Treasury Has Not Forecast Economic Impact Of Closing Pubs, Chief Admits

Clare Lombardelli said modelling the impact of specific measures would be “very difficult”.

The Treasury has not forecast the economic impact of key coronavirus restrictions including closing pubs and cafes, its chief economist has admitted.

Clare Lombardelli said modelling the impact of specific lockdown measures would be “very difficult” if not impossible because of the “very unusual circumstances”.

In remarks likely to be seized on by Tory lockdown rebels, Lombardelli said the Treasury usually analyses the impact of policies based on behaviours that “we know and understand” but that restrictions are too dependent on a range of relationships that are “very hard to estimate”.

But she was criticised by Mel Stride, the Tory chair of the Commons Treasury committee, who said: “Just because something’s hard and it’s difficult doesn’t mean to say it shouldn’t be done.”

Stride also questioned how chancellor Rishi Sunak could make the case for the economy during cabinet debates on Covid restrictions without having any data to back him up.

“We haven’t got specific forecasts or estimates of very, very specific measures”

The exchanges at the committee came after around 50 Tory lockdown rebels formed a new backbench faction dubbed the Covid Recovery Group.

Headed up by chair and former chief whip Mark Harper and ex-Brexit minister Steve Baker, one of the group’s key demands is for the government to publish a full cost-benefit analysis of restrictions on a regional basis, including how economic damage affects health and deaths.

“MPs must be in a position to assess the relative health implications on both sides of the argument of repeated restrictions with a view to removing them immediately if it cannot be proved that they are saving more lives than they cost,” the group said.

But Lombardelli offered little hope that the Treasury would be able to provide such detailed analysis.

Asked by Stride what an economic impact assessment for closing pubs and cafes would be, Lombardelli said: “We haven’t got specific forecasts or estimates of very, very specific measures.

“What we do know is things like the size of the sector, the contribution it makes to the economy, we know the number of people that work in that sector, we know about things like the details of their employment in terms of things like the pay in that sector, we know about things like the size of the businesses, so we know a lot about the sector.

“But what we haven’t done, and it would be very hard, even impossible, to do in a meaningful way, is to estimate the precise impact or provide a precise forecast of what the impact of that would be.

“Because it would depend on a whole range of things that it’s incredibly hard to know – how businesses would respond, how consumers would respond, what compliance would be like.

“These are behavioural relationships that it’s very, very hard to estimate.”

Stride hit back: “The same argument could be applied to the epidemiological analysis which is fraught with the same behavioural concerns that you have just referred to.

“And I cannot believe that the chancellor would be sitting down and having discussions with the prime minister and others about which of these measures make sense, and he would have wanted to argue surely from an economic standpoint as to the impact of these measures.

“The minutes from Sage say these economic impacts are being assessed by you within the Treasury, and I can’t imagine conceivably that he could be having those discussions saying: ‘Well, I just don’t know what the impacts are’.’”

Following the session, Stride called on the Treasury to publish all its economic analysis of coronavirus restrictions and policies.

He said: “Clearly some sort of economic analysis of coronavirus interventions, including lockdown, has been conducted by HM Treasury.

“It’s perplexing that this was not published ahead of last week’s vote on further lockdown measures.

“MPs must have all the information possible available to them to allow them to carry out their duty of effectively scrutinising government measures in the future.

”HM Treasury’s analysis of interventions, as referred to by the chief economic adviser in evidence to us, should, therefore, be made public.”


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