Daily Coronavirus Webinar: Planning for restart: approach for business

Today's webinar took the form of a conversation between our Director-General, Dame Carolyn Fairbairn, and our Deputy Director-General, Josh Hardie, moderated by James Harding, the Editor and Co-founder of Tortoise Media.

Among the topics we ranged across:

• Why it is important to think about a restart now
• What the government is thinking
• How businesses can help
• Moving the Job Retention Scheme (JRS) “from hibernation to animation”
• Improving access to finance.

Thinking about a restart now

Carolyn began her remarks by observing that “this does feel like a week for a change of gear” – to thinking more and more about restarting our economy.

Of course, she added, “it’s really early days” and whatever happens “needs to be driven by the health advice”. But the CBI is hearing from more and more businesses who, in Carolyn’s words, “do want to have some clarity” about those next stages.

There are two particular reasons why it’s important to do this thinking now. One is forward planning. Josh raised the example of an “office-based” business like the CBI, “where many of us have been working from home” – “there’s a lot of stuff we need to do to get the office bio-secure”. That work needs to start sooner rather than later.

The second reason is simply that some businesses are already restarting. Carolyn listed some of the employers that have reopened workplaces, or have announced plans to reopen workplaces, in the past week: Aston Martin, Airbus, Pret a Manger, Five Guys, and more.

Carolyn described this as “encouraging”, as it “shows what can be done” within the existing government guidelines.

“We should not be talking about a trade-off between health and the economy,” she concluded. “That will destroy public trust. We need to be talking about how we reopen parts of the economy safely.”

What the government is thinking

Is the government also thinking of the restart? Cautiously, yes, suggested Carolyn. Over the weekend, she was involved in conversations with the Department for Business, Energy & Industrial Strategy (BEIS), as well as with the unions and other stakeholders, about how businesses might proceed.

The government’s “five tests” for lifting the lockdown – for example, that there is a “sustained and consistent fall in the daily death rate” – still apply. However, Carolyn indicated that BEIS is evolving its own thinking in the meantime. The department is now looking at the situation “by workplace, rather than by sector….  A shop will be different from a factory, which will be different from a call centre, which will be different from an oil rig”.

So far, there are six main “groups” that BEIS is focussing on:

1. Outdoor work
2. Leisure and wellbeing
3. Non-food retail
4. Office work and other non-customer-facing indoor work
5. Factory and industry-based work
6. Distribution and logistics.

Of course, there are complicating factors. As Carolyn pointed out, some businesses span across all of these different working environments – and perhaps even more.

But this thinking does raise the possibility of a restart that isn’t determined “sector by sector”, with some entire sectors left at the back of the queue. So long as there are protocols to define safe working in each of those environments, and so long as businesses can comply with those protocols, then reopening is a possibility.

“This,” said Carolyn, “is the beginning of an approach.”

How businesses can help

Carolyn listed three ways in which businesses, through the CBI, can help with this thinking around the restart.

The first is to provide advice on whether that “workplace approach” is viable. And, if so, whether those groups are the right ones. Carolyn emphasised that this is still “early-stage thinking” from BEIS, and the department is “very clear: if the [ideas] can be improved, they will improve them”.

The second is to communicate how important it is for other services to be open. “Transport,” said Carolyn, “is raised by every single business we speak to…. Schools also come up hugely, in terms of the ability of people to go back to work and have childcare. These factors will be very significant.”

And the third way is to highlight “where businesses have already started to innovate on creating safe workspaces”. The CBI has already heard stories of “red team/blue team” shift patterns, and of companies providing bicycles to their staff, among others. We are eager to hear more.

As Josh observed, “the more consistent we are,” in terms of making our voice heard by the government, “the more effective we will be”.

For its part, the CBI is also doing more work to identify lessons from other countries – both at the governmental level and at the business level.

JRS: “from hibernation to animation”

Great progress has been made on the JRS over the past two weeks. First we heard it was to be extended to the end of June, and then, at the beginning of last week, the online portal through which businesses could claim their money from the government was launched. Some of the webinar’s audience members revealed that they had been paid the cash this morning.

However, both Carolyn and Josh stressed that there is a need for more progress on the JRS. “One of the most interesting next steps on JRS will be how it becomes more flexible,” said Carolyn. “Whether you get partial furloughing or tapered furloughing,” by which some employees could work part-time while also on furlough.

Josh put it in terms of “two different furlough schemes”. The first is the one we have now – “for hibernation” – and which may need to be retained for businesses that will struggle to reopen in the next few weeks or months. The second – “for reactivation” – is the one that still needs to be developed, “an incentivised furlough for getting people back to work”.

Improving access to finance

It has been a similar story with the government’s various loan and credit schemes: significant progress over the past two weeks, although, as Carolyn put it, “there is still more to do”.

The CBI believes that the main Coronavirus Business Interruption Loan Scheme (CBILS) requires the most work. In fact, we proposed four improvements last Friday:

1. A simpler route to loans under £25,000 for smaller businesses, perhaps backed up by a 100% government guarantee
2. An increase in the government guarantee from 80% to 100% for loans up to £500,000, along with a longer repayment schedule
3. Streamlined documentation, to speed up the assessment process
4. A three-month suspension of business rates for all firms in England, Scotland and Wales (matching a policy that has already been introduced in Northern Ireland)

Carolyn revealed that “we feel those are being given fair consideration by the Treasury” – and perhaps even more than that. “We are really hopeful on the first of those…. We are hoping that there will be an announcement today.”

Key questions we answered:

1. Many firms and politicians are turning their attention to the critical issue of the restart. Can you tell me the current state of play?

• Businesses are starting to open, and we are seeing lessons being learned. Just last week, saw manufacturers, such as Aston Martin, Jaguar and Airbus set out plans to reopen, as well as food chains - Burger King, KFC, Pret a Manger, and Five Guys – trialling opening some of their restaurants for delivery collections only.
• And there are many leanings from these experiences, such as:
  • This is not a return to business as usual. Investment is needed in PPE and distancing measures, in reformed working conditions, in new working patterns.
  • Employee engagement is vital. Where cautious reopening has worked, it is because firms have worked with employees and unions to take them on the journey and they feel safe.
  • Reopening must be demand led and supply led. There is much that could be reopened – for example car plants – but where demand will not exist, or where supply chains are not working (as in construction).
• The government’s approach will be categorised by type of work, as opposed to sector-by-sector – as this highlights interdependencies that exist across sectors and supply chains.
• The initial focus is on key types of work government will be looking for input on:
  • 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; and
  • Distribution and logistics, including transportation and storage.

2. Can you give us more detail on the CBI’s initial thinking on plans to reopen the economy and, more widely, what are you hearing from others as they look forward?

• The CBI have been thinking about this for a while and it’s clear that our strength in convening is important – as Bill Gates said this feels like a world war, except this time we are all on the same side.
• Five key principles that build on the lessons above include:
  1. Health first. (Physical, mental and economic). Trust is key – for demand and staffing in particular. A health-first approach will support this, while restarting with a poorly understood virus still present.
  2. A sequenced approach to a long-term restart. Start with enablers – schools, transport, testing, PPE, and sequence sectors, which will move at different paces. Be clear about this early to help firms plan more effectively. Back with constant economic evolution. Targeted support. Adapting furlough and sick pay. Cashflow the restart. A tapered approach that supports a sustainable reopening with a 12+ month horizon.
  3. A unified approach. Government, health experts, business, society, unions and employee voice, nations building the plan together. Maybe with a formal structure. Brings clarity, builds confidence and resilience. Support restart vocally, and deal with mistakes honestly.
  4. Freedom within a framework. Lots of discussion about level of prescription. A principles-based approach gives valuable flexibility. But clear parameters and enforcement are essential to support decisions.
  5. Build back better. Think long term about what economy we want to build, now. Sustainability. Inequality.  Retraining. Infra. Tax and regulation. Learnings from how we have adapted in the crisis. And above all, business behaviour – from good work to prompt payment, must underpin all.
• And we can learn from others. China, Dubai, Germany, France, Canada are all at different stages, taking different approaches. Too early to draw conclusions now, but we are interested to see a) how levels or prescription vary and whether governments can maintain high levels of control and b) how economic measures adapt to support firms.
• The CBI now has three priorities to help on the restart:
  • Get the government engagement architecture set up. We did this with TAs and depts in lockdown and are pleased that it is beginning for restart now. But this is just govt-biz. Trade unions, health professions, and possibly a larger, formal commission?
  • Leverage our network to influence policy. Insight from you. From our international office and networks. From our unique trade association membership. We know that we can provide a whole economy view like no one else and get the right policies in place that work.
  • Provide practical support to UK firms. As we are now. We will continue.

3. How important do you think the issue of business reputation, in terms of their response and actions during this crisis, will be to any successful restart?

• We’ve always said that the way UK’s businesses help country through the pandemic will shape their relationship with society for a generation.
• We see the twin issues of ‘exit strategy’ and business reputation as intrinsically linked.
• And, throughout, what we’ve consistently heard from businesses is not “what am I due?”, but “what can I do?”
  • Whether that’s Estee Lauder producing thousands of units of hand sanitiser for NHS staff and key workers, as well as donating cosmetic products to those in challenging roles.
  • BT promising job security and wage increases to staff during the ongoing coronavirus outbreak, while CEO Philip Jansen commits to donate his salary to community charities for the next six months.
  • Or businesses getting in touch/pivoting operations to help produce specialist medical equipment, such as ventilators or PPE.
• Unfortunately, there are always some villains - and firms have rightly been called out for putting staff at unnecessary risk. But very few.
• Three clear themes emerging - business-led principles for recovery.
  • Care for your employees - treat people as you would like to be treated, and they will stick with you to rebuild our economy together.
  • Financial fairness – Govt acted swiftly to make funds available. But the financial support is finite. Only draw down help when it is desperately needed, not just wanted or there will be little left for others in months ahead.
  • Help national efforts – traditional business boundaries have disappeared, to transform operations to help support NHS, and fight against virus. Huge efforts in cash, kind and time.
• Principles aren’t exhaustive, or perfect – but vital to keep in mind across business operations and relationship.

4. Have you thought about whether different kinds of employees within companies can come back to work at different times?

• This is a complex question, which highlights why it is helpful for businesses to have prior warning about the reopening.
• If you’re an office-based company, there will be a lot of requirements you will need to meet to ensure your workplace is bio-secure. Therefore, the more advanced notice businesses receive, the better.
• Another big issue is transport and its capacity as we re-open the economy. If your company has employees that can work from home, encouraging them to do so would keep the pressure off the transport system, enabling those who need to go to work to do so easily.
• It is important to remember that public transport, when re-opened, will have to operate social distancing, so this will have big implications for their daily capacity.
• Other considerations include whether there are individuals where working from home is possible, but difficult. This is why we need to give firms the flexibility to take the decisions on who comes into work and when, and advanced notice is key to this issue.

5. We are in the corporate events industry and are planning for a return to work in September at the earliest. Do you think the government are considering extending the furloughing scheme for those sectors that cannot realistically re-open soon?

• The ongoing conversation we are having with government on this does consider phasing and sectors coming back to work later. Some support systems will have to stay in place.
• Sectors such as hospitality and aviation are feeling that they are right at the far end of the restart.
• For businesses hibernating until the end of the year, they need to know they will be supported.
• The government have said they will do whatever it takes to support them, so we need to see this happening.
• We would also suggest an adapted furloughing scheme, further down the line, to enable other sectors to incentivise people to get back into work in those sectors that do re-open. This is because we expect that for some employees being asked to return to work, they may be reticent to do so on health grounds.

6. To what extent are you considering the issues of schools and public transport as part of the re-opening plan?

• Transport is raised by every business we speak to as a potential constraint to re-opening the economy, as the majority rely on it to operate.
• The capacity of public transport will be hugely strained when it has to operate on social-distancing measures, and it will.
• We know the Cabinet Office does have a transport stream to its developing re-opening plan alongside business.
• The earlier we have the government’s thinking on these issues, the better.
• On the issue of schools, it is interesting to see schools are being opened relatively early in the re-start process in countries such as Germany, Austria and Denmark.