James Nation On The British Government’s Response To The COVID Pandemic & Dealing With Emergencies

Editor’s Note: The following is an excerpt from a wide-ranging conversation with James Nation, OBE.

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Aiden Singh: What you’re describing is already a very intense, demanding, and stressful role, and that’s in the best of times.

However, you had the unique experience of advising Chancellor Sunak during the COVID pandemic, when everything was magnified. Just as countries were going into lockdown, his very first budget in March 2020 required a £30 billion stimulus to keep the economy afloat. And his second budget was delayed because of the pandemic.

Take us inside those emergency budgets.

James Nation: Well, I should clarify: I joined Rishi’s team in December 2020, so I wasn’t an official for those budgets. I wouldn’t want to claim any credit for the furlough scheme because that was before my time. Though, I worked closely with the colleagues who helped shape it. When I came in December 2020, we were still in the throes of it. If I’m not mistaken, that was ‘the Christmas that got canceled’. And the following year was the Omicron wave, so COVID absolutely dominated. I was particularly close to some of the difficult decisions over when and how to unwind parts of COVID support, not least given the significant fiscal expenditure we had to allocate toward tackling the pandemic.

One thing I always remember from when I first started working for Rishi was that he pointed to a book he said had been one of the most informative he’d read. It was Firefighting by Tim Geithner and other major figures who had been closely involved in the response to the 2008 financial crisis. As soon as he mentioned it, I made sure to read it myself to understand the mindset. And there was a line in that book that stood out. The phrase was about acting quickly to throw water on the sparks. 

That was essential during the pandemic. You couldn’t wait for perfect information before deciding on a business support package or whether to provide grants to pubs to keep them afloat. You didn’t have that luxury. Even at the highest level, questions arose: is it right to pay employers to furlough their staff rather than doing an American-style check in the post and accepting more churn in the labor market? 

On top of that, you had to grapple with the reality that the British state simply wasn’t equipped for a challenge of this scale. A lot of people have said this, and they’re absolutely right: many of the IT systems we relied on, and even the way we held personal data to reach people, just weren’t up to scratch. Once the political decision had been taken to effectively shut the economy down, you had to move extremely quickly and get ahead of the problem, all while working with imperfect delivery mechanisms.

The guiding judgment throughout was simple: act fast, move quickly, and get on top of the sparks before they spread. That’s also why hindsight makes pandemic interventions look so easy, because the knock-on problems would have been far worse if you didn’t move quickly at the time. This is what Geithner describes as well: once you get those broader knock-on, whac-a-mole problems, you quickly lose grip of the situation. 

Earlier I mentioned all the interventions we were doing without the OBR. Rishi had delivered the March 2020 budget, but then had to return with successive pandemic spending packages without the Office for Budget Responsibility weighing in.

That was a big deal for him, which brings us to the March 2021 budget: you couldn’t just leave the question of how it was all paid for. As we went along, we needed a sense of how we were going to start paying for everything, especially given the UK’s debt-to-GDP ratio had jumped so markedly as a result of the interventions.

That’s where some of the difficult tax decisions came in. You were constantly juggling the need for speed with the need to keep track of the public finances, all while acting on imperfect information and using imperfect delivery systems. That can be really uncomfortable. If you’re frozen like a rabbit in the headlights, that’s the most dangerous position to be in when you’re struck by something like a pandemic.

Aiden Singh: In this firefighter situation, we can look back to previous crises that required emergency budgets, 2008 being one example. But this crisis was different. In those earlier episodes, there was precedent and at least some lessons from history to draw on. The COVID lockdown, by contrast, was unprecedented. It was a total shutdown of the economy. It wasn’t like a fire in the banking sector where history offered a playbook.

Were there specific lessons you could adapt from past crises or did you find yourselves improvising? How much did history actually guide you in this instance?

James Nation: I think it did, in the sense that there were certain areas where lessons from 2008 carried through. A few things stand out: acting quickly, throwing water on sparks, as I mentioned earlier; making sure you had properly stocked arsenals to intervene, to use another Geithner phrase; and ensuring you prioritized support for the real economy as much as possible. That also meant having emergency powers in place so the government could move fast, which was tricky given the delivery mechanism issues.

I think the comparisons end fairly quickly, though. A financial crisis is a massive deal, but at its core it requires fiscal, financial, and monetary authorities working together to stabilize the system. This was different. You had the whole new dimension of non-pharmaceutical interventions, and the speed of COVID transmission created acute capacity risks for the health service. That meant relying on scientists rather than economists, which was a very new dynamic. Most countries were blindsided by that.

There might have been a flu-pandemic playbook somewhere, but nothing that looked like what we faced with coronavirus. So while there were some broad lessons on how to respond in a crisis, the reality was that much of this was improvisation. That’s why the firefighting analogy resonates. The guidance from earlier crises helped, but ultimately the blaze was of a very different nature.

This was extremely unique because of that whole different dimension of having to lock down the economy. What would that then mean in terms of human behavior? What should it mean in terms of government messaging and conveying to the public where the trade-offs might be?

So if we’re going to guarantee total safety, we have to shut the economy down. Though, that also means spending billions on employment support, and it means certain industries you care about will be hit hard. That’s a very difficult conversation to have. It became even more difficult when other countries abroad were taking very different approaches and handling COVID in particularly different ways.

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Editing by Harpreet Chohan.