recovery Archives - WA Communications

Billed, Billed, Billed – the government sets out its economic recovery mission

WA’s Naomi Harris analyses the Prime Minister’s speech for what’s getting top billing; how big the bill will be; and what Bills we can expect to follow as he promises to ‘build back better’.

What’s getting top billing

The Prime Minister has earmarked £5 billion to ‘accelerate’ infrastructure to create jobs and support his ambition to ‘build back, better’. To turbo charge the stalled delivery of his ‘levelling up’ agenda and to invest in public goods that aid future prosperity, Johnson is carving up the money for capital spending in health, education and local infrastructure projects – the majority to be spent in the next two years.

The Chancellor is expected to go further next week when he delivers his ‘mini Budget’. Although Number 11 is keen for this not to be seen as an ‘emergency Budget’, it will be presented against a backdrop of the worst quarterly GDP figures since 1979 and, so far, the first local lockdown.

It will again focus on job retention with more detail on changes to employment and business support mechanisms and a potential temporary cut in VAT to help stimulate demand. We can also expect more from the Chancellor on job creation with further information on the earmarked ‘shovel ready’ projects and plans to support a ‘green recovery’. These two speeches are, however, stepping stones towards the much anticipated – and much delayed – National Infrastructure Strategy, now slated for the autumn.

How much the bill will be and who will pay

Uncertain about tax receipts and with public borrowing soaring, some have said that £5 billion is too much on top of the £298 billion that the ONS has said could be the final bill for existing support measures. Others say that £5 billion is a drop in the ocean if the Prime Minister truly wants to “use this crisis to tackle this country’s great unresolved challenges of the last three decades”.

It is undisputed that this government has thrown off austerity and has a new outlook. Ministers are happy to acknowledge where mistakes were made by previous Conservative governments and in his speech the Prime Minister spoke of a government that is “powerful and determined and that puts its arms around people at times of crisis”. Positively Keynesian, although this Prime Minister prefers the Roosevelt comparison.

In all of this it should be recognised that the Prime Minister’s ‘New Deal’ is not just about government spending but rather incentivising private sector investment. Just like Roosevelt, who created the Reconstruction Finance Corporation to design lending systems and new finance mechanisms to draw private investment into projects and insulate business from risk, Johnson is looking to encourage business to stump up capital through regulatory changes. Could this be the time for a Contract for Difference 2.0 or PFI 3.0?

The British taxpayer will undoubtedly be asked to start paying in eventually, but exactly who and when is an open question. Those who have been seen to do well from the crisis are likely to be at the top of the list for a windfall tax.

The Bills that we can expect to follow

We can expect the legislative pipeline to increase significantly in the tail end of this year as the government seeks to put its policy ambitions into action. The return of key personnel to Downing Street combined with rumours that the Cabinet Office and Number 10 may merge speaks of a government looking to increase its firepower on delivery.

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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.