Watch the webinar
Today's webinar was an all-CBI affair, from all corners of the United Kingdom. We were joined by our Director-General, Dame Carolyn Fairbairn; the Director of CBI Northern Ireland, Angela McGowan; the Director of CBI Scotland, Tracy Black; and the Director of CBI Wales, Ian Price. Here are some of the subjects they discussed:
- Kickstarting the recovery
- The Job Retention Scheme (JRS) – what next?
- Other debates, including one metre vs two metres
- Cross-border conundrums
- The problem of consumer confidence.
Kickstarting the recovery
As Carolyn pointed out, we received some “pretty crushing news” last week – the announcement that UK GDP fell by 20% in April. This is the worst one-month drop on record and dwarfs the previous record-holder, a 2% drop seen around the time of the financial crisis.
The priority now, continued Carolyn, is to “get ahead” of the economic shockwaves – and introduce measures to ensure that the “scale of the impact [is] mitigated”. To this end, the CBI wrote to the Prime Minister, the Chancellor and the Business Secretary last week, with our first set of proposals for kickstarting the recovery.
“Central to that is jobs,” said Carolyn. It’s likely that the end of the furlough scheme will also mean the end of many jobs – so more must be done to get people into work. The CBI’s proposals include a complete transformation of Jobcentres, so that they become “local hubs” for training and upskilling the unemployed. We are also advocating for a more flexible Apprenticeship Levy and for Further Education colleges to “provide the right kinds of skills… in digital… in tech… in the life sciences”.
There are two other main parts to our set of proposals: i) ensuring that the economy is built for the future, such as by investing in green infrastructure, and ii) encouraging consumer spending, including through demand-side policies such as car scrappage schemes.
The government seems to be listening. “We’ve had a strong response from the Treasury and No.10,” revealed Carolyn. The CBI’s job now is to “work on some of the detail of these plans with ministers” – and then, hopefully, see them put them into action.
The CBI will also be sending letters to the First Ministers of the devolved administrations this week, with more recommendations for kickstarting the economy.
The JRS – what next?
In terms of existing government policy, this has been “another massive week,” said Carolyn. Today sees the reopening of non-essential shops – and other venues, such as zoos and drive-in cinemas – provided that they can remain Covid-secure. Last Friday saw further detail on how the JRS will unwind in the months ahead.
The short version of the JRS policy is that the scheme will close to new entrants at the end of June, and then will require, month by month, progressively greater contributions from employers until its closure in October. From July onwards, the scheme will also become more flexible, so that employers can put employees on part-time furloughs if they choose. The changes are fully explained on the CBI website.
What dominated the discussion is what happens after October, when the JRS is scheduled to disappear. Carolyn explained just how difficult that situation, and even the few months before, will be for some businesses: “For businesses who cannot yet open, who have no cash in the bank, this is impossible….”
As Carolyn went on to put it, “There has to be something in place to support jobs after October” – perhaps including a new series of grants for particularly hard-hit sectors and industries.
Carolyn also alighted on some of the other policy debates that are animating politicians and businesspeople, such as the reopening of schools (“three in four parents say they are having difficulty managing work and childcare at the same time”) and the government’s mixed messaging on shopping (“confusion of messages is one of the biggest problems we’ve got at the moment”).
But perhaps the biggest debate concerns social distancing and whether the gap should be closed from two metres to one metre. “It’s not business’s place,” said Carolyn, “to make that decision – but we can provide evidence.” Among that evidence: 23 countries are now operating at one-metre distance, and capacity would increase by up to 30% in many sectors were the same policy implemented in Britain.
We do know that the government is currently reviewing this policy – but Carolyn revealed that the review is “going to take weeks”, at least on current expectations. “I don’t know why it’s got to take weeks,” she continued, having earlier made the point that, when it comes to the economic support that businesses need, “this is a race against time”.
The main subject of the webinar was the devolved administrations and how they have approached the coronavirus crisis differently from each other. But both Angela and Ian – representing the CBI in Northern Ireland and Wales – mentioned the same challenge: doing business across borders.
As Angela put it, “it has been quite difficult in Northern Ireland; many companies work across the jurisdictions” – and not just between Northern Ireland and the rest of the UK, but also between Northern Ireland and the Republic of Ireland. “A lot of companies have frontier workers.”
Meanwhile, Ian highlighted some of the strange – but, for business, very serious – issues that Wales’s proximity to England can create. In the English city of Chester, he said, there is a road that spans across England and Wales and which contains almost all of the area’s car dealerships. “Half of them are open, half of them are closed,” because of the different rules in the two nations.
And it could get worse. Ian also anticipated what could happen if England decides to reduce social distancing to one metre, while Wales decides to stick – as it has suggested it will – with two metres: “The train from Cardiff to North Wales can cross the border five or six times. Does that mean that passengers will need to keep switching seats?”
As for the CBI’s overall position, Carolyn explained that we “respect the devolved powers of the devolved administrations,” much as we respect “regional differences” in other countries. But “where it becomes difficult is when the messaging and the philosophies are different… because that undermines confidence.”
The idea of confidence also underpinned many of Tracy’s remarks. “Many people would say that Scotland has taken the most cautious approach” – and that caution is likely to affect the restart. “It could take a long time in Scotland to get that confidence back. We’ve been so tough, I think that coming out of lockdown is going to be a real challenge.”
Besides, as Tracy pointed out, “Scotland’s economy wasn’t in great shape going into the crisis”. The country still faces the same decades-old problems – “productivity, regional inequality, skills” – and will need to tackle them if it is to fully recover from the recession.
But Scotland will also face new challenges as a result of the pandemic, many of them related to confidence. “If it becomes the long-term trend that 10, 20, 30% of the workforce stays at home… it raises the question of how our retail sector survives.”
Key questions we answered:
- Carolyn, what is the latest thinking on the UK’s recovery from this crisis?
- With more worrying economic data out on GDP and employment, the virus’ impact is clear.
- So, it is vital to start looking ahead and plan for what we can do to build back better. Shops opening today is a step in the right direction – but much more will be needed.
- Our priorities encompass three pillars:
- Firm-level: The evolution of current schemes and regulation, how to support firms that can’t reopen, how to get schools open, the future of quarantine and social distancing.
- Country-level: Turbo charging our domestic economy, creating jobs that improve resilience and growth and drive inclusion, stimulating demand, creating dynamic labour markets, re-skilling, and bringing forward green investment
- Brexit: We need a deal done by autumn that works for both services and goods.
- Angela, what’s happening in Northern Ireland?
- Economically, things have settled down. For examples, companies are telling us they have moved from three emergency meetings per week to one a week.
- Now the focus is on how we get businesses up and running. It isn’t just about health and safety but also building confidence, as a lot of energy and money has been spent on helping employees to feel safe.
- The mixed messages we have seen across the UK have not been helpful. We want to see a consistency of message to give employees and consumers the confidence they need.
- Tracy, what is the picture like in Scotland?
- Scotland has taken a very cautious approach focused on public health.
- Inconsistencies in operating procedures placed huge pressures on our members. At the beginning, we had food companies across the UK continuing the operate – but in Scotland they came under huge pressure to shut.
- Construction has been one of the most difficult sectors. Some of Scottish construction companies are doing more work south of the border as they can operate there, unlike in Scotland.
- We are now focusing on the next phase, and we want to ensure consistency is met with practical measures to ensure businesses can reopen. I think it will take a while in Scotland to feel safe to come out again as we have been so tough in implementing the lockdown.
- Productivity, regional inequality, and skills are all challenges in Scotland that pre-dated the virus. So, when we speak to government, we remind them that these are decades-old challenges that need addressing urgently.
- Ian, how are things looking in Wales?
- The border is incredibly porous, and many employers have people living in England and Wales. So, the confusion that has arisen over certain rules and regulations applying differently in each of the nations has caused an added layer of stress and confusion.
- For example, car dealerships in England are open but not in Wales. And so Welsh car dealerships are not selling any cars and are losing out.
- We also have an issue with childcare in Wales. Some people have childcare across the border with different rules and regulations.
- As we move forward towards the recovery, we’d like to see a focus on consistency with the recovery as our needs in Wales are no different to the other nations.
- Carolyn, what is the CBI’s position on devolution, given the challenges this crisis has brought?
- Having different messaging and philosophies undermines confidence. If there is one thing we know we need in this crisis, it is confidence.
- We want people to be able to go shopping and return to activity if it is considered safe to do so.
- Our message is to keep the joined-up conversations going on and try to keep aligned on the philosophies. Plus we need to recognise that businesses operate across borders.