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Reshuffle 2020: Opening the doors to Boris Johnson’s new Cabinet
Reshuffle 2020: Opening the doors to Boris Johnson’s new Cabinet

Archive for November, 2018

Nurture or regulate? How government is supporting investment in AI

Investment in the UK’s tech sector is booming despite the cloud of Brexit uncertainty, with Britain leading the way among European countries. UK tech firms attracted £3 billion in 2018, more than double that invested in 2017. Boosting the trend further, the government has announced a series of funding strategies for Artificial Intelligence (AI) and future tech. The government certainly feels that it has the policy ideas to help boost the sector further, but will these policies help or hinder private equity investment in tech?


£3 billion investment in 2018


2018 has been a big year for government policy on AI in particular, with a new Office for AI set up, a new “Sector Deal” between government and AI stakeholders, and the launch of the Centre for Data Ethics and Innovation. These measures have committed the government to working with the tech and business sectors to help AI develop, meaning portfolio assets will have the opportunity to influence the direction of AI policy. Greg Clark MP, Secretary of State for Business, Energy and Industrial Strategy, has previously said that government wants to “help our world-leading businesses exploit the potential of AI, encourage companies to engage and grasp the opportunities ahead.” This all shows a willingness from the government to put the UK at the forefront of AI development and to invest in its growth. The issue with this policy is not one of enthusiasm from the government but ensuring that the tricky balance between the commercial opportunities for business – that it wants to help deliver – and the ethical questions about the use of AI are addressed.


Regulation that enables innovation


Currently, the Office for AI is run jointly by the Department for Digital, Culture, Media, and Sport (DCMS) and the Department for Business, Energy, and Industrial Strategy (BEIS). Tellingly, when the House of Lords Artificial Intelligence Select Committee published a report on AI in April 2018, the government response came only from BEIS. On this basis, BEIS is likely to be the department in the driving seat on AI policymaking, meaning funding and policy priorities could be influenced by business, and aligned with their commercial priorities.


The recent cabinet reshuffles are also likely to have an effect. While all the government’s new policies on AI were being established, Matt Hancock MP, a man infamous for his love of tech and innovation, was Secretary of State for Digital, Culture, Media, and Sport. In July he was replaced by Jeremy Wright MP, who has demonstrated decidedly less enthusiasm for the subject. Across his parliamentary career, Wright has largely sought to steer clear of all things technology related, only intervening as Attorney General to remind social media companies they were not above the law and to say that international law must keep up with the rapid rate of technological development or risk cyberspace becoming “lawless.” While this is unlikely to alter the direction of government policy, it may temper ambitions within DCMS, leaving BEIS with the bulk of the de facto responsibility for AI. This gives rise to the potential for the governments’ AI policy to become focused on its business potential, rather than technical innovation, alienating developers. The respective remits of DCMS and BEIS theoretically mean that DCMS will focus on supporting innovation during the current development stage of AI, while BEIS focuses on future business applications. In the absence of attention from DCMS, the government risks becoming too focused on the future without doing enough to help the industry grow in the present. Measures like the Sector Deal will help businesses maintain lines of communication that may alleviate this issue, but leadership within DCMS is unlikely to have been as enthusiastic as they once were.  


“Sensationalist” or “clear and present danger”


Underneath all the investment announcements and sector deals, there is a concern that there will be a backlash from some on AI. Greg Clark MP has spoken before about the ‘sensationalist’ way AI is portrayed in the media and has suggested that the government needs to take the lead in marketing AI to the public. They are likely to have a difficult job on their hands, with a 2017 report from PwC estimating that up to 30 per cent of the UK’s jobs could be under threat from AI, a figure which won’t go down well with workers in the diverse array of sectors likely to be affected. The government must perform a balancing act – supporting AI growth without adding to the perception that workers will be left without a job as a result.


There have been accusations from Labour and the academic community that the government has failed to tackle the ethical consequences of AI. Shadow Culture Secretary Tom Watson has argued that the government must do more to protect those in jobs that could be replaced by AI, while a group of 26 academic and research institutions described AI as causing a “clear and present danger” to society if unregulated.  It is highly unlikely that the government will seek to introduce heavy-handed regulations while AI is still in the development phase, and high funding levels will likely continue in the short term. However, investors should be conscious that regulation of the sector is largely inevitable once AI reaches the consumer market, whether that is self-driving vehicles or new advertising algorithms. In an era of cyber-attacks, fake news and Big Data, the government will have to be prepared to mitigate the risks if it wants to reap the benefits of AI.


Investors will have to be conscious of the mood in government going forward as this will remain an evolving and politically sensitive issue. The government has indicated that it would seek to introduce regulations for AI on a sector by sector basis while regulators have been encouraged to adopt an approach that both protects the public and “enables innovation.” How they approach this balance, and whether it is possible, will be crucial for the development of AI and investment in the sector.


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Birmingham Airport launches plan to invest £500 million to grow passengers to 18 million by 2033

It was a privilege to celebrate the launch of Birmingham Airport’s draft Master Plan at The Cube in Birmingham City Centre this morning, detailing ambitious plans to grow by 40% to 18 million passengers per year by 2033.

Birmingham Airport’s Chairman Tim Clarke and Acting MD Simon Richards were joined by Mayor of the West Midlands Andy Street, Leader of Birmingham City Council Cllr Ian Ward and Cabinet Portfolio Holder for Transport and Highways at Solihull Metropolitan Borough Council, Cllr Ted Richards, to welcome partners from across the region to mark the launch of this exciting plan that will unlock huge economic potential for the region.

The draft Master Plan sets out a self-financed new investment of £500 million, which will improve, modernise and extend facilities.  This investment will deliver increased capacity and enhance the passenger experience, to drive international trade, investment, employment, inbound tourism and the success of the region’s many universities.

The draft Master Plan further reinforces the integral part the Airport plays as a catalyst for growth across the Midlands and in the UK’s economic prosperity.  It outlines the Airport’s role in driving future economic benefit to the region which will increase by 42%, totalling £2.1 billion a year and 34,000 jobs by 2033.

An ambitious yet sustainable plan, it outlines how the Airport will provide more flights to cultural hubs, business centres and a greater choice of outbound holiday destinations.  Furthermore, the Airport will continue to expand the existing wide range of short-haul and long-haul scheduled and charter services and destinations, with both full-service and low-cost airlines, whilst maintaining its strong commitment to balancing growth with a responsibility to the environment and the people who live and work in the Airport’s vicinity.

Ahead of the final Master Plan due to be published in early 2019, today’s launch triggers the start of a 12-week public consultation, ending on the 31st January at 23:59, for stakeholders to feedback their views on the Airport’s Plans.

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Four takeaways from Matt Hancock’s vision for prevention

Matt Hancock has made a typically energetic start to his time as Health Secretary. Unlike many cabinet colleagues, Hancock has been on the front foot with a steady stream of new policy announcements since he took on the role.

And one theme has emerged as a unifying thread through much of his public commentary on health: Prevention – the idea that if you stop the causes of ill health early, you won’t have to pay the larger costs of treatment further down the line. Simple in theory; harder in practice.

This week, DHSC launched Prevention is Better than Cure, a vision document outlining the government’s direction of travel on prevention, to be followed up with a Green Paper in the first half of 2019. Matt Hancock followed this up with a keynote speech to the Social Prescribing Summit, a term which has come to embody Hancock’s health philosophy.

Over the past decade, the warmth of words on this topic would have sufficiently heated several Whitehall buildings, but Hancock is turning that rhetoric into action. Here are four takeaways from Matt Hancock’s prevention drive:

  1. The ‘prevention vision’ will define Hancock’s time as Secretary of State

In focusing in on prevention (and technology) Hancock has been able to apply some of his strongest-held political principles to the health brief. Integrated communities, the role of culture, music and sport in health, and personal responsibility all feature highly in his political back-story.  They’ve now come to the forefront in his prevention vision and are likely to feature in the coming Social Care Green Paper too.

As an economist by trade, he is naturally drawn to the nudge theories of behavioural change, and the big savings that, theoretically, are delivered through early prevention.

Since the Health and Social Care Act there is no need for the Secretary of State to be involved in the minutiae of NHS decision-making, and Hancock has been content to say to Simon Stevens et al “Here is your extra £20bn, keep the NHS running,” as Hancock focuses on other projects.

This is good news for those organisations – providers of leisure, sports, arts, voluntary and community groups – who will be the ultimate delivery vehicle of the prevention agenda.

Although, as many have pointed out, the very real issues of winter crisis, staffing shortages and impact of Brexit mean Hancock’s time spent on ‘pet projects’ may be short-lived.

  1. The Spending Review will be make-or-break for this agenda – but Hancock isn’t calling the shots

The NHS has just received a funding boost, but public health (where prevention currently sits) has not. The opposition, and many commentators, focused their response to Hancock’s (as yet unfunded) prevention vision around the £700m cut to public health budgets.

If Hancock is to truly deliver a prevention agenda, it must be funded. That means diverting more NHS funding to support prevention through the integrated care systems, or securing a major uplift in public health funding at the spending review.

Unfortunately for Hancock, neither of these outcomes are within his gift. CCG leads and local authority chiefs will decide how money is spent at a local level, and the funding gaps for things like social care are so extreme that prioritising social prescribing will be a bold choice. Meanwhile the Treasury is in the driving seat for the Spending Review, and currently sees more value in investments in infrastructure and digital technology than public health.

Some of the language around personal responsibility and the call on employers to ‘do their part’ from the prevention vision document suggests Hancock recognises this agenda will not be flush with new cash. The same old cries of ‘warm words not action’ will resurface if Hancock cannot manage to drum up new funding for this policy.

  1. Predictive prevention is on its way

The use of genomic testing to determine future likelihood of medical need may be reminiscent of a Black Mirror episode, but it is here, and it works.

The government says predictive prevention – understanding who needs what intervention and when – will be a crucial part of the UK’s 21st century health system. Innovation in public health tends to be limited compared with other areas of the economy, but predictive prevention could kick-start a new industry and put an end to a ‘one size fits all’ approach to healthcare.

The DHSC and Public Health England will convene an expert group to explore how digital services and personalised genomic testing kits can tell what kind of treatment a person is likely to respond to.

Of course, the use of personal health data has been a controversial topic, not without its challenges. There are references in the government’s prevention vision to ‘safeguards in place’ but these will need to be sufficiently robust before any public roll-out.

  1. The life sciences sector is out in the cold

The life sciences sector (once regularly described as a ‘jewel in the crown’ of British Industry) is largely on the outside looking in to this debate.

Matt Hancock has made no secret of wanting to cut the medicines budget, and has been far more vocal than his predecessors in publicly dressing-down pharma companies on pricing. With PPRS and Brexit to deal with, the Health Secretary that doesn’t appear to be in-step with the life sciences sector’s needs.

What is more, Hancock’s prevention vision has little time for pharmacological interventions. Speaking at the Social Prescribing Summit this week, he called out industry for trying to ‘convince us drugs are better than free social cures’ and said he wanted better outcomes for patients ‘without popping pills.’

The rhetoric in this debate is currently one-sided. Bizarre as it may seem, life sciences has to remake the case about the fundamental role of medicine in health, and the value of medical interventions in a fully-fledged prevention pathway.

So far, Hancock has proven that he’ll stick to his guns in focusing on his three main priorities -workforce, technology and prevention. For the time being, engagement and communication on those issues will be the way into Hancock’s good-books.

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The tough sell: getting a Brexit deal through Parliament looks harder by the day

This afternoon’s news of Jo Johnson’s resignation as Rail Minister throws into sharp relief the challenges still facing Theresa May in getting any kind of Brexit deal through Parliament. Confidence has grown over the past fortnight that a deal is likely to be struck between the UK government and the European Commission / remaining EU Member States. However, the parliamentary arithmetic that the government will need to confront back in Westminster if and when they secure an agreement remains daunting.

Johnson’s resignation follows hot on the heels of reports in The Times that May’s attempts to reassure the DUP have simply increased their suspicions that she is about to sign up to a deal that retains some Irish border backstop element that will be unacceptable to them. If the Prime Minister is unable to rely on the support of the DUP, on top of the anticipated opposition of hardcore Brexiteers, the numbers start to look very difficult indeed.

It remains to be seen whether Johnson’s resignation will be an isolated incident, or whether further resignations will follow in the coming days. If it is the former then No 10 will hope to ride this out, as they did following the other Johnson resignation earlier in the year. If it is the latter, then this could be the start of a very uncomfortable week indeed for the government.

Either way, there is no escaping the significance of the fact that Johnson was a remain supporter and his resignation is a clear indication that May’s Brexit strategy is pleasing very few people indeed. Of course, there is still a feeling in No 10 and elsewhere that the spectre of a chaotic no-deal will ultimately prove too scary an alternative for the majority of MPs, but this approach represents a high degree of gamesmanship that will leave many in the business community feeling very nervous.

What is clear, is that as the negotiations enter the final straight (at least over the withdrawal agreement) there is an enormous job facing the Prime Minister to sell whatever emerges from the negotiation to Parliament. That job is getting harder by the day.

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WA shortlisted for PRCA’s Public Affairs Award

We are delighted to announce WA Communications has been shortlisted for the Consultancy Campaign of the Year in the Public Relations and Communications Association’s (PRCA) Public Affairs Awards.

A panel of experts from the industry chose our campaign to save the UK’s cash network with Cardtronics as one of the most successful campaigns of the past 12 months. The winner will be determined by the judging panel.

Our strategy blended together hard evidence and emotive storytelling to illustrate the impact of a reduction in access to cash through ATMs would have on people right across the UK including vulnerable groups, rural communities and businesses. Through this we stopped the development of “cash deserts” across the UK. By engaging with parliamentarians, officials, regulators and third-party stakeholders, WA was able to raise awareness of the impact and rally support to scrutinise the decision further and secure political commitments to protect access to cash in the UK.

Commenting on WA’s campaign, Duncan Faithfull, Director of Corporate Relations at Cardtronics, said:

“The WA team were absolutely central to the success of Cardtronics’ campaign to ensure the interchange fee in the UK remains at a level that supports universal access to cash. Their ability to access ministers, officials and parliamentarians was impressive, and they tapped into the agenda of the day to ensure the threat to ATMs was front and centre of the policy debate.

WA applied pressure in all the right places to ensure government was fully aware of our campaign, leading to the Chancellor of the Exchequer confirming his commitment to access to cash in his Spring Statement; an invaluable breakthrough.

WA went to great lengths to understand our business needs, and to make sure they worked with us in a way that suited our culture. They were always on hand to support the team and were a vital resource, both in terms of their insight and responsiveness”.

WA Communications gets to the heart of our clients’ policy, regulatory and reputational issues to develops insight led campaigns with maximum impact. We help out clients engage in the decisions impacting their commercial environment and build bespoke and creative strategies which suit their needs.

The awards ceremony, where the winners will be announced, will take place on 29th November 2018 at Park Plaza London Riverbank, 18 Albert Embankment, London, SE1 7TJ.

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End game for May or end of the beginning?

With events moving fast in Westminster today, the WA team set out our take on the challenges facing the Prime Minister. Further updates will follow as the situation develops.

After two years of negotiation and speculation, Theresa May has finally delivered a draft Withdrawal Agreement text. The Prime Minister has tied the future of her premiership to the 585 page document. ‘Collective agreement’ of the Cabinet late last night has been followed this morning by two Cabinet resignations, one of them the Brexit Secretary Dominic Raab. This is a fast-developing situation, so what are the key questions that will inform what happens next?

Will there be more Cabinet resignations?

Brexit Secretary Dominic Raab was first out of the blocks this morning, followed closely by Work and Pensions Secretary Esther McVey. Penny Mordaunt (International Development) and Andrea Leadsom (Leader of the House) are on the resignation watch list and there is intense focus on Environment Secretary Michael Gove. Gove is also rumoured to have been offered and rejected the vacant Brexit Secretary role. May is clearly planning to plough on and force the deal through but every Cabinet resignation represents another valuable vote lost in the meaningful vote and makes the job of leading her Party and the country that much more difficult.

Will Graham Brady receive 48 letters?

There has been significant speculation that Graham Brady, Chair of the 1922 Committee, is close to (or may already) have received enough letters to trigger a formal vote of confidence in Theresa May’s leadership of the Party. Jacob Rees-Mogg has now openly done so and, while it remains to be seen how many other members of the ERG will follow his lead, the level of anger among Brexit supporting Conservative MPs does appear to be reaching its peak, making a leadership challenge increasingly likely. No 10 has officially confirmed that May would fight any challenge and, if she were to win, then she would be safe from another formal challenge for another twelve months.

How does a meaningful vote pass?

This is the most challenging question of all. The DUP have come out strongly against the deal and the confidence and supply agreement now appears dead in the water. It is already clear that a significant number of Brexiteer Conservative MPs will oppose the deal, with their numbers swelled by resignations from government positions (every PPS, no matter how unknown is still another vote May has lost). With the Labour front bench also lined up against the deal, the only hope for the Prime Minister appears to rest on sufficient numbers of Labour MPs crossing the House and supporting the deal in the national interest. There is currently very little evidence that enough of them are willing to do so. If the Prime Minister survives the week then this is a picture that may shift again before the vote takes place in early December but, as things stand right now, things look bleak for May.

What if May loses the meaningful vote?

This is currently unclear. It is difficult to envisage how the Prime Minister could continue if she were to lose the vote. The options available to her or her successor would be very unpalatable: to attempt to re-open negotiations with the EU; to call a General Election (no longer as straightforward as it was due to the Fixed Term Parliaments Act); or to call a second referendum. The truth is all bets would be off and the UK would be heading for a period of unprecedented political turbulence.

What are the immediate next steps?

The remaining members of the Cabinet will have a big decision to make over whether to follow Raab and McVey out of the door. Gove, Sajid Javid and Jeremy Hunt are seen as bell-weathers. They have the potential, in the next 48 hours, to decide the Prime Minister’s future.

Undecided Conservative MPs will look to the remainder of the Cabinet for a steer on what comes next and there will be many on the backbenches mulling over whether to submit their own letter.

The Prime Minister herself will have to reflect seriously on the implications of the clear challenge to securing a parliamentary majority in favour of the deal. So far, she appears determined to press on and call the bluff of her various detractors. But the situation is getting more challenging by the day.


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Investing in fertility with IVF

The in vitro fertilisation (IVF) sector has been catching investors’ attention for some time, with growth accelerating due to demographic trends, a market which looks ready for consolidation and stretched NHS budgets increasing the amount of lucrative private work available. But with promising commercial indicators for the market are there any political, policy, or regulatory risks investors in the sector should watch out for?

Accelerating sector growth

Change may be coming in the way the NHS commissions IVF providers. NHS England is working to develop a benchmark price to inform what CCGs should pay for IVF. This is aimed at reducing the significant variation in pricing across the country but may also lead to a reduction in the average price paid. Commissioning guidance aimed at improving adherence to the NICE guidance was also promised by NHS England in the face of concerns over variation in commissioning across CCGs. However, rather than an NHS England-led review, this is now being primarily driven by NHS Commissioners, the national member organisation for CCGs, suggesting that it has been de-prioritised for national focus.

The emotional investment of patients, and the few other options available to those with fertility issues, mean IVF patients are considered particularly vulnerable and the issue is likely to stay active in discussions around pricing and NHS availability.

Scrutiny of “added extras”

There has been criticism from public figures, such as Labour’s Lord Winston, a fertility expert, who have verbally attacked some private clinics for allegedly exaggerating the chances of patients achieving a successful pregnancy as a result of IVF cycles. Added extras, which some clinics offer, such as endometrial scratches, embryo glue, and immune therapy, have come under particular scrutiny, with Lord Winston saying there is little evidence for their efficacy.

In other areas such as dentistry, government has sought to encourage competition by requiring clinics to publish detailed price lists and supporting the creation of comparison websites, so patients can more easily research service levels and affordability. Media commentators have suggested similar measures could be taken forward for IVF as part of government’s consumer rights agenda.

Though there is scope for some regulatory disruption, many of the other trends are positive. The sector, which contains many small operators, looks ripe for consolidation and scaling and there has been some investment from private equity already. Nexxus Iberia and Capzanine acquired a 35 per cent stake in the largest European fertility network, Eva Fertility, this year; Mobeus Equity Partners provided growth capital to Bourn Hall, the first IVF clinic in the world, in 2014; and Create Fertility, a low-cost provider, received backing from Livingbridge Capital in 2013. The UK’s largest private fertility clinic group, CARE Fertility has been wholly owned by Bowmark Capital since 2012.

The UK market varies in scale and ownership. In 2017 there were 132 licensed clinics and laboratories in the UK of differing types. Some performed 4,200 cycles of IVF treatment whilst the smallest provided fewer than 100. Most (34 per cent) are privately owned, many of which are part of groups owning clinics across the country. 29 per cent of clinics are run by an NHS/private partnership where self-funded patients can access services through NHS institutions. NHS-only services make up just 22 per cent of all clinics.

“Patchy service” within NHS

One driver of demand is the increasing restriction in IVF availability on the NHS. NICE guidelines for England, which must be considered by Clinical Commissioning Groups (CCGs) but not necessarily adhered to, specify that women aged under 40 should be offered three cycles of IVF treatment and those aged 40 to 42 should have access to one cycle.

However, the Human Fertilisation and Embryology Authority (HFEA), the sector regulator, has noted that the trend is for CCGs to “reduce the number of treatment cycles they fund”, resulting in “patchy service”. This has been corroborated by Fertility Fairness, the campaign for access to fertility treatment, which has published an audit showing the treatment CCGs offer across the UK. Just 12 per cent of CCGs now follow NICE guidance, down from 24 per cent in 2013. Seven CCGs offer no IVF at all, while many are introducing new criteria to restrict treatment such as: changing the definition of an “IVF cycle”; lowering the upper age limit for treatment to 35; restricting treatment based on Body Mass Index; and stopping` treatment based on past relationships.

Falling fertility

Another factor is reduced fertility and delayed parenthood. According to the HFEA, 32 per cent of heterosexual couples in the UK experience unexplained infertility, with the primary treatment being IVF. This high rate of infertility can partly be explained by the increase in the average age women have their first child – up from 27.2 years in 2005 to 28.6 in 2015. In 2014, 52 per cent of all live births in the UK were to mothers aged 30 and over (with 67 per cent of fathers over 30).

Declining male fertility is also a key factor causing an increase in IVF usage. Sperm counts of men in western countries have more than halved in the past 40 years and are falling by an average of 1.4 per cent per year. Male infertility, for which there is no treatment, is the main reason for people pursuing IVF and therefore its growth will continue to drive demand.

To ensure investors can take advantage of these trends towards growth, they must navigate their way around the increased attention on IVF access and pricing and mitigate potential regulatory hurdles. They must pay close attention to stakeholders commenting on the sector and carefully consider how their companies will operate and sell to patients.

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