I’ve been putting off writing this blog, but after the weekend’s Cummings and Goings, there was a certain inevitability that it had to be written. The question I keep asking myself, as I am sure many of you are also poising – is:
What is the UK going to look like after the first, second, and even third waves of coronavirus have passed through in the next year or two?
Apologies if some or indeed all of these thoughts are only half formed – that is in the nature of crystal ball gazing – the clouds parts for a second before closing again – and I’m no Yoda.
I suppose it makes sense to consider how life will change as a result of the virus continuing to circulate in society – as opposed to the long future when a vaccine or effective antiviral treatment becomes available, assuming either of those actually happen. I think, as with most things, that they will happen eventually, but that could be a long long time away.
I’m not going to continue to prefix everything with “I think” because it should be obvious to you all that these are my thoughts – and as usual they could be right or wrong.
I’m going to start out making an assumption which I think it is now safe to do. That is that people are not going to catch coronavirus when they are outside, unless they are outside and very close or actually physically in contact with another person. This virus spreads indoors or via direct physical contact between people. It spreads through the air (droplet or aerosol) and on surfaces indoors – in trains, buses, planes, cars, factories, offices, shops, restaurants, cinemas, theatres, hospitals, care homes. You’d have to be incredibly unlucky to catch it from touching a gate or sitting on a bench in the park.
The nature of work is already changing radically and I think that will continue until that long future vaccine/treatment. Face to face meetings will largely be a thing of the past, beyond one to one’s or a few people space far apart in a room, for a very short time. Unless they move outdoors. Large offices with tens, hundreds or thousands of people in them – how will they survive? Factories where much is already automated are continuing and can function in the future, indeed this may spur a further round of automation. Others where close contact was the norm and hasn’t changed – well look at what’s happening with outbreaks in meat processing plants – here but much more in the USA. What is happening is that workers on low pay with no other choice are being forced to continue to work in unsafe working conditions with the constant threat of catching the virus. Over a hundred years of progress in workplace safety is now at grave risk.
But manufacturing has long been a minor element of the UK economy. We are a service economy – jobs are office jobs or in other parts of the service sector, particularly leisure – shopping, eating out, cinemas, music etc. Shopping was already moving online and that has obviously accelerated hugely during lockdown. This was always a one way street. Now retailers find that street has disappeared altogether. How many more big names and small shops will re-open? As each month goes by the chances diminish, which is why the Government is now desperate to re-open the economy, even if it means risking the second wave appearing before it would normally have done ie in the late autumn/winter. Those that can move online only will do so. Others may find they can survive by limiting the numbers of physical shoppers entering shops – as those that have stayed open are finding. But unless fixed costs change, no retailer can survive with only 10% or 20% of former footfall. Fixed costs mean rent, business rates (for which the Government has offered new exemptions), energy costs, staff costs etc. The big one is rent.
Owning and renting out Commercial Property is big business. It’s worth about £100Bn a year, 7% of the economy, using the Gross Value Added measure. That’s about the same as the entire food and drink sector (UK agriculture is worth 0.53%). Commercial property covers everything from shops, retail estates, massive shopping centres, office complexes, industrial estates, big storage sheds on the M1, you name it. It’s all sitting there making money. Money is made two ways – from rent, and from capital appreciation ie the value of the property goes up (or down.)
It’s such big business, that lots of money, searching, always searching, for a return on investment, flows into commercial property. Since the 2008 crash the search for a return on investment has become frenetic, because of historically low interest rates and other factors. That money could be coming from individual investors or institutions, like private equity funds, hedge funds, pension funds.
What happens to the commercial property market if shops close or can’t afford to pay their rent? Just looking at Dorchester where I live, there are lots of empty shops – they have been empty since 2008. Or some have been filled for a year or two while they have a cheap introductory rent deal. Then they are empty again when that runs out. The landlords don’t care whether the shop is empty because they can bank on capital appreciation, the value of the property going up, over the long term. What happens to that value if those shops are never filled again? What happens to all the money invested in big office complexes if no business ever comes back to occupy that office space? It becomes worthless.
Those places could be revamped for some other purpose – but equally they may just be demolished or abandoned. Repurposing industrial or office space for residential use is fraught with problems, as the Government has found because that process started several years ago.
Many people have found that it is possible to do their jobs, to some extent at any rate, from home. Obviously this has its advantages and drawbacks and as someone who has worked from home on and off (mostly on) for the last 27 years it didn’t make much difference to me, but I appreciate that trying to concentrate on some knotty problem with a 2 and 5 year old running around screaming, when you’ve never had to try and do that before, could be something of a nightmare. But equally, if you could do your job at home and not have to do a 2 hour each way commute every day on a crowded train – what would you do? Even 10 years ago the idea of being able to have a meeting with 10 people online with video would have seemed a pipe dream. Now it’s a daily occurrence – and if you have a decent broadband connection it works most of the time. It may not be perfect, but then again how many times were people late, or just never appeared, at physical meetings because a train was cancelled, or there was an accident on the motorway.
Does this spell the end of mass-transport commuting? It’s hard to see it continuing in the same fashion as before. Our creaking rail system which has been severely damaged by mismanagement and ideological obsession with creating fake markets. Overcrowded unreliable trains have a new dimension – take one and play a daily game of Russian roulette – will today be the day you catch coronavirus when someone coughs and fills the entire carriage with aerosolised virus particles? Buses could conceivable survive but with fewer passengers on each vehicle, but any public transport system where the future involved far fewer passengers would mean either much higher prices or a massive public subsidy. It’s difficult to imagine anyone being prepared or even able to pay more for their tickets, especially if they are struggling because their income has dropped. And this Government, despite it’s emergency bail-outs, is not going to change its spots and start giving large subsidies to keep ticket prices down.
Does that mean everyone jumps in their cars to commute? That’s certainly possible but the roads are already at full capacity. And there’s also a new found appreciation that cities and large towns are nicer places to live, and healthier, when there are fewer cars around. Already in London and other big cities, road networks are being transformed to encourage more walking and cycling. Cars are being excluded or strongly discouraged. If everyone jumped in their car to make the commute they previously used the train for, the roads would immediately become permanently gridlocked. Most drivers know this. Those that don’t will find out in the first week they try.
What about a massive new road building programme then – say multiply the current £28Bn new roads programme by 10 and create lots of construction jobs to help the economy. As anyone who takes an interest in these things know, you cannot build your way out of a congestion problem, because new roads generate their own new traffic, on top of the traffic problems they were supposed to solve.
And then there’s HS2. The Government is forging ahead with HS2, mostly I think on the basis of the sunk cost fallacy, which is “we’ve already spent this money, so if we stop now, we’ll have wasted it all.” HS2 won’t be open for business for a long time and I guess they think that coronavirus will have been sorted by then. They may be right. But if the rest of society has shifted to a different pattern of working, what will be the point of having it? If people don’t need to get from Manchester or Birmingham to London in comfort, with a few minutes shaved off the journey time, they won’t use the train. Imagine what a couple of hundred billion pounds invested in the national cycle network could do.
this is already getting to be a long post so I’ll stop soon. But I wanted to say something about leisure. So much of our economy is based around what could loosely be described as leisure, in the sense it’s the stuff we do when we are not working. I already mentioned shopping. For some that means football, whether watching it in the pub or going to the match. Other sports are available, to take part in or watch. Or it could be going for a meal, a drink, to a club, the cinema, the theatre, a concert, a festival. It’s lots of different things. Much of it happens indoors, especially during the cold rainy months (remember them?).
How can any of these things continue? We’ve just heard one of our local restaurants, one of the Carluccio’s chain, is not going to reopen. The food was good, not brilliant. The staff were friendly, the coffee could be great on a good day. It was a regular place for people to meet, chat, catch up with friends. It’s gone. The whole business went bust. That story is going to play out time and again over the coming months. Things can’t just be mothballed until such time as magically they reappear again. That isn’t how business works. It woujld only have happened if the Government had stepped in and agreed to pay for all business costs, 100% of them, for an indefinite period.
But what about leisure that was already happening outside, or could be moved outside? This is a prospect. With the current weather restaurants and pubs could become outside only. Add in some suitable covers and they could function when it’s raining, if it ever rains again. Anything that doesn’t involve physical contact could move outside. People are already discovering that outside can be a great place to be – look at how many people are out walking or cycling, or running now. Far far more than I have ever seen. But especially in cities it’s now clear that the outside space available is very unevenly distributed and many, especially in poor areas, do not have anything like enough.
I’m not going to start on connection to nature, because that’s a whole other topic which I will save for another time.
I’ve gone over 2000 words now so I will stop there and end with a couple of questions.
How do you see society changing in the next year or tw0?
How will coronavirus affect your life in the next year?