TaxPayers' Alliance statement on coronavirus

In light of the coronavirus (covid-19) outbreak, we have been asked how the TaxPayers’ Alliance responds to the massive government intervention undertaken to tackle the public health emergency and prevent the economy from collapsing. We want to address that clearly.

The TaxPayers’ Alliance vision is for a pro-enterprise country with lower, simpler taxes funding better public services through innovation, automation and eradicating waste. That vision applies to normal times, but also for the future of the country once we have moved past this crisis. Moving towards that vision will take time but remains the right course for the UK.

The measures which have been announced to deal with this crisis are unprecedented. They are highly damaging to the public finances and involve troubling interventions in the economy and the daily lives of everyone. But they are understandable and justifiable. Covid-19 is an impending national catastrophe, in human and economic terms; the specifics may be debated, but in general the government is right to take action that in ordinary circumstances would be unacceptable.

The government has little choice if it wishes to avert the loss of life which is predicted without significant social distancing, and its impact on the economy. Reducing contact to contain the spread of coronavirus means shrinking economic activity, so many standard policy objectives must briefly be turned on their head. We do not want to lose capital in businesses which are normally viable, but demand for their output must temporarily be suppressed. Preventing contagion can mean encouraging people not to go into work for a short period of time. That means very different policies compared to those which are sensible in a normal recession.

For once, calls for higher spending, borrowing and debt are justified. But given the government will be borrowing enormous sums on our behalf, the need for careful, prudent and well-targeted implementation is greater than ever. This money will eventually need to be paid back, and will be another legacy of this terrible crisis. Such efforts must be focused on ameliorating this supply-side shock. Stimulating demand now would be counterproductive for public health and ineffective for economic management. These extraordinary measures are justifiable, but at some point they will no longer be - and they will need to be reversed.

We should consider how to make best use of the massive changes in fiscal and regulatory policy as we return to our normal lives. For example, regulations which have been repealed to enable businesses to stay solvent may not be needed in the future. New innovations developed with so many working from home could be encouraged. 

Other positive steps can be taken: the BBC could use this period as a guide to more public service broadcasting activities and make their back catalogue freely available; road and railway engineering works could be brought forward to take advantage of the exceptionally reduced travel demand. Returning to normality once the crisis has abated should be the strategic objective for the government, rather than allowing coronavirus to permanently undermine our way of life.

Let’s remember, significant fiscal repair will be needed in the years afterwards. The scale of the challenge has illustrated the need for governments to be ready to take drastic action when required, underlining the importance of sound public finances in normal times. Debt levels will need to be brought back down rapidly through growth-enhancing measures and spending restraint. Supply-side repairs will be critical. We will need to be ready in case some other crisis happens.

We say to anyone who shares our principles: don’t despair. Emergencies such as this are exactly why we fight for what we do in normal times - so that we can pull together as a nation to see off a crisis. And it means we must start helping the government with constructive ideas to map a course to sound public finances in the coming years.

This crisis will reveal many heroes. Those working night and day in public services and in government; companies keeping the show on the road, paying salaries and contributing to the national effort; right down to the families and individuals helping those less fortunate than themselves by delivering food or alleviating loneliness. But let’s also remember taxpayers - once again, when the chips are down, they have helped to provide the means for us to face this national challenge together. We owe them all a tremendous thanks. 

We wish everyone the very best at this difficult time.  

Mike Denham
Chairman, TaxPayers’ Alliance

John O’Connell,
Chief executive, TaxPayers’ Alliance

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