Treasury Made No Forecast For Lockdown 2.0
Fri 10:28 am +01:00, 13 Nov 2020
SAGE say it’s not their job to take into account the economic impact of lockdown. It’s the Treasury’s job. Why then has the Treasury now admitted that it produced no forecasts in the run up to the second lockdown? Why did SAGE on September 21st claim they were in hand? These were the questions MPs put to Treasury officials on Wednesday. Kate Andrews in the Spectator has the details.
Chair of the Committee Mel Stride asked Clare Lombardelli, Chief Economic Adviser to the Treasury, to comment on specific economic analyses conducted around lockdown restrictions, ranging from the closure of pubs, gyms and restaurants to “circuit breakers” and working from home directives. It was quickly revealed that no analysis has been done.
Stride’s interest stemmed from SAGE meeting minutes dated September 21st, which referenced a “package of measures” that the Committee said “need to be adopted to reverse [the] exponential rise in cases”. These included some of the more radical measures implemented during the first lockdown, including changes to “working from home” rules, banning contact between households, the closure of hospitality and leisure sectors, and even the return of a (shorter) lockdown. In the minutes, SAGE states that the economic impact of these measures was being modelled by the Treasury: “Policy makers will need to consider analysis of economic impacts and the associated harms alongside this epidemiological assessment. This work is underway under the auspices of the Chief Economist.”
In yesterday’s session, Lombardelli revealed that no such work was ever underway. The impact of the specific restrictions on the economy were not forecast or predicted by the Treasury before they came into force: “As the Chancellor set out in Parliament last week, we haven’t done a specific prediction or forecast of the restrictions… what we do is ongoing policy that feeds into decisions ministers take, which they consider alongside the health impacts, the social impacts, and they also consider the economic impact.”
Without this analysis and these forecasts, what was the basis on which the Government was weighing up whether to shut down the country again?
The Treasury’s lack of forecasting does not mean Chancellor Rishi Sunak would have been without any data when in discussions with the Prime Minister and other senior Cabinet figures about lockdown. Lombardelli notes the Treasury has been compiling forecasts done by other bodies, including the Office for Budget Responsibility and the Bank of England.
But yesterday’s admission from the Chief Economist calls into question the priorities of the Treasury: the Sage minutes are dated over a month before England’s second lockdown was announced, giving the Treasury at least four weeks (though the minutes imply longer) to forecast the impact of specific lockdown measures on the economy. That the institution did not produce any forecasts or predictions also raises serious questions about the extent to which the economic implications of such radical measures were considered before the Government brought them in.
Worth reading in full.
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