UK Government's Covid tier system impact report fails to quell Tory revolt


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The release on Monday of a UK government report into its three-tier coronavirus lockdown strategy has failed to quell the growing tide of anger from politicians.

The main finding of the document, titled Analysis of the Health, Economic and Social Effects of Covid-19 and the Approach to Tiering, is that it is too early to draw conclusions on the wider effects of the measures, which were imposed on districts with varying levels of restrictions depending on local levels of transmission.

“It is not possible to know with any degree of confidence what path the economy would take if restrictions in place were not sufficient to prevent exponential growth or in the absence of restrictions entirely,” it said.

“On the one hand, fewer or no restrictions would allow many people and businesses to operate as normal, if they chose to do so.

“On the other hand, more widespread infections and the consequences of pressure on the NHS [National Health Service] would affect spending in the economy due to voluntary social distancing, effects to confidence and impacts on businesses, including through high levels of employee sickness.”

Whether this ambivalent verdict will sway any wavering MPs before Tuesday’s vote on the tier system in Parliament remains to be seen.

But UK Health Minister Matt Hancock quoted another report as evidence of the effectiveness of lockdown.

The React-1 study by Imperial College London found that Covid-19 cases had fallen by a third during lockdown.

“They have been working,” Mr Hancock said. “This is clearly good news. It shows the national restrictions have been successful … we have got this virus back under control.”

UK Health Minister Matt Hancock is an arch defender of the tier system which he says is working. AP
UK Health Minister Matt Hancock is an arch defender of the tier system which he says is working. AP

Prime Minister Boris Johnson had been under increasing pressure from the large number of lockdown sceptics in his party to produce evidence to support measures regarded by libertarian Conservatives as draconian.

The government’s report was intended to ease their concerns but instead has sparked more frustration.

“I am disappointed MPs, journalists and the public have been given so little time to digest information of this magnitude,” said Covid Recovery Group chair Mark Harper, an MP.

“We are, after all, talking about imposing some of the most severe restrictions on our constituents and the way they lead their lives and run their businesses.”

Mr Harper’s concerns are also unlikely to be eased by Mr Hancock’s optimism over the fall in daily coronavirus cases, which were down to their lowest level since September on Monday at 12,330 infections.

Instead of concluding that the fall is a sign of the need for restrictions, anti-lockdown Tories believe the opposite applies.

While the report fails to address the central question over the long-term economic impact of the tiers, it does seek to provide a compelling case for restrictions on public health grounds.

How the tiers affect health care

The report claims that without mitigating measures, hospitals would soon be overwhelmed.

When the R rate – the average number infected by a person with Covid – was greater than 1, there was rapid growth in hospital admissions in England.

The below graphic shows the rise in admissions up to this point and the tapering during the second lockdown.

UK hospital admissions have tailed off in November. NHS England
UK hospital admissions have tailed off in November. NHS England

The report warns that if hospital capacity were exceeded, avoidable Covid and non-Covid deaths would have resulted.

It says this would be “intolerable”, although it admits that the size of any possible breach could not be predicted because of the number of variables.

The report lists what is at stake should the NHS become overwhelmed:

  • Half a million emergency admissions
  • 49,000 cancer treatments
  • 10,000 hip replacements
  • 7,000 knee replacements
  • 39,000 cataract operations
  • 2 million first outpatient appointments and millions of other treatments

How the tiers affect mental health

One of the arguments used against lockdown is its effect on mental health.

The report rebuts this, saying adverse effects on mental health would rise if the pandemic were left unchecked.

“It would be expected that higher rates of post-traumatic stress disorder would be seen amongst health and social care staff, patients who contract Covid-19 [including those admitted to hospital and in intensive care], and the relatives of those who die,” it states.

“People in the high-risk category may also experience higher levels of worry.”

UK Covid tier restrictions as of December 2

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Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Islamophobia definition

A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.

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