I guess the issue with panic buying is if there are supply chain issues caused by stuff coming from China.
However, I actually think the government is more concerned about economic disruption if lots of people stay home from work, and therefore businesses have to close (or alternatively, businesses closing as a precaution, and people not getting paid). I think they're concerned if they start closing schools etc, then some businesses would follow and that would have a knock on effect on the economy.
I also think the NHS couldn't really cope with lots of worried well turning up at doctor's surgeries etc.
They're probably worried about hitting the tourism sector if more people start cancelling holidays AND people perhaps decide not to come to the UK.
That's the cynical view.
It's also possible they don't have a clue and they're making things up as they go along.