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Now the fog’s starting to clear on the crisis

With the government engaged in a race to beat coronavirus and save the economy, the sins of a decade-long austerity programme are coming home to roost

03 April, 2020 — By John Gulliver

YEARS ago I was put under “house arrest” by the armed Peking Security Bureau – the equivalent of Special Branch in China of the 1960s – and imprisoned in a small single hotel bedroom with a wife and 10 year-old son, without any contact with the outside world. Food was pretty rough, the door was locked, and I was not allowed out of the room. Politics and journalism is a devilish brew.

In a way I am under “house arrest” again at the other end of the age scale as I have been self-isolating for two weeks. You could say most adults and children in the UK have been put under house arrest by the government.

Mine in the 1960s lasted two years. The nation’s self-incarceration obviously won’t last that long – but how long will it last?

At first, we were told it would be for a short while, two or three weeks were hinted at, then a little longer, and now even as long as June. That’s another 50-odd days. I believe this sort of political game is called the “nudge” way of doing things.

It means our sentence is being stretched out psychologically through political spin.

We want to look kindly on the government because, by and large, the British are apolitical and trusting – at least for a short while. But, again, for how long?

Somehow, as the fog is now beginning to clear in my mind, it reveals a worrying scene.

The government threw several balls in the air as it turned out the “scientific experts”, fronted by a politician at the daily press conferences. Saving the economy was second to beating the disease. Then came the government announce­ments on how the public would be helped financially. But is it? Something phoney is happening, I suspect. First, small businesses were comforted by being told they didn’t have to worry because all the wages of the staff they couldn’t employ because of the closures would be covered by HMRC. Well, up to a point.

Then it became clear a company would have to provide accounts to justify the claim and that this would take time. This made sense admittedly. Otherwise, fraudsters could rip off the govern­ment. But it also mean claims would not be met for two or three months.

Then the millions of self-employed freelances were told last week that they would have their lost earnings saved by a repayment from HMRC – but not until June.

Lots of freelances would no doubt survive but millions, paid weekly, would suddenly lose their income. There would be no more money in their pockets – and, in a timely fashion, Whitehall introduced news police powers in a piece of law that took one day to shoot through the Commons.

However, as partly argued in a cogent article by Mike Phipps whom I have come across in left Labour circle, it seems pretty clear that our civil servants are banking on delayed payments to freelances who will live off their savings – and another factor, I confess I had forgotten about until this week, the credit system we live under. By February, UK households owed £1,675billion or £1.7trillion on credit cards and to money lenders etc.

It is an astonishing sum and most economists agree it is pulling down our economy and one of the causes of the present economic crisis that has criss-crossed the pandemic.

This translates into a sum of £139million per day being transferred from households to financial dealers. Unless this transaction is maintained the economy will crash more, so, perhaps, there is an explanation here as to the dilemma facing a government that is in a wartime situation with a kind of fuzzy peace-time approach to today’s unprecedented crisis.

To keep up payments to the financial dealers the government is effectively bankrolling the employed – as well as the self-employed. Up to a point.

Two months without pay for freelances until June will seem of little consequence as food, rent and energy bills could be met.

Using their credit cards the fairly well paid middle-class self-employed will control their budgets for a few months into the mid-summer. But the lower paid, with poor credit facilities, or those in the “underground” with “cash” jobs could get desperate by the end of April or early May. Crowds could appear in the streets as happened in 2011 unless HMRC steps up its payment method.

But what about “normalcy”? When could we expect self-isolation to end and people to return to work? That should occur early summer but the signs are that they won’t. Too many firms would have gone bankrupt. Too many jobs would have been lost. However much interest rates are cut, firms don’t like loans. These have to be repaid and repayments can be messy, mingling with falling sales and unbalanced ledgers.

Ironically, at the very moment when capitalism is at its weakest in Europe and the US, its enemies are also under-strength, disorganised, and leaderless.

In the Far East the regimes governing Singapore, South Korea and China, tightly organised with a differently evolved culture of thousands of years, are getting back to normal. It took them three months of draconian self-isolation to bring this about.

This involved strict detection and stoppage of transmission of the disease. We haven’t even started detection on the necessary scale so how will transmission end? Even doctors and nursing staff cannot be given tests, never mind the public. My wife is a hospital doctor; she is still awaiting a test!

The sins of the austerity programme, enamoured of the Lib-Dems and Conservatives for 10 years are now coming home to roost.

It is not a question of seeking scapegoats or blaming individuals. The system was at fault. And it was allowed to be so.

We are still desperately short of ventilators.

At first the government was able to cover up, helped by a supine media. But the scandal is too deep to be covered up.
This is not helped by a kind of “panic” atmosphere created by the publication of death figures that do not appear to have been documented, certified and put through the sieve of rigorous testing.

Obviously, figures will go up exponentially. But the rate should be properly scrutinised – and the media tends to leap in with sensational but unchecked information.

The government is engaged in a race to beat the disease and at the same time allow the economy to recover. Time is not on its side. What happens if it fails?

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