Andy Haldane: Five Lessons We Can Build On From the Pandemic

This article is based on comments made by Andy Haldane, the former Cabinet Office permanent secretary for Levelling Up, and Chief Executive of the the Royal Society of Arts, Manufactures and Commerce, during IPPO’s Two Years On event on March 24, 2022.

By Andy Haldane

The COVID-19 pandemic was no doubt a global crisis. But during times of crisis come both challenges and opportunities for policymakers.

As the UK moves forward to a new normal, it’s important not to lose sight of what could prospectively go well as a result of what we’ve learned, if we play our cards right.

New opportunities have sprung up in the light of the pandemic, and it’s now our job to minimise the effects of its negative outcomes, and maximise the opportunities that were brought during this time of crisis.

Public, Private and Civil Partnership

One of the great success stories of the past two years has been the vaccine programme. For me, a crucial ingredient was the model of industrial organisation that was used to take us from the lab to the vaccination centre. That involved a very explicit joining of hands between the public sector, the private sector and civil society. They acted in unison at all stages of the supply chain, from the laboratories right through to delivering vaccines in people’s arms.

This is not a new model of industrial organisation. It’s the self-same model that has delivered success at least since the Industrial Revolution. We rediscovered it during COVID-19 and it has proven to be the recipe for getting things done at speed and at scale, by harnessing the very best of all three of the sectors acting together.

It’s not a pure market model, not a pure state model, but rather a blended mix of the two, with civil society playing a crucial adhesive role. I hope that’s a model of industrial organisation that we can use outside of the crisis period, because there for me lies the secret path to success.

Support Programme More Effective Than Expected

The catastrophic falls in levels of activity that came from the various restrictions and accompanying behaviours did not cause anything like the damage to jobs and incomes that were feared at the very start of the crisis.

Or put differently, the various intervention and support programmes put in place, both locally here in the UK and globally, proved to be far more successful than I think almost everyone expected.

To the extent that many countries, including the UK, unemployment is already back to pre-pandemic levels. The hit to incomes has been nothing like as great as expected. In fact, in employment terms, we now find ourselves with the highest level of unfilled vacancies in history and acute skill shortages that are very broadly based.

Leaning In to Digital Revolution

There was a necessity for businesses and individuals to lean actively into the digital revolution to transform how they did business and their daily work. It nudged businesses to get their digital houses in order and a great number of individuals to fine tune and improve their digital skills.

That has delivered benefits in terms of productivity to businesses and individuals, and indeed broader benefits. More flexible working practices have led to accompanying reports of satisfaction in the workplace.

Less Constrained by Physical Proximity

Physical proximity has suddenly become a bit less of a constraint on where business is done and where workers work. That means places the previously distant satellites of agglomerative cities have suddenly come into their orbit.

Stranded towns and villages that would have seemed to be beyond any city planet’s orbit have now been brought within range. Broadly speaking, that change is really positive from a ‘levelling up’ perspective.

Social Capital

Of all the capitals that collapsed during COVID-19, social capital was the one that stood tall.

We saw that in the great boom in volunteering, including in support of the NHS, the proliferation of community action groups of various types, and more generally, a reawakening of the true power of friends, families, communities and charities.

Now all of those prospectively are fantastic endowments and legacies, and the question now is how not to let those legacies deplete, but indeed to build upon them.

What next?

The arrival of COVID-19 was not an equal opportunity challenge.

In terms of people, it hit the poorest and most vulnerable hardest. Whether that was through earnings and learning, or physically and mentally. These impacts played into what were already large and pre-existing disparities in wealth and health, and our happiness levels.

In terms of places, the hardest hit were the larger cities, with significant hollowing out of our city centres. Not all of that has been refilled since.

In the pre-COVID-19 period the prime driver of growth in the UK had been increased labour supply, and a good deal came courtesy of increased participation in the workforce, not least by women.

COVID-19 has reversed those trends. The reason why we have a record level of vacancies in the UK and very pervasive skill shortages is because the UK’s labour force has lost between half a million and a million people over the course of the last couple of years for a variety of reasons.

Another casualty of COVID-19 has been global supply chains and an increased tendency for countries to make things at home, which is increasing the costs of goods and services, and therefore the cost of living.

Finally, many governments have rightly thrown the fiscal kitchen sink at the crisis, which has gone further towards exhausting their fiscal space.

The question now is how do we turn the ratcheting up of government debt down? And if another big risk came along, would there be, as things stand, sufficient fiscal space for the government to play the crucial cushioning role played during the course of the pandemic?