The UK will borrow nearly £400bn this year. That’s nearly 20% of GDP and more than we have ever borrowed in peace time. Was it worth it? Has the amount of money we have spent to save lives from Covid been well spent – or have made a horrible mistake? That’s the question John Beattie asked me on the radio yesterday night when we were talking about the spending review. I really dislike that question. I hate talking about the value of a life – and the extent to which saving one over another is worth it or not worth it.
Sometimes the whole conversation about Covid seems to boil down to the hideous philosophy student argument about the five men tied to the railway line (the Trolley Problem). There’s a train coming – you can pull the lever to move the train to the other rail and save those tied to the first. But if you do, the train will hit a man standing on the other track. What’s the morally correct thing to do? Let fate take its path, or take action to give one life for five (without knowing anything about those lives)?
In this context lockdown is pulling the lever. But for it to feel morally OK you have to believe that you saw the correct number of people on the railway line – that you really did kill fewer than you saved. But what if your ability to see the line ahead was a little obstructed – and when we look back we see that there was actually only one person tied to the track and five hanging about on the second track? See why I hate the question? Still we must try and answer it. The pulling of the lever has changed the UK’s public finances for years to come – so it matters.
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Equitile Investments has had a look at the numbers. The standard way to compare the effectiveness of different types of healthcare spending is through assessing the number of additional “quality adjusted life years” – QALYs – achieved by the spending. In the UK, the National Institute for Healthcare Excellence, NICE, is responsible for determining which health treatments the government is willing to fund. The upper threshold here is usually in the region of £20,000-£30,000 per QALY, and the average something like £15,000.
So how much have we spent per QALY during the pandemic? To know that you have to know the number who have died with Covid, the amount spent and the number of deaths that have been avoided by anti-Covid policies (ie, lockdown). The latter is a tough one to figure out – particularly as the similarity of death rates between Sweden, the UK, Spain and Italy despite their “wildly different” lockdown policies slightly suggests that lockdown has little real effect in the end.
But for the sake of getting somewhere, Equitile assumes that around 50,000 lives have been saved (we have cut fatalities in half) and that each of those saved would have lived an average of another five years (this errs on the side of generous given the average age of death and the co-morbidities of those who have died with Covid). The total bill is then assumed to be £250bn (it will end up higher). The result? A cost of £1m per QALY.
You can argue with the numbers around the margins, but, as Cooper says “one would have to make some heroic alternate assumptions to avoid coming to a similar conclusion” – and that is before we start talking about the QALYs lost to lack of cancer treatment and the like.
The matter of how we moved from a maximum of £30,000 per QALY to £1m in the blink of an eye will “trouble historians for some time to come”, but even now it is worth asking why we didn’t do this cost benefit analysis properly – and if we did (but that cost analysis is not in the public domain) why we changed our idea of what was an acceptable outcome. There may well have been good reasons at least the first time we pulled the lever to put ourselves into lockdown. Nothing was clear at the time – perhaps it looked from a distance as if there were ten people tied up. But look at the bare numbers and our stunning borrowing numbers for this year many months on and you do have to ask: once we knew there were not, why did we pull it the second time?
Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).
After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times
Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast - but still writes for Moneyweek monthly.
Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.
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