Watch the webinar
Today's webinar featured, as Tortoise Media’s James Harding said, “a star-studded cast”. There was the CBI’s own Director-General, Carolyn Fairbairn. There was also Katherine Bennett CBE, Senior Vice President at AirBus and Chair of the Western Gateway. And John Allan CBE, the President of the CBI but speaking here more as Chairman of both Tesco and Barratts. It was, unsurprisingly, a deeply insightful conversation, which spanned across numerous areas:
- The economic support packages – and their limitations
- Lessons for the restart
- New thinking for the new economy
- The importance of equipment…
- …and of transport.
The economic support package
It increasingly feels, said Carolyn, that the government’s range of economic support packages are “in pretty good shape”. This week, the CBI has been particularly delighted by the announcement of the Treasury’s new Bounce Back Loans Scheme, which should deliver straightforward and speedy loans of up to £50,000 to smaller businesses, as well as by the continued stability of the online Job Retention Scheme (JRS) portal. We’re hearing from more and more businesses saying that they’re finally getting the money they require.
There could be more good news this week. Tomorrow, we’ll get the latest data from the government’s main Coronavirus Business Interruption Loan Scheme (CBILS), which had previously been operating quite slowly. “We’re hoping to see exponential take-off,” explained Carolyn.
However, as Carolyn went on to say, “there is data from the economy that is extremely concerning”. Overnight, there was the news that British Airways is planning to make 12,000 employees redundant – and that’s on top of the findings from the CBI’s own Industrial Trends Survey, which shows historically low levels of confidence among manufacturers. “All eyes are turning to the long-term impact,” said Carolyn. “That’s why the conversation about the restart and the recovery are so important.”
Lessons for the restart
The restart was the main topic of the webinar. It is also, Carolyn revealed, receiving more and more attention from within government. “We are expecting to hear from Boris Johnson later in the week,” said Carolyn, “about what a cautious lifting of the restrictions might look like” – although we don’t know what the birth of the Prime Minister’s son, announced during our discussion, will mean for that timetable!
We heard from both John and Katherine about how their own businesses are handling the restart – or, rather, about how they haven’t really stopped. John described how Tesco, which has had to remain open as an essential service, has “traded throughout this whole crisis, so we’ve had to learn how to make our shops safe places while still working”. While Katherine explained how AirBus “hasn’t fully closed down” its operations around the world.
John has faced a different challenge, however, at the housing developers Barratt. “We shut down completely after the government’s announcement…. We’re now at the stage of a pilot reopening.”
There did seem to be some common lessons from all of these different experiences. One is about the importance of guidance. Katherine described how, building on the government’s own guidance, AirBus has developed its own 19-point plan for its workforce – “it’s not just about when an employee walks into where they work, it’s also about the journey to work”.
Another lesson is about communication. Katherine explained that AirBus’s measures had been introduced through “working with trade unions and plant representatives”. And then, once the measures were in place, it was important to frequently remind employees about them, as well as to reassure those same employees (and their families) about their safety at work.
And yet another lesson is about checking and policing the new guidelines. John revealed that, as Barratt returns to work, it will actively “welcome” inspections from the Health and Safety Executive (HSE), as well as “have our own safety team to do surprise visits on sites”. He added: “In a sense, we’re over-engineering it in the short-term to ensure a high level of compliance.”
The new economy
Katherine spoke of how “this is the gravest situation that [the aviation] industry has ever seen”. John revealed that people’s supermarket shopping habits have entirely changed – in favour of both home delivery and ingredients that can be cooked with. “Demand for flour is still very high.”
But, John asked, “What will stick?” It’s not yet certain whether or how economic models will be fundamentally changed in the years ahead. As he added in the case of houses, “Is there pent-up demand? Or are people going to be in a very sticky economic environment? It’s hard for us to predict.”
However, there are areas where businesses could – and perhaps should – already be thinking differently. John highlighted the example of office space: “Lots of offices have got staff working from home. This seems to be working very satisfactorily…. There are lots of people [in business] saying that we actually need only 30, 40 or 50% of the office space we previously needed…. If we can [save money] by shedding office space, rather than shedding people, I think most would say that’s a good choice to make.”
And Katherine drew on her experience as Chair of the Western Gateway, an equivalent of the “Northern Powerhouse” for the West of England, to describe some of the good practices that we may want to continue in future: “People are really helping each other. Small businesses getting help from larger businesses. We can all pull together.”
She also emphasised the importance of some long-standing agendas that shouldn’t be forgotten – such as greening the economy, making it more digital, and “levelling up” the regions.
The importance of equipment…
Katherine and John both represent industries in which personal protective equipment (PPE) is important – and will become more important during the restart phase, to enable work where social distancing cannot happen. They mentioned how AirBus and Barratts have been able to buy in “slightly different grades of masks” to enable work to continue.
But, in both cases, the buying-in of new equipment only happened after donations had been made to health and care workers. In John’s words: “[Barratts] gave all [its] masks and defibrillators to the NHS when [it] shut down.” And in Katherine’s: “We gave any spare PPE to local hospitals… we shipped in face masks from China that we gave to the NHS.”
Katherine also told the brilliant story of the Ventilator Challenge, by which a group of companies, including AirBus, have worked to make more ventilators available to the health service: “We set up four new production lines to ramp up the production of two existing models…. We’ve been producing these ventilators for the past two weeks, and they’re already going to the NHS.”
It’s this sort of ingenuity that the CBI is eager to facilitate as part of our search for more PPE. Please get in touch with firstname.lastname@example.org if you can help.
…and of transport
“[Transport is] an absolutely huge issue,” said Carolyn. “It’s a crucial enabler for businesses to go back to work.” Other countries are showing us how public transport might operate during the restart phase – for example, by insisting on one empty seat between each train passenger. But all the examples suggest massively reduced capacity.
“I’ve seen some estimates,” continued Carolyn, “that put the [future] capacity of the transport system at 25% of previous capacity.” She added: “What are the ways in which businesses can supplement public transport?” There are certainly options around car pooling and cycling. “Ingenuity is going to have to apply to transport, too.”
Key questions we answered:
- To Carolyn, what is the CBI hearing from companies that are starting to re-open?
- We’ve detected a shift in the last week – government schemes coming online means more firms are thinking about the restart.
- Most firms that can open up are doing so on a trial basis, operating a fraction of a production line or one or two sites and stores.
- The PM is back – we’re expecting greater clarity this week about ‘phase 2’.
- Here’s a recap on what we know so far from government’s approach:
- There won’t be a ‘big bang’ – gradual shift from phase 1 to phase 2.
- Aware of links between different parts of society – business, transport, schools.
- Strong desire to ‘take people with them’ – consensus building between business, unions, and civil society.
- We also know outline of government’s approach to the restart; categorised by type of work, rather than sector. This has been split into six categories:
- Outdoor work – including infrastructure, energy, construction, housebuilding, and agriculture.
- Leisure and wellbeing – including restaurants and pubs.
- Non-food retail, including real estate.
- Office work, research and other non-customer facing indoor work.
- Factory and industry-based work, including manufacturing, food manufacturing and engineering.
- Distribution and logistics, including transportation and storage.
- A phased approach, starting with enablers:
- Transport – for example, the support for roll-on-roll of Ferry services last week, tube services in London, tram and bus systems in the regions.
- Medical support and equipment – testing, PPE.
- A unified approach. Government, health experts, business, unions and employee voice – all working together. Open and transparent.
- Freedom within a framework. Clear parameters but with flexibility.
- Build back better. Think long-term. Sustainability. Tackling Inequality. Levelling up regions. All underpinned by ‘good’ business.
- To Katherine, what is the long-term macro-economic outlook for the aviation sector?
- Tourism, travel and aviation is essential to the global economy. 10% of the world’s GDP is reliant on aviation. It helps international trade and is vital to help friends and family see each other.
- Having seen our industry figures for Q1, this is the gravest situation our industry has ever seen.
- Airbus has 13,000 employees in the UK working on civil aerospace. We are a leading space company and we are the largest supplier of large aircraft and helicopters to the RAF.
- Considerable changes expected to aviation. The industry in Asia appears to be returning to operation and people are beginning to fly again.
- We will have to address significant questions. For example, how will airports have to operate and how will our passengers have to fly? E.g. will there need to be a free middle seat in our aircrafts?
- There is a discussion about health passports or people having their temperature tested before boarding an aircraft. We want people to fly efficiently while maintaining their safety.
- To John, what is the state of the economy and mindset of consumers for Tesco?
- Tesco were deemed an essential service during this crisis, so we had to work out how to make our service safe for people while working.
- We saw significant changes to consumer behaviour in the first phase of this crisis.
- Stockpiling, panic-buying took place in the first phase. We still do not understand why people panic-bought toilet rolls.
- We are seeing significant changes in shopping behaviour – more people want home deliveries. We have increased our home deliveries from 600,000 to 1 million per week.
- Changes to people’s attitudes towards food and eating. People are thinking more about cooking from scratch, so sales of the ingredients people use to cook are significantly up.
- We are trying to understand how much of these temporary changes in behaviour will last after the crisis.
- We are not sure how people will react to the reopening
- The basic level of food that people will consume per capita will be pretty unchanged as we go forward but the makeup of that food basket may change.
- To John, moving onto Barratt Developments, what is your assessment of the state of play?
- We shut down completely after the government’s lockdown. This was partly due to our prediction that workers wouldn’t want to come to site. We are close to a pilot re-opening of a limited number of sites.
- The Construction Leadership Council came up with a protocol of how to make building sites safe which we are following.
- We are beginning to see the re-emergence of our supply chain, with the second largest brick maker going back to work.
- We cannot predict how customer behaviour will change. Will there be pent up demand to buy houses or will people hold off major purchases until the economy is assured? It is hard for us to predict that.
- There is a strategic shortage of houses in the UK. The government can continue to stimulate demand through schemes such as help to buy.
- To John, considering the reopening of Barratt’s sites, how will you ensure your workers are safe?
- We have put a lot of thoughts into this and have come up with many steps to achieve this.
- Limiting the number of workers on site.
- We will start with half the usual number of employees.
- We will widen the walkways on our sites.
- It is not always possible to ensure social distancing so we will equip our workers with PPE where they have to work close together, which is the case for tasks such as plastering.
- We will stagger our workforce’s start-times.
- We then have to wrap all these measures up with a clear communication strategy to ensure we convince our employees that it is safe to come to work.
- We have also instilled a plan to police social distancing on our sites. This is composed of 4 parts:
- We will have site managers inspecting
- A warden on every site, possibly an ex-soldier
- We will welcome the Health and Safety Executive in to do inspections
- Our own safety team will be doing surprise site visits to ensure social distancing is taking place.
- To Katherine, what are Airbus doing to keep their employees safe when returning back to work?
- Airbus have developed a 19-point employee safety plan and will share it with the CBI.
- Airbus have introduced testing machines. This has been used on, for example, delivery drivers, when coming on site. We even found that some truck drivers tested positive for the virus when examined at our site gate.
- To Katherine, how are Airbus helping the government on its call for business to help supply PPE and ventilators?
- We shipped in 700,000 face masks from China that we have given to the NHS in England and Wales.
- Within four and a half weeks of the government’s call for manufacturers to produce ventilators, we had a ventilator series equipped, tested and approved by the regulators.
- Set up four new production lines to ramp up the production of two existing models.
- Producing these ventilators for the last two weeks and they are going to the NHS.
- To Carolyn, on public transport, the process of re-opening is becoming an increasingly big concern. What are your thoughts on it?
- This is a huge issue as it is a crucial enabler for businesses to go back to work.
- We are seeing other countries slowly bringing their transport networks back into operation, with measures such as trains operating on the condition passengers must have an empty seat next to them. the capacity of our transport system is estimated at 25% of current capacity.
- Businesses could think of ways to ease the pressure on the transport system when it re-opens.
- The Cabinet Office are conducting a work stream on transport as they recognise its crucial role in the restart.
- To John, how are Tesco and Barratt approaching any lessons learned from this crisis?
- We cannot rule out the possibility this lockdown may happen again, so we are ensuring we are learning lessons from how we have managed it.
- People’s attitudes towards new-style offices will be key. There is no need for some office workers to rush back to work as they can work from home. That is a consideration worth taking to ease the pressure on public transport.
- Businesses realise they only need 40-50% of the office space they currently have. That sort of efficiency will be needed. We will have a dismal economic outlook for at least the next year.
- Consumer spending will be down and if we can shed office space rather than people, that is a better choice to help the economy.
- We should feel proud of the good things that have happened during this crisis. For example, we do not hear any more stories about the shortage of ventilators, and this is partly because businesses stepped up to the government’s challenged and produced many.