Matt Hancock, the UK health secretary, has denied reports of a growing rift with chancellor Rishi Sunak over the economic fallout from measures to halt the Covid-19 pandemic.
Treasury sources have claimed that Mr Sunak has made “robust” representations to Mr Hancock, arguing for a clear path back to normality to prevent devastation to the UK economy.
“It is fair to say we need to be considering all ways of protecting lives and wellbeing, not just the loss of life from the virus, but the wider implications of a major downturn as well,” one Treasury official told the Mail on Sunday.
Analysts at Nomura, the investment bank, believe the UK economy could shrink by 7.8 per cent in 2020 — the most severe downturn since 1921 and a far worse fall in output than the 2008 financial crisis.
Some backbench Tory MPs have started to raise concerns about the consequences of the lockdown, citing studies showing that it could cause other deaths because of a rise in mental illness, the impact of unemployment or cancelled hospital appointments for other conditions.
Many are anxious about how and when the Treasury’s economic assistance will be withdrawn once social distancing measures are relaxed. “My post bag is full of angry businesses: they’re worried about getting the support, worried about how long it will last and, most of all, worried how it will be withdrawn,” one senior Tory told the Financial Times.
Another MP said that small businesses in their constituency were fearful about surviving. “Businesses are scared. By the summer, Rishi is going to be propping up most of the economy. That’s not sustainable and it will have to end at some point. Then what?”
Speaking on Sky News on Sunday morning, Mr Hancock said Mr Sunak was doing an “absolutely brilliant” job as chancellor of the exchequer. “We are working very closely together,” he said. “Measures he has put in place to support people . . . are absolutely phenomenal. He has been lauded around the world for the first-class economic response.”
Mr Hancock said he understood how “impactful” the social distancing measures were on people’s lives. “That is why we need resolve as a nation, to follow those rules so we can get out of it as fast as possible.”
One Treasury figure told the FT that there was no “row” between the two cabinet ministers. “The chancellor is concerned about the wellbeing of people first and foremost hence the economic package he’s delivered,” he said. “We all realise the need for a coherent exit strategy so we can get the economy going again but that needs to be done as safely as possible.”
Yet there are big concerns inside the Treasury about how the economic intervention will be brought to a close.
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“Withdrawing these packages is going to be painful and create some very difficult political choices for the chancellor,” said one Whitehall official. “Move too fast and we’ll end up with huge unemployment and a lot of bankruptcy. Move too slow and the deficit will balloon.”
But some members of the Johnson government said it was too soon to be thinking about ending the economic stimulus before the peak of the crisis had hit.
“The next week is all going to be about the NHS and the rising number of deaths. That remains our primary concern. Until we know how or roughly when the lockdown is going to end, it’s impossible to say how we can wean the economy off the state largesse,” said a minister.
Neil Ferguson of Imperial College London, who has been a key adviser to the government on coronavirus, was asked about the exit strategy on Sunday.
“I’m very conscious that people are suffering in this country right now, there is a cost, economic, social and financial cost to this country — and probably health cost as well — we all want it over as quickly as possible,” he told the BBC’s Andrew Marr Show. “But there’s no point in doing this unless we can find a strategy that allows us to exit from it and at the same time keep transmission low.”
Professor Ferguson said he expected the peak of the outbreak in seven to 10 days’ time.
Mr Hancock meanwhile said the NHS needed 18,000 ventilators — double the current level — while admitting there might only be 13,500 in hospitals by Easter.
He warned that people could be banned from taking exercise outside unless they followed the social distancing rules. “If you don’t want us to have to take the step to ban exercise of all forms outside of your own home then you’ve got to follow the rules,” he told the BBC.
