Daily Coronavirus Webinar: In Discussion with Nadhim Zahawi MP, Minister for Business and Industry

Overview:

The restart of the economy is picking up pace, with new guidance for businesses emerging on a weekly – if not daily – basis. To discuss some of the latest developments, we were joined by Nadhim Zahawi MP, Minister for Business and Industry, and Matthew Fell, CBI Chief UK Policy Director.

Here are the key points raised in today’s webinar:

• The latest updates from government
• The importance of agility
• Quarantine and test and trace
• Build back smarter.

The latest updates from government

To start the discussion, Matthew gave his comments on yesterday’s “keenly anticipated” announcements about a new raft of measures to ease England’s lockdown. They do not take us “completely back to normal” he said but they do represent a “big step towards the new normal.”

Matthew identified three key areas of note:

1. The government introduced a new term which is the “one metre plus” rule. Where it’s not possible for businesses to operate at a distance of two metres, they can operate with one metre social distancing plus extra safety measures such as perspex screens. This will make a “massive difference” to businesses in a range of sectors, said Matthew.
2. Numerous sectors have been given the “green light” to open from 4th July but others will remain closed. Pubs, restaurants, hotels and holiday lets will be able to open but swimming pools, exhibition centres and indoor gyms will remain shut.
3. Primary and secondary schools will return in full from September.

Matthew acknowledged that it may have seemed more simple to go into lockdown than to emerge and adapt to the new guidelines. The CBI is anticipating a “flurry” of questions from members as we enter this new phase.

Nadhim, whose department has been busy preparing the guidance, stressed the importance of hearing from business leaders for him and his team to develop and improve the policies and praised forums like the CBI webinars for enabling that.

Despite the easing of measures, Nadhim emphasised the need for caution. “The public must continue to follow social distancing guidelines,” he said. The government “will have no hesitation” to reverse the easing of lockdown should cases of the virus begin to rise. However, with testing and tracing in place it should be possible for the reintroduction of restrictions to be done in a more localised way. The government will work with local authorities to impose stricter measures in areas where cases are higher, he said.

The importance of agility

Nadhim described the government’s response to the virus in terms of “chapters.” The first chapter was the very initial phase of “reacting to the emergency” where the government acted quickly with whole economy measures like the business interruption loan schemes (CBILS) and the job retention scheme (JRS) to support jobs across the board.

The next chapter will focus on fiscal and non-fiscal stimulus to the economy as we enter the restart, said Nadhim. Alok Sharma, the business secretary, is leading the government’s “recovery taskforce” and the government has set up a number of sectoral task forces to elicit the input of businesses as we enter the next phase, Nadhim explained.

All phases have required agility from the government to adapt policy to the needs of businesses and the economy. For example, schemes like the JRS were slated to end in July but have been extended as the government has responded to the ongoing need to support jobs. At the start, the focus for government schemes was on “fast delivery” above “flexibility.” Measures focussed on the whole economy rather than on the needs of specific sectors, but as policy has been developed over time more variability has been introduced. “You’ve got to be agile,” said Nadhim.

Quarantine and test and trace

14-day quarantine measures for travellers coming into the UK were introduced earlier this month, these measures have raised questions for businesses and the public. At the very start of the Covid-19 crisis, the UK government did not issue blanket quarantine measures for travellers, except for people who were entering the country from Covid hotspots like China, Iran and Japan, Nadhim said. When the virus began spreading, it was determined by expert advice that these measures would do little to prevent the spread. As infection rates began to slow in the UK, quarantine measures for travellers were reintroduced to prevent the import of more cases or a “super spreader”, said Nadhim. These quarantine measures are set to be reviewed on 29th June.

There have been some industries and essential job roles in medicine, infrastructure and freight that have been exempt from quarantine. Now, other businesses are interested in the idea of establishing “travel corridors” between low risk countries to facilitate business travel. Nadhim said that it is “in the interest” of his department “to get people working.”

The government’s testing and tracing system has been operational for a few weeks now. But the need for the contacts of a person who has tested positive for the virus to self-isolate has caused some issues for businesses. Nadhim explained that not all contacts will have to isolate, only those who have been with the infected person for a prolonged period of time at a distance of less than two metres.

Build back smarter

So far on these webinars, we have spoken a lot about the idea of “build back better.” A few weeks ago, an infrastructure expert introduced the idea of “build back faster” and today, we talked about “build back smarter” : how can government and business make the right investments in growth industries and skills as we rebuild the economy?

Both Nadhim and Matthew spoke about growth opportunities in the green economy and in digital infrastructure. Investing in net zero energy projects: tidal, solar, nuclear and so on and developing the skills of the workforce to match these growth areas will be key.

Matthew pointed out that the Covid crisis and the needs of home working has hugely accelerated demand for enhanced digital infrastructure. The adjustment of planning restrictions could hugely accelerate the rollout of 5G, superfast broadband and electric vehicle charging, he said.

Apprenticeships, upskilling and reskilling will be an area of focus for the government, said Nadhim. We need to take a focussed and “granular” view of what skills are going to be the most valuable in the future, he said.

Key questions we answered:

1. Nadhim, what is the government saying about how businesses should restart?

• To help us support the economy, we want to hear your input on the issues you are facing.
• The Business Secretary, Alok Sharma, has held five economic roundtables focused on the recovery. These focused on, among others, the green recovery and how to attract international investment. And all those areas are moving forward at pace.
• From Saturday, pubs, restaurants, and hairdressers will be able to open, provided they adhere to the Covid-secure guidelines. The guidance will allow people to keep a social distance of ‘one metre +’. This means one metre away plus mitigations which reduce the risk of transmission – such as visors.
• The public must play its part, by remaining alert and exercising common sense.
• Test and Trace is crucial to allow us to stay ahead of the spread of the virus.
• The devolved nations must make their decisions, but the direction of travel is the same as England.
• The CBI have played a crucial role in informing our policies and decisions, so I thank them.

2. Nadhim, is working from home still the norm?

• We would like you to continue working from home if you can.
• This helps the country’s infrastructure as it allows those who can’t work from home to travel more safely using public transport.

3. Nadhim, what is your thinking on the future of the Job Retention Scheme (JRS)?

• Initially, the scheme was expected to come to an end much earlier, but it got extended to October. So, there have been changes to the furlough scheme.
• The Chancellor has been chairing an economic and business committee to consider how we respond to the impact the pandemic is having on businesses.
• The Secretary of State will hold specific sector roundtables, including aviation, retail, insurance, manufacturing, tourism, and hospitality, and more. And then all of this is fed into the government to ensure we are responding with agility to the needs of business.
• We are constantly reviewing our support schemes and will update them, if needed, accordingly.

4. Nadhim, companies in France and Germany are making big investment decisions because those countries have implemented long-term support schemes, providing much needed certainty. What scope is there for a re-formulation or extension of the JRS and other support schemes?

• We are alert to the risk of losing good businesses due to cash flow issues. That is why we have a system in place to review our support policies in an agile way.
• We are convening businesses from varying sectors and that enables us to address issues specific to each sector.
• When I talk to the aviation sector and they tell us what France and Germany are doing, we look at those support schemes and learn from them.
• We know that jobs are going to be a priority. We are updating our industrial strategy for a world where unemployment may be at 7-8%.
• Where are the opportunities for levelling up and to ensure that we remain in line with our net-zero targets?

5. Nadhim, how can the government restore demand in the economy?

• We need to address the key questions such as how to accelerate business innovation and adoption across the country.
• This government is not going to be one that shrinks inwards. We will focus on infrastructure spending and R&D. On R&D, our aim is to get to £22 billion per year by 2024. It is currently at £12 billion per year.
• Some of the key questions are:
  • How do we capture growth opportunities from the shift to net zero?
  • What are the projects that we need to focus on to drive that sustainable growth?
  • How can we make the UK the best place in the world to start a high-growth business? What are the non-fiscal barriers to do that?
  • How can we level up economic performance across the UK?
  • How can we win and retain more high value international investment?

6. Matthew, what are the CBI saying to government about stimulus, employment and training?

• On the stimulus, there is a lot that can be done to accelerate activity. We are keen on a net zero agenda. There is a lot that can be done to help the green infrastructure and digital infrastructure roll out. Regulatory changes can be done without costing large sums of money.
• On the skills agenda, that is where the insights on where the future demands for skills are going to come from. We have a fundamentally different labour market now. Prior to the crisis it was about how we address skills miss-matches. The skills miss-matches still exist but it is also now about creating jobs quickly.
• Key questions:
  • How do we get people into the schemes quickly?
  • Can we embrace re-learning technology so we can accelerate people into jobs?
  • How do we take skills that people have today, and rapidly redeploy them into different areas?