure.

Tony Yates, a macroeconomist with the Resolution Foundation, argued that lockdowns were necessary despite their failings.

“To me there is no alternative to stumbling through these lockdown measures and hoping that test and trace capacity comes and a vaccine comes,” Yates told MPs. “The only alternative is a regular harvest of about 0.6% of the population and I don’t see how anyone could subscribe to that.”

All three economists agreed that the government should have more input from economists when it came to the decision making around COVID-19.

“You’ve had SAGE forecasting the epidemic without taking account of economics,” Yates said. “You’ve got the Treasury doing things in private without taking account of the epidemic. The same is true of the Office for Budget Responsibility, the same is true of the Bank of England.

“The virus and the economy are one and the same.”