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Reopening the property market during lockdown
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From the Queen’s Speech to the next election: what now for the government’s agenda?
From the Queen’s Speech to the next election: what now for the Government’s agenda?

Posts Tagged ‘coronavirus’

Balancing the health of the nation with the health of the economy – 10 key takeaways

On 15th October WA hosted an event exploring the difficult decisions facing government in balancing the health of the nation with the health of the economy.

With a second wave of Covid-19 upon the UK and much of Europe, political, media and public pressure is building, and a difficult winter is approaching.

We brought together an expert panel to consider the issues, hosted by WA Director Caroline Gordon. The speakers included Tom Newton Dunn (Chief Political Commentator and Presenter at Times Radio), Poppy Trowbridge (former Special Adviser to the Chancellor and WA Advisory Board Member) and Dr Jonathan Pearson-Stuttard (Epidemiologist at Imperial College London).

It was a wide-ranging debate (watch here if you missed it), but what were the key takeaways?

Here are our top 10 points made during the discussion:

 

1) The prosperity of a nation is inextricably linked to the health of a nation:

The pandemic has taught us the value of public health cannot be underestimated. A legacy of Covid-19 must be a proper review of how we approach public health and what we ask of the NHS.

 

2) Devolved and regional politics has grown in power:

With healthcare devolved to national governments and Metro Mayors exercising influence over local lockdowns, leadership over the pandemic has often come from politicians not based in Westminster. What will this mean for the Government’s agenda beyond Covid-19?

 

3) Government is still stuck in campaign mode and not thinking long term

It’s no great surprise that a government of campaigners would think in campaign terms, but their focus has been too short term and the messaging too ambitious. With the pandemic creating complicated and long-term challenges they need to find a more nuanced way of communicating.

 

4) The libertarian principles of the Government are holding it back from decisive action

The restrictions being introduced to manage the spread of the virus are unprecedented for any democratic government, but they particularly jar with the PM’s brand of libertarianism. That conflict, manifested in hesitation and delays about enacting measures, has surfaced repeatedly through the crisis.

 

5) No 10 and No 11 have been closely aligned, but that could be fraying

There has often been tensions between the inhabitants of No 10 and No 11 Downing Street, but in Boris Johnson and Rishi Sunak there has been unusual harmony up to now. That consensus, however, is coming under strain with the Treasury keen to focus on keeping the economy moving and resistant to overly restrictive measures. How this relationship plays out could come to define the rest of this government’s term, particularly with the Chancellor being tipped as the most likely successor to the PM.

 

6) Internally government realise ‘Test & Trace’ is not working

With no clear vaccine timetable or even the promise that one will work, NHS Test and Trace is the only route back to a degree of normality. A fully functional test and trace system was the only reason SAGE agreed to the unlock over the Summer, but the Government’s centralised approach has been beset by problems. Whilst they have not publicly admitted it, quietly they are beginning to shift people and resources towards local test and trace approach which has been much more effective.

 

7) The government could do a lot more to help businesses navigate the crisis

Government offloaded too much responsibility onto businesses and were not clear about how long restrictions were likely to be in place. This uncertainty has meant businesses can’t plan effectively and many have taken an understandably cautious approach because of this. With unemployment rising, the Government needs to find a way to give business the confidence to invest and create jobs.

 

8) The public consensus is fragile compared to the first wave

People feel ‘cheated’ by being ask to lockdown again – they were willing to trust the process first time around, but a lack of faith in the government a second time around (not helped by the Dominic Cummings affair) could undermine the effectiveness of measures for the second wave.

 

9) England and Wales has one of the worst excess death tolls in Europe

Dr Jonathan Pearson-Stuttard’s research has shown that excess deaths in England and Wales were 37% above normal, second only to Spain’s 38% as the worst performance in Europe. When the public inquiry into the handling of Covid-19 finally comes, there will surely be questions to answer.

 

10) The Government’s long-term ambitions are on hold

It may not feel like it, but we are still in the early days of this Government. Elected back in December 2019 with a strong majority, the crisis has put the brakes on the broader policy agenda as they battle to tackle the virus and shore up an unstable party. The Government is a long way from making strides on its domestic agenda, businesses need to try to understand what each Department is trying to achieve despite the virus and bring solutions and opportunities for good news.

 

These are just a handful of takeaways from a wide-ranging and fascinating discussion, you call watch the full video exploring how to balance the health of the nation with the health of the economy here.

 

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The Winter Economy Plan explained

Chancellor Rishi Sunak has this afternoon delivered his Winter Economy Plan to the House of Commons.

In response to the recent rise in Covid-19 cases and the introduction of new restrictions expected to last for the next six months, the Chancellor cancelled the planned autumn Budget and instead made a short statement on the government’s immediate plans to support jobs and the wider economy over the winter. Before the statement was delivered in Parliament, Sunak was pictured outside No. 11 with the heads of the CBI and the TUC, signalling this was a set of measures that had the endorsement of both businesses and workers.

The decision to cancel the Budget, which would have included details of the government’s long-term fiscal recovery plan, was only made over the last few days. Today’s announcement reflects a recognition that the potential impact of a second wave of Covid-19 has made longer-term economic planning difficult and the government needs to take a flexible approach to the economic challenges ahead. The government has today taken the opportunity to act quickly to prevent a sudden increase in unemployment following the end of the furlough scheme in October and instead allow for a more manageable increase in unemployment.

Officially the government is still aiming to publish a multiyear spending review before the end of the year that would set out departmental budgets until 2024. However, a more likely scenario given the economic uncertainty is for the government to publish a one-year settlement to allow departments to plan for 2021/22. It is expected that the next full Budget will take place before the next fiscal year, likely in March 2021.

The main elements of the Chancellor’s Winter Economy Plan are:

The expected value of the package announced is around £5 billion, leaving the government with more firepower to support the economy should Covid-19 restrictions become more severe. Anneliese Dodds, the Shadow Chancellor, said it was “a relief” government had U-turned on the need for more support for workers but criticised the government for not acting soon enough. Paul Johnson, Director of the Institute for Fiscal Studies, has also warned that the limits of the new Job Support Scheme mean that the UK will see a large rise in unemployment over the winter.

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On the front foot: How the insurance sector can tackle reform and reputation

With all aspects of the insurance market currently facing the twin challenges of reform and reputation, the sector should take advantage of the delays to Financial Conduct Authority (FCA) action to get ahead of future market intervention and launch transformational change.

Pre-covid, change was on the horizon

The FCA launched an investigation into general insurance pricing, focusing on home and motor insurance in October 2018. The investigation was launched following campaigning against practices in the general insurance market, culminating in Citizens Advice making a super-complaint about loyalty pricing to the Competition and Markets Authority (CMA). Concerns about treatment of vulnerable customers, in addition to the transparency of insurance premiums and the ‘loyalty penalty’, where customers face higher charges for remaining with their provider over the long term, were cited by the CMA and FCA prior to the launch of the investigation. The final report was due to be published in Q1 2020 but has been delayed, along with the majority of its open investigations, to “beyond June 2020” due to coronavirus. With the FCA planning significant reforms, insurers should use the extra time to adapt their business models to minimise the impact of the measures when they are eventually introduced.

On 4 October 2019, the FCA published the interim report of its market study into the pricing of home and motor insurance. The report concluded that customers who do not switch insurers regularly pay more for cover, but that many firms have introduced significant barriers to switching, suppressing competition in the sector. Interventionist remedies are likely to be on the way, with the FCA currently considering a ban on auto-renewal of contracts, alongside a requirement to put all customers on the best value plan available to them. Another option currently under discussion is limiting or banning margin optimisation, or only allowing new business discounts where the discount is transparent and fully removed after one year.

Intervention in pricing practices could have significant consequences for the insurance industry. Auto-renew policies in particular, where insurers’ pricing practices mean premiums are raised year on year at the point of renewal, are likely to be targeted. The consequences for the industry are likely to be a decline in renewal rates and margins; a reduction in customer renewal tenures; a decline in new business discounting; and a disruption of the broker market.

For insurers that can pivot to a business model based on driving new business, rather than retaining existing clients through current structures, the transition will bring opportunities to increase market share at the expense of more slow-moving players. However, the impact of coronavirus has also brought fresh challenges to the sector that will have to be addressed.

Covid is likely to compound the need for reform in the insurance sector

The coronavirus pandemic has led to widespread criticism of the insurance sector across multiple specialisms. With the FCA already clear that the sector was not working well for consumers, issues around miscommunication of business interruption insurance and travel insurance coverage will only serve to drive home that perception. While there is no suggestion the insurance sector is running outside the boundaries of current regulatory standards, questions are arising over whether the sector should be more tightly regulated than first thought.

The FCA is currently taking a test case to the Supreme Court to provide legal clarity on business interruption insurance. The FCA previously wrote to insurers in April explaining that it believes most business interruption policies do not provide cover for losses related to the Covid-19 pandemic. Its decision to seek legal clarity is likely driven by the extensive public criticism of insurers during the pandemic, and the number of businesses currently taking their own legal action. While it is likely the FCA’s instincts on the legality of insurers behaviour will be proved right, this is unlikely to exempt the sector from significant reputational damage, particularly as businesses continue to struggle with the economic effects of the pandemic.

The insurance sector should be mindful of the reputational challenges it faces

With legal cases and negative news coverage piling up, insurers are going to need to do more than simply restate the terms of insurance policies if they wish to avoid longstanding reputational damage to the sector. The ongoing debate over the legalities of denying business interruption insurance payouts to businesses is ongoing, however, the growing perception of the sector is increasingly of one that is not focused on consumers.

Insurers are aware of the mounting challenges. Two-thirds of insurers surveyed in May 2020 by FWD Research believe that the industry has damaged its reputation through its coronavirus response. The question now is what the sector can do about it. Coronavirus has exposed a significant expectation gap between insurers and their customers, compounded by a traditionally hands-off approach to customer service and auto-renew policies that require minimal customer engagement.

Preparation is key to minimizing the impact of change

The FCA has made it clear that it is willing to enact transformational reforms on the insurance sector that will dramatically increase transparency and, for some insurers, fundamentally alter the way in which they do business. While the coronavirus pandemic may have delayed the publication of the FCA’s final rulings, insurers should not take this as an indication that the FCA has lost interest and instead begin preparing now for the likely changes that will be enacted.

The negative media coverage during the pandemic is likely to focus political and regulatory attention on the insurance industry once again. Insurers should prepare now for more scrutiny going forward and should consider developing a targeted communications plan to demonstrate that they have listened to the concerns raised over the past few months, and what they will do to help lead change in the industry going forward.

 

 

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Webinar – Balancing the health of the nation with the health of the economy

On Thursday 15th October 2020, WA Communications Director, Caroline Gordon, hosted a webinar exploring how the Government can balance the health of the nation with the health of the economy.

We are living through unprecedented times in which a devastating public health crisis is creating a global economic slowdown.

The Government has to make daily decisions that balance the health of the nation against the health of our economy. Political, media and public pressure is building and a difficult winter is approaching. There are no easy answers – just more questions facing every business and organisation in the UK as to how to respond, plan and communicate.

Panellists included:

 

Watch a recording of the webinar:

 

 

 

 

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Webinar – From Whitehall to Town Hall

On Monday 23rd November 2020, WA Communications Director, Naomi Harris, hosted an expert panel to explore whether the Covid-19 pandemic has caused political power to shift permanently from national to regional and local government.

Watch the discussion to explore:

The panel was comprised of:

  • Joe Anderson, Liverpool Mayor
  • David Collins, Northern Correspondent, Sunday Times
  • Poppy Trowbridge, Former Special Adviser to the Chancellor and WA Advisory Board Member.

 

 

Watch a recording of the webinar:

 

 

 

 

 

 

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Under the microscope: M&A faces new post-Covid world

As most European countries appear to have passed through the peak of the coronavirus pandemic, governments have turned their attention to how to bring the economy back to life. It is becoming clear across all countries affected by the virus that one of the consequences of lockdown will be a wave of businesses entering administration or facing a fundamental restructuring of their operations.

Governments, ranging from populists in Poland and India to fiscal conservatives in Germany, are concerned that the number of businesses looking for new ownership will lead to foreign buyers acquiring assets in bulk. To tackle this, they have turned to protectionist policies to keep prospective buyers out.

Protectionist tendencies were becoming more common before the coronavirus pandemic

The economic policy response to coronavirus is likely to continue to vary significantly across the Eurozone and beyond. However, one emerging trend is the number of countries, including the UK, that are introducing legislation designed to increase scrutiny of M&A transactions on national security grounds. Primarily designed to exclude foreign buyers from purchasing assets of national importance while prices are lowered by the coronavirus pandemic, the wider effects of these laws may make cross border M&A a more complex task for all investors in the future.

The willingness of governments to intervene in M&A has been increasing in recent years. Australia and the United States have been particularly interventionist and have been hawkish on the issue of Chinese investment, both banning Huawei from helping build 5G networks. Although the UK to date has not blocked an M&A transaction on national security grounds, in recent years the Competition and Markets Authority (CMA) and UK government has scrutinised an increasing number of transactions on national security grounds involving various kinds of acquirer, including financial investors. Acquisitions of Cobham, Northern Aerospace and satellite operator Inmarsat have all been investigated by the CMA and the transactions approved. In all instances, the acquirer offered several legally binding assurances to the government before the deal was approved.

The government is taking rapid action to protect strategic industries

Here in the UK, Boris Johnson, Rishi Sunak, Alok Sharma and Dominic Raab are currently developing new legislation that would make it easier for the government to intervene in M&A transactions on national security grounds. In the short term, amendments will be put forward to protect UK assets during the coronavirus pandemic, however, a more detailed plan for a new, more interventionist takeover system is being drawn up and will be presented to Parliament before Summer recess.

Two new proposals already tabled in Parliament will make it tougher for foreign buyers to acquire any assets related to the nation’s healthcare self-sufficiency and, separately, artificial intelligence and other tech. One amendment would drop the £1 million revenue threshold currently in place for screening takeover targets in AI and other areas that pertain to national security. This would allow the government to intervene in the takeover of loss-making start-ups developing medicines or technology of national interest. The other amendment will widen the government definition of sectors critical to national security to include the food and drink sector for the first time.

Crucially, neither of these amendments specify what kinds of investors will be targeted under the new legislation. While concern may rest primarily with state-owned buyers, investors should be mindful that the CMA has instigated action against several US funds in recent years, including in the sale of Cobham and Inmarsat indicating the importance of the asset will take precedence over the nationality of the buyers.

A new long term takeover regime will change how investors should approach UK assets

The new takeover regime being devised would require UK businesses to declare when a foreign company tries to buy more than 25% of its shares, assets or intellectual property. The plans are significantly more stringent than those drawn up under a similar scheme considered by Theresa May’s government, under which companies would have been expected to notify the government of takeovers voluntarily.

Reporting will only be required for businesses where a takeover would pose a risk that it could give a foreign company or hostile state the power to undermine Britain’s national security through disruption, espionage, or by using “inappropriate leverage.” The significance of this legislation will be determined by how this risk is defined. Legislation planned under Theresa May used an incredibly broad definition, which, if replicated, would allow any secretary of state to intervene in any M&A transaction if they were concerned about the security implication.

The sectors most likely to be affected are civil nuclear, communications, defence, energy and transport, however compulsory reporting of transactions would likely have the effect of slowing the pace of deals across all sectors. Investors, whether they deal with sensitive assets or not, are likely to have to get used to greater government interest in their activities, an increased reporting burden, and potentially greater media scrutiny of their activities as the government makes its investigations public.

Change in the EU brings challenges and renewed opportunity

Countries across Europe are also acting. Margrethe Vestager, EU Competition Commissioner and Executive Vice-President of the European Commission, has encouraged EU states to take action to prevent foreign takeovers. Describing the protection of EU businesses from takeovers as a “top priority,” Vestager has effectively encouraged states to act against any takeovers deemed to be a cause for concern.  While this fear relates primarily to Chinese investors amid concerns about intellectual property and national security, the political unwillingness to single out the Chinese for special restrictions could risk creating significant collateral damage. Plans put forward by the Commission would exclude all state owned buyers, potentially eliminating some of the competition for assets created by the increasing activity of Middle Eastern and Asian funds in Europe.

Poland’s populist government is among those planning changes. Legislation is currently being drawn up to allow regulators to block non-EU companies from taking stakes of more than 10% in businesses deemed to be providing critical infrastructure, goods or services for two years. This more stringent block on foreign investment is in part due to the comparative affordability and availability of Polish businesses. 30 years on from the end of communism in Poland, those who have built successful businesses are beginning to reach retirement age, while a drop in the value of the zloty has also pushed prices lower for foreign buyers.

The issue for investors comes back to Brexit. Much of the proposed legislation would impose additional restrictions on all non-EU countries. Proposals, such as those put forward by the Dutch government, would ensure governments could halt companies from buying EU competitors at inflated prices or undercutting them with artificially low selling prices. The Spanish government, meanwhile, is proposing that non-EEA investments larger than 10% in key domestic assets in the “strategic industries” such as infrastructure, technology and media be authorised by the Spanish government. The European Commission would also have the authority to demand greater transparency in foreign companies’ accounts.

These restrictions will soon apply to the UK, with the true impact likely to be determined by the extent to which the UK chooses to diverge from EU law relating to financial services. It may be possible to negotiate the UK’s exclusion from these additional barriers to investment if the UK and EU agree to a close trading relationship for the financial services sector. This would be unlikely to be completed by the time the UK leaves the transition period on 31 December and negotiations around the full financial services future relationship are likely to take years to complete due to their complexity.

Much of the legislation remains in draft phase across the EU and the UK as politicians continue to prioritise the immediate economic and health challenges and much will depend on whether governments can pursue such ambitious regulatory change in the coming months. If these laws do make it onto statute books, investors willing to deal with the additional bureaucratic burden may find greater choice and potentially lower competition for assets in areas of “national interest.” Regardless of sector, as the size of government increases and its post-Covid appetite for intervention grows, investors will need to adapt to greater government engagement in the future.

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Five tips for effective communications as we move out of lockdown

This article initially appeared in Real Deals.

 

The need for clear, effective communication has remained constant as the nation collectively figured out how to adjust to lockdown, and then consequently the more complicated process for coming out of lockdown and the move towards a new normal.

Good communications during such times of uncertainty and change is business critical. And the need for executive teams to carefully plan and manage the message they are giving employees, customers, suppliers, investors, government, media and other stakeholders will only continue to grow over the coming weeks as media scrutiny of business behaviour intensifies.

However, good communication doesn’t happen by chance. It is the result of taking the time to understand what your audience is thinking and feeling, of crafting clear messages, and adopting a tone and approach that resonates well with your audiences.

As the lockdown continues to ease, there will be a multitude of operational and business continuity decisions facing companies. What a business communicates and, importantly, how they communicate during this time is more critical than ever.

 

Five tips for businesses on how to plan effective communications as we move out of lockdown:

 

1. Consider your tone and nuance.

Your messaging must adapt with a Covid-19 lens. Communications that ignore the high levels of concern that still prevail as we move out of lockdown and the wide economic pain will not resonate with your staff, customers or the general public. Consider how you need to adjust your business’ core messages to ensure they are sensitive and appropriate to the environment you are now operating in.

2. Act now to protect your company’s reputation from future scrutiny.

The reckoning of how businesses have behaved and treated their staff during this time has already begun. Companies that have used government support throughout this time should also expect questions to be asked at some point about executive renumeration, especially if staff redundancies are to come. Objectively examine your business decisions and ask how they would come across if they were on the front page of a newspaper. Then communicate and act responsibly and sensitively now to ensure your reputation won’t be damaged in the coming
months because you ‘did the wrong thing’.

3. Prepare to communicate your new normal.

If your business has been or will be reshaped, it’s time to adjust what you say about yourself and articulate your new normal. Plans for business changes will require thoughtful preparation of an appropriate narrative, and you will need to develop key messages and a suite of materials to convey your message. For any significant change programmes that will be implemented, take the time to carefully plan how announcements will be made and the messages you need to convey to your staff and external stakeholders, including government, regulators and media.

4. Provide certainty where possible.

Your staff and customers are looking for certainty wherever they can find it at the moment. As much as possible, provide answers and as clear a picture of your future as possible. Rule things in and out wherever possible. Keep your staff in the loop as much as possible, including furloughed staff, and make sure you are actively listening to their questions and concerns. Your honesty and sincere efforts to regularly keep all employees up to date with the situation facing your business will be deeply appreciated.

5. Keep your communications natural and emotionally engaging.

Don’t rush back to polished, slick ways of communicating. People appreciate authenticity and honesty during times of great change, so keep your communications relational and personable. Your staff and customers will long remember how they were treated during this period. If you put the effort in to planning and executing good communications during this uncertain time, you can reap the rewards of gratitude and loyalty.

 

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Counting the cost: what coronavirus means for care homes

As the UK continues to struggle with the effects of the coronavirus pandemic, the frailty of our social care system has been confirmed, weakened by decades of underfunding and delayed reform. The government is now beginning to lay the groundwork of finding solutions to the complex problems the sector faces. However, the scale of the challenge involved – and the daunting political risks – mean the sector will have a long way to go before it can benefit from the pressure of the media spotlight government is under.

The social care sector is often seen as the poor relation of the NHS in the UK, fragmented and without the long-term funding solution pledged by successive governments.  The social care green paper promised by then Prime Minister Theresa May in 2017 never materialised, and her successor Boris Johnson has yet to set out his vision for dealing with the system, beyond saying that he would be seeking a ‘cross party consensus’ on the way forward.  There has been little evidence of this cross party approach in practice, but No10 and the Department for Health and Social Care are now assessing whether a social care tax for over-40s is a viable option.

With the issues the sector has grappled with for more than a decade becoming more pressing with every passing day, the government will struggle to put off reform for much longer.

Legacy issues have been compounded by the covid crisis

Even before the coronavirus pandemic, the UK’s social care sector was under serious strain. A June 2019 survey published by The Association of Directors of Adult Social Services (ADASS) found that in the previous six months, 80 councils had experienced a home care provider failing and 38 experienced providers handing back contracts.

Despite rising demand for care across the UK, investors drawn to the sector are struggling to find ways to translate demand into a strong business model. Now, rising PPE and staff costs, and falling resident numbers mean that care homes are under even greater financial strain. The government has allocated £3.2 billion to councils in the past two months to help them respond to coronavirus outbreaks, but to date, the additional funding – in the form of an increase in the fees they pay care homes – has failed to reach some providers.  An example of this was in Sheffield, where on 19 May care homes wrote to the council to ask for additional support, arguing the forms they were required to fill in to access the funding were overly complex and made the system too slow.

The government is continuing to seek solutions to the additional pressures coronavirus has put on the social care system. On 8 June Health Secretary Matt Hancock announced the formation of a new coronavirus social care support taskforce led by David Pearson. The task force is responsible for the delivery of practical advice and support for the care sector, but no additional funding is available through initiatives it manages.

Many privately owned care businesses are also holding high levels of debt.  Accounts for HC-One, Four Seasons Health Care, Barchester Healthcare, and Care UK, which combined run about 900 care homes and look after 55,000 residents, show they are paying an overall average rate of almost 12% interest on total debts of £2.2 billion, according to Opus Restructuring. To pay debts as well as meet staffing and care costs, as well as the increasing cost of PPE, an estimated occupancy of at least 80% is required – a figure increasingly difficult to maintain as the pandemic continues. The Knight Frank care home index found an average occupancy rate of 88.9% in 2019, but the sector has reported a decline in occupancy of between 4%-8% in April 2020, potentially putting remaining residents at risk of their care provider becoming insolvent.

Issues with quality, while improving, also remain more common in for-profit care homes. 84% of care homes run by local authorities were rated good or outstanding in 2018-19, compared with 77% of for-profit homes, according to LaingBuisson analysis in August 2019. This could be in part a funding issue. Analysis by Care UK has found evidence of local authorities providing preferential funding to their own care homes, at the expense of for-profit providers. One council, for example, was found to be paying £650 per person per week for its own care home versus less than £500 to an independent provider. LaingBuisson estimates costs for a well run home will be between £623 to £726 a week per person, meaning some for-profit providers will be struggling to make fees cover the cost of care.

Coronavirus has once again brought the issue of quality of provision in care homes back to the top of the political agenda. After the media drew attention to the 10 coronavirus related deaths in a single HC-One owned care home on Skye in May 2020, the regulator carried out an inspection and raised “serious and significant concerns” about its management.

The whole sector should expect more scrutiny of the services it is providing, from the media and parliament, particularly as the coronavirus inquiries begin. Care homes, particularly larger chains with complex management structures, will see enhanced, sustained scrutiny as a result of the coronavirus crisis, with politicians and the media alike keen to assess how businesses have managed the crisis, and where mistakes were made. Care homes, with their tragic death toll and specific vulnerability to the disease, will be an area of focus as the government looks to learn lessons from the pandemic.

A significant issue for the sector, and one that has been repeatedly highlighted by politicians and the media during the coronavirus pandemic, is the comparatively low pay of care workers. All supermarkets now offer higher minimum hourly pay than the average social care worker hourly rate. Unlike other sectors, opportunities for promotion and pay increases are often hard to find, leading to an average annual staff turnover of over 30%. Although care workers will benefit from increases to the National Living Wage pledged by the government, if other sectors continue to go above and beyond the minimum standard, the sector will continue to struggle to find enough staff. Care England, the representative body for independent care providers, has warned that without an increase in the fees local authorities pay care providers, increases to the Living Wage will be unsustainable for the sector. Without an increase in funding levels, the government risks further destabilising the sector through the NLW increase, but without higher pay, the sector is unlikely to find the long term staffing solution it needs. Finding a solution that works for the sector, its employees and the government will be key to any long term settlement.

What is the future of the sector?

Social care will certainly face some difficult days ahead, and business failures are likely. However, the coronavirus crisis could be the wakeup call the government needs to enact real change in the sector and to give it the stability it needs. Media scrutiny has never been higher, and the oncoming onslaught of parliamentary and independent inquiries into the response to coronavirus will inevitably lead to focus on how the government should rectify the problems in the sector. A continuation of the status quo is likely to become impossible as pressure grows.

Large care providers, particularly those owned by private equity investors, will face more pressure than ever to demonstrate their value to the sector and the quality of their services. This will require a concerted communications effort with government, regulators and, in some cases, the media. If the sector is to ask the government for additional support, it will need to demonstrate why additional funding is necessary and to assure the government that businesses receiving additional funds are responsible employers and care providers. The affairs of care providers, like the wages they pay to staff, the amount of tax they pay, and the fee structure they use for residents, will soon be under much closer scrutiny.

This will be a particular challenge for private equity owned businesses, where perceptions of highly paid executives using profits to fund bonuses, rather than improvements in care, continue to persist. Without addressing the perceptions of policymakers head on, for-profit care homes will struggle to make an impact on government policy and will find offers of financial support thin on the ground. P

The government’s response to Covid-19 has also demonstrated that Private equity as an industry will itself face this challenge. Government reticence to provide financial support to private equity backed businesses during the crisis has laid bare how reputational challenges translate into real world business problems. The private equity industry will have to tackle negative perceptions of the sector head on to ensure the government understands its needs, and the needs of its portfolio companies.

Investors willing to look at the longer-term picture for the sector could be rewarded with a new, more stable financial settlement, if the government is prepared to make hard choices on how it will be paid for.

Polls show there is public consensus on how to pay for social care – a system that is free at the point of use, funded by general taxation in a way that is similar to the NHS. However, the additional funding required for social care is substantial, and very many people will have less disposable income as a result of the lockdown and likely economic downturn. How government chooses to balance this trade-off will say a lot about its longer-term priorities. Recent reports indicate that the government is considering taking advantage of the public polling to introduce a new system of taxation for over 40s to help pay for elderly care.

Before the coronavirus pandemic, the government was revisiting the recommendations of the 2011 Commission on Funding of Care and Support and held talks with the Commission Chair Sir Andrew Dilnot. The main principles of the Commission’s recommendations were a more generous means test for government funding, combined with a lifetime cap on care costs. Versions of Dilnot’s model were proposed and subsequently dropped by both David Cameron and Theresa May, who both saw the electoral pitfalls of tackling the social care crisis head-on.

Now, the government appears to have advanced its thinking in response to the clear urgent need for reform displayed during the pandemic. Health Secretary Matt Hancock in particular advocates taking inspiration from countries thought to have successfully found solutions to funding social care, while encouraging the development of a well functioning competitive market for providers.

Two sources of inspiration are Germany and Japan, where the ageing population led the two countries to reform their respective elderly care systems far earlier than in the UK. In Germany, reforms introduced in 1995 introduced a social care insurance system, with employees paying around 3% of their income annually and the amount being matched by their employers. This insurance system covers the cost of a minimum standard of care for individuals regardless of their age and is not intended to cover the full cost of an individuals needs. For providers, the system combines the nationally set benefits with local commissioning which combines financial certainty for providers with local flexibility, allowing them to negotiate with local authorities for funding that reflects the needs of the area.

The system in Japan, introduced in 2000, is relatively similar to that of Germany. Long term care insurance provides universal care to those over 65, covering an unusually wide care remit that includes wellness and prevention. Insurance payments are compulsory for over 40s, with the rest of social care funding being collected from general taxation. In addition to paying premiums, service users must pay a co-payment when accessing services, although those on very low incomes are exempt. Most people pay 10% of their care costs, although this rises to 30% for those on high incomes. The care provider market is an incredibly competitive one, primarily consisting of small care providers and which are a mix of for-profit and not-for profit companies, social enterprises and charities.

Both of these systems have significant attractions for the UK government and show that creating a care system that satisfies the population while limiting government expenditure is possible. Issues with both systems still remain. The cost of care, particularly in Germany, has risen in recent years, increasing the amount of care people must self-fund and both Germany and Japan suffer from the same workforce shortage issues faced in the UK. However, with the UK’s social care system untenable in its current form, social care providers can look to the examples of both Germany and Japan and see a way forward that includes high quality of care and financial stability for the market.

The road ahead for social care is certainly difficult and there are no easy choices. Yet the sector needs change, and pressure will continue to grow for meaningful sector reform. Johnson has promised this reform, but with everything else the government has to deal with at the moment, we may be waiting a while longer for the difficult decisions to be made.

This article was originally posted on 9 June and amended on 28 July. 

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Government’s Covid-19 response: What it means for private equity

The government’s response so far to the Covid-19 pandemic provides for a mixed report card.

Disasters have been averted in the NHS, but death numbers are among the highest in Europe and coronavirus is having a devastating impact on care homes. Questions about the timing of lockdown and the government’s testing infrastructure also remain. The government’s business support measures have been more successful. The furloughing scheme has undoubtedly saved hundreds of thousands, if not millions, of people from unemployment and credit is finally making its way to businesses who need it via the Bounce Back Loan Scheme and the Coronavirus Business Interruption Loan Scheme (CBILS).

Private equity firms and their portfolio companies have not been at the front of the queue to receive government financial support, nor have they been at the forefront of the government’s mind throughout the policy development process. The furloughing scheme has allowed portfolio companies to keep staff on the payroll, while the government subsidises their wages, and the news the scheme will continue until October provides certainty to both workers and management teams for the next few months at least.

CBILS, when it was announced in March, gave the impression that it could provide a vital line of credit to support the liquidity of many private equity-backed portfolio companies. CBILS allowed firms with a turnover of less than £45 million to borrow up to £5 million, with 80% of the loan backed by the government.

However, many portfolio companies were ineligible for the loans as turnover was originally calculated on a group basis, taking into account the portfolio as a whole. This rule was later relaxed to allow portfolio companies to apply as separate entities for the government-backed loans, alongside the introduction of the Coronavirus Large Business Interruption Scheme (CLBILS) that provided credit to firms with turnover over £45 million. CLBILS was created after it was pointed out to government that many firms were too large for CBILS but were not of investment-grade so could not access the Bank of England’s Covid Corporate Financing Facility (CCFF).

Just when private equity firms thought it was possible to dip their toes into this new pool of credit, another issue raised its head that has proved to be a significant barrier to portfolio assets accessing the government-backed loan schemes.

Under EU state aid rules, firms that had accumulated losses greater than half their subscribed share capital as at 31 December 2019 are not eligible for government support as they are deemed to be a ‘business in difficulty.’ Due to the leveraged structure of the vast majority of private equity portfolio companies, this rule has made them unable to access CBILS and CLBILS.

Both the British Private Equity and Venture Capital Assication (BVCA) and the Confederation of British Industry (CBI) are currently lobbying the EU Commission to change the rules, but so far the Commission has held fast.

The saga of how the government’s various support measures have arguably fallen short in supporting PE-backed companies illustrates two important facts about government.

The first is that the old adage about not wanting to see how the sausage is made still holds true. The government has had to conduct policy development that would normally take years in a matter of months, with every mistake or problem that would have been caught along the way being made in full view. Fortunately, industry groups like the BVCA, and expert advisers supporting individual investors have been on hand to support the government and ensure the measures have been refined enough to help the majority of businesses.

The second is that while government has been willing to make some concessions to private equity, the sector is clearly nowhere near the top of the government’s agenda. This partly comes down to a lack of understanding of how the private equity model works, for which the industry itself must take some responsibility. If policymakers buy in to many of the enduring myths about the sector –  that UK private equity firms are sitting on huge amounts of cash that could be deployed to support their portfolio companies – for example, there is little incentive to go to any special lengths to provide them state-backed financial support

The post-coronavirus recovery will offer private equity firms the ideal opportunity to rectify this problem and ensure a more prominent position in the government’s thinking. By demonstrating how private equity firms bring expertise, innovation and growth to businesses in all sectors across the UK, private equity can make its case that it is a force for good.

Government will be looking for every opportunity to promote growth and investment, and private equity firms will be in a strong position to contribute to this.

 

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Are we still in the midst of an electric vehicle revolution?

The government’s 2035 ban on petrol, diesel and hybrid vehicles is under threat in the wake of COVID-19. With strong political and societal forces now in play, the government and industry face difficult decisions.

The risk is two-fold; the government may concede to pressure from some parts of a troubled automotive industry by relaxing its 2035 target; or a simple lack of policy action will make it far harder to meet the target in reality, even if government sticks by it on paper. The inevitable hampering of supply and demand will also make it harder.

Either way, industry will need to make a compelling case to government if it wants electric vehicles to remain a genuine priority policy area.

The government, meanwhile, needs to adapt its electric vehicle strategy in a way that reflects the new reality and has an opportunity to frame this as a key pillar of a green, economic recovery agenda.

 

COVID-19 changes everything

 

The world has fundamentally changed in the last two months.

For electric vehicles, supply is now a huge issue in Europe. Delays in global vehicle production is now likely as sourcing batteries and parts is very hard to do outside China without incurring much higher costs, especially considering China has far more lithium reserves and much greater lithium production than any other country.

Fiat has already implemented temporary closures at some of its Italian plants with others likely to follow, with the risk of a longer-term reduction in production capacity resulting from plant closures or delayed investment. In the UK, the likes of Nissan has today said it will begin building cars again in June having suspended production six weeks ago.

Even more significant, however, are the societal and economic changes arising from COVID-19, some of which serve to reinforce the case for electric vehicles whilst others hinder it. For example, the links being made between COVID-19 deaths and air pollution could increase the demand for cleaner and greener vehicles. A recent RSA survey found that over half of respondents had seen an improvement in air quality since travel restrictions were enforced.

Big questions are also emerging over the future of public transport. Auto Trader found 48 per cent of consumers were less likely to use public transport after the lockdown. Though this could lead to a rise in demand for electric vehicles in the longer term, equally, in the short term it could push people into buying dirtier (and now cheaper considering falling oil prices), CO2-emitting vehicles, or micro mobility solutions such as bikes or scooters. The former could potentially hinder the take up of electric vehicles, as could the latter as people look to replace shorter journeys with walking or cycling, thereby missing the window of opportunity to promote EVs as the natural solution.

 

Electric is still the answer

 

One fact remains clear; the drive to zero carbon and the increasing evidence of the harmful impact of air pollution mean electric vehicles remain an important long-term strategic play for the automotive industry, alongside hydrogen and other biofuels.

Yet take-up in the UK remains extremely low. March saw the number of new battery-electric vehicle (BEV) registrations number 11,694. That’s 4.6 per cent of a UK total market that was down 44.4 per cent. These numbers have been quickly dismissed by experts as distortions to what’s really going on. Yes, sales of electric vehicles are rising, but nowhere near as fast as March’s figures suggest. So, if March is just an anomaly then a more important question is what government should do to increase supply and demand of electric vehicles in both the short and long-term.

In the short term, despite extending its consultation deadline (from the 29th May to the 31st July) on bringing forward the ban on sales of new petrol and diesel vehicles, the transition to electric vehicles remains a key strategic pillar of the green agenda for government and the automotive industry. Government grants (including extending the plug-in car grant at the last Budget) and tax incentives have no doubt helped create the beginnings of an electric vehicle market in the UK but for manufacturers, another big driver of supplying these cars in the first place is the EU’s strict requirements when it comes to carbon dioxide emissions.

For consumers, they need the confidence now more than ever that they can buy an electric vehicle at a reasonable price. They also need to know they will have enough charge points along their route and that when charging their vehicle, the experience will be as quick and affordable as possible.

Existing commitments include ensuring every person in England and Wales is within 30 miles of a charging point; investing an extra £500m on a fast-charging network; and boosting funding for high-tech research by £9bn over the next five years. These will be important in giving consumers the confidence they need. However, government must implement these policies immediately, or at the very least accelerate them through releasing funds over a shorter 3-year period.

Furthermore, as provided for in the Automated and Electric Vehicle Act (2018), government also has at its disposal the powers to be more prescriptive with what it requires from charging providers in connection with standardisation across provider payment methods. Making use of these powers could provide a more seamless consumer experience, helping drive confidence, greater uptake of electric vehicles and, ultimately, help provide some much-needed economic stimulus.

 

The (green) road to recovery

In the longer-term, the government’s attention will turn to driving economic recovery.

One approach to this could be to double down on its climate change commitments as part of a ‘Green Recovery’ agenda, similar to Labour’s “Green New Deal” which would have seen a state-led investment programme to reduce greenhouse gas emissions in as fair a way as possible.

The policy thinking to support such an approach is already emerging; the International Renewable Energy Agency recently found that accelerating investment in renewable energy could generate global GDP gains of almost £80tn between now and 2050.

Electric vehicles would obviously need to be a key pillar of such an approach.

A green recovery agenda that prioritises the clean energy transition with a specific emphasis on its electric vehicle plans, could drive significant investment required to spark an economic recovery. Conversely, failure to prioritise these issues will be a major missed opportunity.

 

Industry’s role

COVID-19 has presented the government with a significant window of opportunity to pursue a clean energy system that aligns economic stimulus and policies with environmental goals.

However, there’s no guarantee this will happen.

So, for those with a vested interest in the development and take up of electric vehicles, getting out early and making the case for a green recovery will be crucial for realising the electric vehicle revolution.

We may not be in the midst of a revolution right this second, but with a little bit of refocusing from government and constructive engagement with industry about what needs to happen and how, we can soon be on our way.

 

 

 

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How your business will need to communicate as the lockdown changes

There is no doubt it’s time for businesses to prepare for their second stage of communications in response to the Covid-19 lockdown.

The first phase of communications we all witnessed firsthand: the urgent rush to communicate changes in business practices to employees, customers and beyond, along with rapid government lobbying, in response to the lockdown.

But there is a shift happening now that the country is trying to define how and when lockdown will end – or continue to change shape over the coming months. This ‘new normal’ is going to require even more sensitivity in how businesses communicate their messages.

This crisis has impacted every business, whether for good or bad, and certainly every individual.

Communications that now ignore such a seismic change will be seen as inauthentic and simply won’t resonate with audiences. Remember, good communication always focuses on understanding your audience: and every business is guaranteed that their audience is thinking about Covid-19 and how it will continue to impact their personal life.

All businesses need to apply a new lens to their communications as a result.

This means the tone of voice and nuance of your messages are more important than ever. A tokenistic nod to Covid-19 in your communications won’t suffice.

It’s time to take a thoughtful look at how you can adapt your company’s messages to maturely acknowledge the worry that is in the community, along with the very real need for businesses to be moving ahead with their economic recovery.

Our recent webinar unpacked this change, exploring how businesses can practically manage their communications during this time.

We hope you find this advice useful as you take a look at your messages, the different scenarios you are planning for, the channels of communication you are using, and tips for communicating with your different audience groups.

It’s likely not going to be ’business as usual’ for some time still. So don’t make the mistake of ‘communications as usual’.

 

To watch a recording of WA’s recent webinar ‘After the Shock: Managing the Recovery’ please enter your details below:

 

 

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Exit Strategy: What can the UK learn from European countries’ plans to ease the lockdown?

Despite the UK lockdown being extended for another three weeks, much of the focus is starting to shift to the exit strategy; when and how might we see some of the restrictions lifted?

The UK Government is alive to this and the need to give citizens a sense that there is “light at the end of the tunnel” as  Dominic Raab put it in yesterday’s briefing.

The extent to which epidemiological or behavioural theory is driving the government has been much debated, with the UK’s relatively slow move towards social distancing and then lockdown supposedly driven by fears of ‘behavioural fatigue’ if measures were put in place for too long.

An end in sight?

Understandably, however, it is to our neighbours in mainland Europe that the Government may look for ideas on exiting lockdown, with most countries a few weeks ahead of the UK in dealing with Covid-19.

On Wednesday the European Commission put forward a “roadmap for common lifting of containment measures” to provide a pan-EU standard, but individual member states had already moved to announce partial relaxations with some already reopening schools and retail.

A full list of current exit strategies is detailed below.

What does it mean for the UK?

From the measures announced, it’s clear that there are some similarities among those countries beginning to ease lockdown, with incremental lifting of restrictions focused on schools and some retail a common approach. It is logical to think the UK will follow suit.

What is interesting is that no country is adopting a demographic-based approach, such as releasing young people from lockdown first, a potential measure widely covered in the UK press following a paper from the University of Warwick’s Department of Economics.

UK Timescales

The big question then becomes when lockdown might be eased in the UK. With Boris Johnson out of action for a few weeks making his own recovery from Coronavirus, people are beginning to look towards the bank holiday on the 8th May for his return and an announcement about easing the lockdown.

This week Dominic Raab also outlined five assessment points that the government will use before any lockdown can be lifted. These are:

  1. that the NHS has sufficient capacity to cope with the number of coronavirus patients across the UK;
  2. that there is a sustained fall in the death rates from Coronavirus;
  3. that data shows infection rates are decreasing to a ‘manageable level’;
  4. that testing capacity and the quantities of PPE can meet any future demand;
  5. and that any adjustment to the measures will not risk a second peak in infections.

As usual in Government, there will be a conflict between Departments looking to exert influence – between the Treasury pushing the relaxation argument to minimise the economic damage and the Department of Health and Social Care who will be understandably cautious about the public health impact.

However, one of the biggest drivers on the timing just might be the PM’s personal journey back to full health.

It will need his authority to balance competing Ministers and Departments and his public profile to deliver effective cut-through to a nation that has been isolated for, by that time, six weeks.

 

 

Lockdown Europe: how other countries are relaxing measures

 

Austria

Denmark

France

Germany

Italy

European Commission

 

 

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Energising our way to a recovery: How have priorities in the energy sector been impacted by COVID-19?

In recent weeks, the outlook has changed for every sector of the UK economy and energy is no exception. WA takes a look at how government and Ofgem have responded to the COVID-19 crisis, whether their priorities have changed and the emerging opportunities for businesses in the energy sector.

Where are we now?

April should have been the month that the government sold us their vision for the energy sector, yet they have been forced to postpone the release of their White Paper to focus efforts on ensuring consumers are protected during the ongoing pandemic. Similarly, Ofgem should have been actioning its work programme, but they are now working with companies to keep essential services running.

The challenges faced by the government and regulators are profound, but that does not mean that pre-COVID-19 pledges will simply fall by the wayside. Instead, they are even more important to securing the UK’s economic recovery. At some point in the near future, the government’s focus will shift towards rebuilding lost momentum. Companies should prepare to take the opportunity to shape the energy sector’s future policy environment.

COVID-19 shouldn’t be an excuse for failure by energy companies, says regulator

During a recent Utility Week webinar, Ofgem Chief Executive Jonathan Brearley stated that COVID-19 should not be used by energy companies as an excuse for failure. In particular, Brearley noted the energy sector was too timid in how it supported consumers during the financial crash in 2008, and now is not the time to repeat similar failings. The regulator is going full steam ahead with its plans to decarbonise the economy and will be delivering the new RIIO-ED2 framework as planned, though this will be reassessed if the outlook worsens. Overall, Ofgem is being pragmatic and trusting companies to do the right thing by their customers, and it’s clear they see the road to net-zero as a fundamental step towards securing the UK’s economic recovery.

In the weeks ahead, Ofgem will be reviewing its work programme in light of COVID-19. This is an opportunity for the sector to re-engage with the regulator and demonstrate what support is needed to help businesses impacted by the virus and fulfil the regulator’s plans.

Fresh ideas and a new Chair for the BEIS Committee

Keir Starmer’s appointment of Rachel Reeves as the new Shadow Chancellor of the Duty of Lancaster means the chairmanship of the BEIS Committee is vacant.

As Labour MPs compete for the role, the Committee is inviting comments on issues it should investigate over the course of this Parliament. At such an important time in our country’s history, the Committee will be looking at suggestions beyond the response to COVID-19, which will be covered by a myriad of inquiries. Instead, they will be looking to the sector to offer insights into business areas the UK needs to strengthen if it is to thrive in the new digital, carbon-neutral age.

Energy White Paper will return

We understand that the Energy White Paper, which has already been delayed on several occasions, will be delayed further as a result of the ongoing response to COVID-19.

While this is frustrating, as it will provide crucial insight into the government’s policy direction on the retail market and reaching net-zero, this presents an opportunity to influence and feed into a document which is further away from completion than widely thought. With much of the country confined to their homes, now more than ever the government will be looking to industry for answers. For example, the government’s manifesto included commitments to introduce new measures to lower bills and invest in clean energy solutions to reduce carbon emissions. While detail around these measures is light, the delay to the White Paper is a good opportunity for the industry to shape what activity in these areas should look like. This will be even more important as the government considers the role of the energy sector in the UK’s economic recovery.

So, what does this all mean for the energy sector?

We have a government with a fresh mandate and a new Chief Executive at Ofgem, both of whom will want to make a bold start to their tenures which will go a long way to securing their legacy.

As the country shifts towards its plans for economic recovery in the weeks ahead, the energy industry has an opportunity it never expected – to help the government and regulator overcome the COVID-19 crisis and help achieve their shared goal, which remains unchanged: to achieve net-zero by 2050.

Those companies able to start that forward-looking process, to demonstrate how they can protect consumers and offer solutions to support decarbonisation efforts, stand to benefit a great deal from their ability to shape the policy environment in the months and years ahead.

WA is supporting organisations across a range of sectors in their response to COVID-19 – whether it is engaging with government and regulators or helping to manage their reputation at this critical time. Please get in touch if you would like to learn more about how our experienced consultancy team can help your business.

 

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Covid-19: what will the recovery look like?

Since the Covid-19 crisis hit, the focus has been on crisis response.

Government, businesses, trade associations and charities have all been grappling with an existential threat that would have been unthinkable just a few short weeks ago.

The Government’s response has been swift and significant. Hundreds of billions of pounds have been made available to prop up businesses in the form of grants, loans and tax deferrals.

What does the Recovery look like?

The priority up to now has quite rightly been how we manage the health and economic emergency that Covid-19 has created. But parts of the Government are already pivoting to think about what the recovery could look like, how we can speed it up and what policy levers they need to pull to make it happen.

A lot will depend on the nature of the economic recovery and governments around the world are using every tool in their arsenal to try and prevent a drawn-out recession.

But even more will depend on people.

How will we all respond once restrictions are lifted? How can we be encouraged to start pumping money into businesses who will desperately need it?

Policy Innovation

Policy teams across Whitehall are looking at their programmes and trying to work out which parts are still viable post-Coronavirus; which parts will need to be reworked and which parts put away for another day.

Policy innovation will have to occur almost everywhere.

And the situation with businesses is no different.

The past few weeks at WA Communications have been about helping clients understand the developments, put their cases to government and manage crisis communications.

But already the conversations are starting to shift from disaster response to recovery. We are talking to clients about what work they can do now to maximise their chances for success once the crisis passes.

Structural Reform

But more than that, structural reform questions are already beginning to surface.

After the 2008 crisis the financial sector went through unprecedented scrutiny and regulatory change.

This time the questions will be broader; about our long-term investment in public services, the role of the state; the readiness and structure of the NHS; the nature of employment; and the capabilities of the domestic manufacturing base to name just a few.

Central figures in this government are born reformers and will relish these types of challenge to conventional thinking.

Dominic Cummings may no longer be able to go to war with the BBC or civil service hierarchy, but he may yet find room for his reformist agenda in the response to Covid-19.

Message and positioning are key

Given the unprecedented upheaval the Government is having to manage, making your message stand out is key to being heard.

Measures that drive economic recovery and protect or create jobs will draw the most attention.

But there will also be possibilities to think more creatively about how you can work with government, what policy innovations can fit into the broader narrative of recovery and which sectors can lead the charge.

Despite the pandemic, it’s important to remember this is a government fresh off the back of a resounding election victory and with a huge swathe of first-time Conservative voters to please.

In the midst of a crisis it seems premature to be thinking about a recovery, but the Government is already looking for ideas.

Positive policy ideas that can help support the economy will be listened to.

Organisations that bring solutions will be welcomed.

Using this time to think about what role you could play in the recovery would be time well spent.

 

 

 

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Governing in a Crisis: How the UK Government is adapting to Covid-19

We are living through unprecedented times, but just like all of us, government and parliament are adapting to a new way of working.

New structures within government as MPs head home early

The immediate attention of the Government is understandably and rightly on responding to the national public health and economic emergency that we face.  As the Prime Minister put the country on a war-like footing, camp beds have been dusted off, and families have been told not to expect to see loved ones working on the front-line for days, weeks and possibly months.

But this bunker is far from isolated from the outside world.

It is relying on a network of communications channels, some hastily set-up, to feed those inside with information and intelligence in order to guide their next move.

As a priority, the prime minister created a new ministerial structure framed around four new implementation committees focusing on health, public sector preparedness, the economy and the international response.  Each committee is chaired by the relevant secretary of state and brings together officials and ministers, reporting into Downing Street.

Number 10’s business team and its sector specialists have been tasked with triaging the huge amount of correspondence pouring in from companies up and down the country who are requesting additional clarification, detail and support.

And within the ministerial departments, officials and advisers are having to manage an unprecedented amount inbound communication.  Their job is to identify common themes and to spot worrying outliers, relaying this information up through the chain of command for action.

Outside of Whitehall, it was confirmed today that MPs would leave for their constituencies a week earlier than planned for Easter recess.

This measure follows on the back of the Speaker telling all visitors to stay away from the parliamentary estate, select committee hearings being wound-up with no witnesses to interview, and Westminster Hall debates being pulled for fear of transmission.

New ways of working

Against this backdrop you would be forgiven for thinking that nothing else but coronavirus matters.

It is true that priorities have shifted, and that the coronavirus response is without doubt the single biggest item on the Government’s agenda.  The response, and its aftermath, will preoccupy the duration of this Government, and probably the next.

But it is noticeable that, even now, most meetings already in the diary to take place in person with ministers, parliamentarians and officials on matters outside of coronavirus, are being quickly re-arranged to take place over audio and video conference lines.

Postponed not cancelled.  Moved in the diary not removed from the agenda entirely.

Similarly, all current select committee inquiries have had their deadlines for evidence submissions extended.

While Easter recess could not have come sooner for many MPs, parliament is expected to return – in some way – on April 21st.  Robert Halfon MP, chairman of the education select committee, is pushing with many others for remote working to be enabled.

Central to this will be video conferencing and, potentially, digital votes.  This may not be possible to arrange at full-scale in just a few weeks, but the Commons has already approved temporary use of video conferencing by select committees until June 30th, with the option for the Speaker to extend.

We can expect more information to follow in the coming weeks as 21st century parliamentarians lobby the new speaker to bring parliament up to speed to allow much required parliamentary scrutiny to continue.

Looking ahead

The attention and focus of the Government and parliament will, of course, remain doggedly on coronavirus for the foreseeable future, but we should not forget that this is a Government at the start of its journey not the end.

It is a Government with a manifesto that – while surpassed by recent events – was built on a lot of promises that people will remember, not least the levelling up agenda.

This Government will have a mammoth task in responding to the fast-moving crisis and realising its commitments through tangible outcomes.

In the fog of war it can be hard to see, but this Government is lucky to have a business community standing ready with ideas and solutions to help it in its immediate response and in the delivery of previously made pledges.

 

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Covid-19: how to be heard when everyone wants the Government’s attention

We are in uncharted territory.

Never before has a crisis hit of such magnitude and affected so many in the UK and around the world as the Covid-19 (Coronavirus) pandemic

Whilst the immediate priority must be people’s health, the economic consequences of the pandemic are becoming clearer day by day, and national governments are the only bodies with the financial firepower to help.

The Government is urgently trying to put measures in place to protect businesses, but the situation is evolving rapidly and of a scale few will have dealt with before.

Advisers are Key

Government is being inundated with requests for help.

These requests are being triaged and prioritised by senior officials and advisers in the departments and at No 10. Access to them is vital.

Making sure your message lands is also crucial.

You need to recognise that the person the extraordinary pressure the person you are speaking will be under and offer solutions if possible.

Work with the media

Finally, it is important to recognise that government does not exist in a vacuum.

The Johnson government has been particularly tuned into public perceptions, even live streaming focus groups into Downing Street to get instant reaction to policies.

Your story and the stories of your employees matter. Media opportunities have never been more abundant.

If you have a story to tell, think about how you can work with the media to disseminate your message, whilst being mindful of the gravity of the situation and not appearing to profit from the crisis.

Remember your employees

Public messages will also have the impact of reassuring your employees that you are fighting hard to address the challenges ahead.

Many employees risk feeling isolated and concerned for their future, leading from the front can show them you are up to the challenge.

It’s all about your message

Whilst we are a long way from knowing the true extent or length of the impact of Covid-19, now is the time to taking your case to government.

Whatever form of communications strategy you decide to adopt, your message is vital.

Hone it, test it and say it loud and often.

It may not seem like it right now, but people are listening.

 

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Budget 2020 Analysis

This was a Budget of two halves.

The Chancellor started on a sombre note as he gave a detailed statement on the coronavirus and the Government’s response.

To manage temporary disruption to the economy, he pledged that the Government would:

Collectively, the fiscal stimulus package amounts to an eye-watering £32 billion.

MPs behind the dispatch box were visibly surprised by the scale of the intervention, but it did not stop there as the Chancellor moved from ‘providing security today’ to ‘planning for prosperity tomorrow’.

‘Planning for Prosperity’

Added up, the Chancellor’s forward-looking ‘prosperity’ pledges come to an additional £175 billion over five years with money allocated to transport, digital and energy infrastructure; public services; research and development and the wider enterprise environment.

Despite the sombre start, the self-assured delivery and bullish outlook in the face of an unprecedented global event looked like an early pitch for higher office.

The Chancellor said that while the commitments in Budget 2020 have remained within the limits of the existing fiscal rules, the framework would be reviewed – suggesting that a relaxation on borrowing could follow in the autumn in the face of low interest rates.

The Green Book, which sets the criteria by which infrastructure projects are judged, will also be reviewed – tying in with the Government’s commitment to shift investment out of the South East and towards the regions.

More Fiscal Events this Year

The Budget also launched a consultation on the Comprehensive Spending Review (CSR), which will close in July.

The exact timing of the CSR, which will set out detailed spending plans for public services and investment, will be confirmed by the Government once it has a clearer understanding of the coronavirus’ economic impact.

Collectively the Budget amounts to some very big spending commitments but with little detail on exactly when, where and how large chunks of the money will be spent.

What happens next

Four days of debate will now follow as MPs get to grips with the detail of Budget 2020, before the Finance Bill, which enacts the proposals for taxation, is tabled in Parliament.

The Budget will also be scrutinised by the Treasury Select Committee, with expert witnesses providing evidence to committee members.

With a majority of 80, we can expect the debates and Bill to pass without too much drama, but as the ‘omnishambles’ in 2012 showed a second round of scrutiny can throw-up unexpected surprises for the Government.

Looking further ahead, the Chancellor knows that his first Budget will be like no other and further tests sit on the horizon – the CSR later this year which will see an inevitable bun fight ensue as departments square up for longer-term funding allocations, and the Autumn Budget just a few weeks before we’re due to leave the EU for good.

 

 

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