This week marks another step on our road out of lockdown. For the first time in months, pubs, restaurants, gyms, and hairdressers are open for business.
One of the clearest lessons of the pandemic is how reliant our economy is on the health of the people. Poor health brought our economy to a thudding standstill, causing an unprecedented 9.9 percent fall in annual average GDP in 2020. And it was only through improvements in health that we have been able to open things up.
The economy’s reliance on health was not an easy lesson for the government. Indeed, denial of this fact often underpinned key mistakes – an over-eager attempt to support restaurants through Eat Out to Help Out and the delayed December lockdown among them. In that context, the current plan to gradually reopen society represents progress.
But it’s not enough for the government to accept that good health is essential for the economy. They must go further still. They must also grasp the fact that a strong economy is vital for good health, and bring this fact to bear on economic policy. If they don’t—and instead refuse to put in place the stimulus and support needed to maintain the nations’ health—they risk significantly extending Covid-19’s deadly legacy.
Economic Strategy is the Key Determinant of Health
It often surprises people to hear that access to the NHS is not the most important factor in defining whether we have good or bad health. The right diagnostics and treatments are, of course, very important. But in a country with a universal health system, economic conditions are by far the number one determinant of our health.
This is not the same as saying that recessions are inevitably lethal in countries like the UK. During this pandemic, this logic of ‘inevitability’ has been used to justify arguments for lockdown scepticism and opening up quickly despite high infection rates. ‘If we don’t sacrifice our health for the economy, we will end up with worse health,’ the argument goes.
In reality, there’s nothing inevitable about the health impact of a recession. What’s really important are the economic choices a government makes when a crisis hits, and to what extent it uses stimulus to mitigate the damage.
There is no better demonstration of this than in how different countries reacted to the 2008 financial crash. In Iceland, the people chose by plebiscite to sack the bankers, invest in public services, and maintain social security. It was a tremendous success, and health outcomes remained stable over the following ten years.
By contrast, the United Kingdom chose austerity. That path saw life expectancy reverse in the poorest parts of our country. The gap in healthy life expectancy between Blackpool and Buckinghamshire reached 15 years. And progress on health prevention stalled – where maintaining our initial trajectory would have seen 130,000 less people die.
As David Stuckler memorably put it: ‘Recession can hurt. But austerity kills.’
Our Health Demands an Economic Stimulus
This means our health now relies on the government’s economic response to the pandemic recession.
Other countries have economic strategies that acknowledge this reality. In the US, Joe Biden has put forward a $1.9 trillion economic stimulus. Japan has gone even further: late last year, they put forward an economic stimulus worth 13 per cent of GDP. The UK could meet America’s level of ambition by investing £190 billion (8.4 per cent of GDP) in a fiscal stimulus, but at the 2021 Budget Rishi Sunak committed half of that.
According to analysis by the Institute for Public Policy Research (IPPR), the Chancellor’s limited stimulus has put 750,000 viable jobs at risk. A lack of stimulus, combined with the government’s decision not to introduce a follow-up work support scheme following the end of furlough in September, could be the difference between an 8.5 percent and 6.1 percent unemployment rate.
That unemployment will, in turn, cause some very tangible health problems. The evidence on the link between good work and good health is clear: on average, every ten percent rise in employment rate correlates with a five-year increase in healthy life expectancy. On that basis, a 2.4 percent difference in unemployment translates to a year and half less life lived.
Of course, the cost will not fall equally. Unemployment, and the associated health cost, will fall on the poorest, most vulnerable, and most marginalised in our society.
Rising Unemployment Makes Welfare a Vital Health Intervention
Even then, the health consequences of unemployment are not entirely inevitable. They are determined by the strength of a country’s social security system. Again, this is an area where UK government policy is flirting with health disaster.
The government plans to end the temporary £20 per week increase in Universal Credit in just five months’ time. This is despite the fact the UK has one of the least generous social security systems in the OECD. Even with the uplift, UK unemployment support is only worth around 40 percent of previous net income. In other advanced economies, the average is about 60 percent.
The health impact of weak social security system can be severe. One study linked the introduction of Universal Credit to a significant increase in psychological distress. Elsewhere, sub-optimal welfare reforms have been linked to rising food poverty, homelessness, heart attack, and suicide.
As well as enabling poor health, a lacking social security system can also determine whether a serious health condition causes destitution. Research by Macmillan Cancer Support shows that four in five people will be £570 a month worse off because of a cancer diagnosis – but Universal Credit only pays between £256.05 and £507.37 a month. That means tens of thousands struggling to make ends meet, while contending with a serious and potentially terminal disease.
In forming the NHS, Nye Bevan reportedly declared: ‘Illness is neither an indulgence for which people have to pay, nor an offence for which they should be penalised, but a misfortune the cost of which should be shared by the community.’ Today, it is the lack of a coherent social security not system—not the absence of a universal health system—that stops that vision from being a reality.
A Pandemic of Despair
Of course, we cannot look at our post-Covid economic strategy. It is important to remember that we face this crisis on the back of a decade of austerity. This raises the stakes significantly.
In 2015, a paper by Princeton University academics Anne Case and Angus Deaton coined the term ‘deaths of despair’. Their analysis of American health data showed a worrying spike in mortality amongst middle-aged, working-class people linked to overdoses on opioids and other drugs, suicide, and alcohol misuse.
In 2019, a study by the Institute for Fiscal Studies showed that a decade of austerity and rising inequality had brought the trend across the Atlantic. Their work simultaneously identified high levels of income, employment, and geographical inequality – and increases in deaths from suicide, drug overdose, and alcohol-related liver disease amongst middle-aged people in England.
This is the base from which we face a new economic crisis in 2021. It could not be more vital that the government does not repeat history by returning to a policy of austerity, as implied in last month’s Budget. The nation’s health demands a policy of stimulus, redistribution, and economic justice – otherwise, the conditions will be in place for a pandemic of despair to tear through the nation, with catastrophic human consequences.