Watch the webinar
In today’s webinar Carolyn Fairbairn, Director-General of the CBI and Josh Hardie, Deputy Director-General of the CBI, reflected on the key moments of the week and what they will mean for business going forward.
Here are the main points they discussed:
- Going back to work safely
- Changes to the Job Retention Scheme (JRS)
- Do we need a sectoral approach to the restart?
- The benefits of an international perspective
- Longer term thinking.
Going back to work safely
Sunday night’s seven-minute address from the Prime Minister had some critical announcements for business. Boris Johnson encouraged people who cannot work from home to begin returning to work from Wednesday.
“It’s been a truly monumental week” said Carolyn, reflecting on the series of important announcements we’ve heard from the government. Sunday night’s announcement was the “starting gun” for the next phase of the UK’s response to the Covid-19 pandemic, she said. A lack of clarity made the address controversial, but the speech also “set the stage for this being complex and long term,” said Carolyn.
The next big announcement for the return to work was the release of 50 pages of guidance for businesses on how to safely manage 8 different types of workplaces. Also introduced this week was a phased return for different sectors, with construction and manufacturing returning soon and hospitality and other non-essential businesses opening again in June.
Both Carolyn and Josh were pleased with the collaboration with the unions on establishing how to manage the risks of the return to work. The guidance represented “a tremendous collaboration with the TUC,” said Carolyn. While the decision to encourage businesses to publish their risk assessments involved “really productive” conversations with the unions, said Josh.
In Josh’s view the businesses that have managed the return to work most successfully so far have been those who communicate transparently with their employees: “At the heart of this is that dialogue between employer and employee. The aim of that risk assessment is primarily to keep people safe but it’s also to build confidence,” he said.
Changes to the Job Retention Scheme (JRS)
The announcement of changes to the JRS by the Chancellor Rishi Sunak also raised questions among business leaders this week.
As well as an extension of the JRS to October, the Chancellor also suggested that a partial furlough scheme would be introduced from August to allow employees to return to work part-time while still on furlough. Carolyn noted that CBI members were interested in an earlier introduction of the partial furlough scheme and said that this feedback had been sent on to the Department for Business, Energy and Industrial Strategy (BEIS).
Another critical point of Sunak’s announcement was the introduction of an employer contribution to the scheme although the details of the level of the contribution and time frame for this remain unclear. The Treasury and HMRC are “really really debating it,” said Carolyn. Initially, the idea of a 60% government contribution and a 20% employer contribution had been floated, but this could be a problem for some businesses. “There are going to be many businesses out there who do not have a revenue stream through August, September, October,” said Carolyn. Making the contribution when they don’t have money in the bank won’t be possible.
However, Carolyn said that it is important to recognise the need to wind down the scheme. “It is very reasonable for the Treasury to say if a job is not viable for the medium to long term, it is not right for the state to pay.” Retraining could be a solution.
Do we need a sectoral approach to the restart?
Carolyn and Josh discussed whether “sectoral thinking” would become more prominent in the government’s approach to the reopening phase. Josh suggested that the Treasury might explore alternative ways to support different sectors rather than “adding endless complexity to the furlough scheme.”
Carolyn noted that we’re already seeing different support packages for hospitality in France, aviation internationally and universities in the UK. “Even if the furlough system isn’t the right way to support really stressed sectors, there may be other things that can be done.”
The CBI sees itself as having a critical role in promoting these sectoral support packages, said Carolyn. “We can talk about the whole economic benefit of a particular sectoral support package,” for example the benefits to innovation of a thriving university system and the benefits to future digital infrastructure of the construction sector.
Josh sounded a note of caution about focussing too heavily on sectors, however. “The difficulty is that the virus doesn’t support the economic definition of sectors.” We’ll see differences between businesses within sectors, some will be able to return more quickly than others. “It’s not always the case that a strictly sectoral approach might work,” he said.
The benefits of an international perspective
Over the course of this morning’s webinar, Carolyn and Josh spoke about international examples of countries emerging from lockdown. Carolyn mentioned South Korea, Germany and Austria as being ones to watch as we follow their suit in opening up our economy. Similarly, she said she was “watching France carefully” as it opens up its hospitality sector to see what we might be able to learn from them.
Also up for discussion was the impact that measures such as the proposed 14-day quarantine for international travellers could have on the UK’s position internationally. “It can be seen as an aviation issue,'' said Carolyn. “It is not. It is a whole economy issue.” The UK has a service economy and many sectors are reliant on exporting their expertise to help firms abroad. Introducing the quarantine measures “will really slow our recovery,” she said.
Carolyn and Josh both saw this moment of revival as an opportunity for UK businesses to make themselves heard internationally. “We’ve got to be out there making that case [for international trade],” said Josh. Meanwhile, Carolyn has been in conversation with equivalent organisations across Europe and the G20 to make sure that concerns about international flows of people and goods are addressed.
Longer term thinking
This week has seen the first inklings of “light at the end of the tunnel” said Carolyn. We have the opportunity now to start thinking about the future and what it will look like. Carolyn outlined some big questions that the CBI revival group will be looking at going forward:
“How do we prioritise our infrastructure spending? How do we retrain a new generation for a very different world.? How do we make sure we have sufficient demand in our economy to make sure we can refloat our business? What will the future be of international supply chains in the face of the pandemic?”
We have an opportunity to build back better, she said. “It’s an exciting time. I think actually the opportunity for business to show real leadership is there.”
Key questions we answered:
- What are businesses asking about the government’s restart plan?
- Understandably, there are lots of questions around the specifics of conducting COVID-19 risk assessments.
- To help with these assessments, The Health and Safety Executive (HSE) has published two short guides on setting out how to assess risks and talking to staff about these issues.
- The HSE also havs their existing risk assessment template that businesses can use. It’s exactly the same process, as before – it’s just the content that’s different.
- In addition to risk assessments, we’re also receiving a lot of questions on core enablers, such as transport and PPE.
- Arguably the biggest challenge ahead is planning for how staff will get to and from work every day.
- Transport operators are working hard to increase capacity safely. But, with social distancing measures it’s still likely only 1 in 10 passengers will be able to travel in some parts of the UK.
- Businesses are also looking for greater clarity on PPE. The Public Health England (PHE) guidance does not require employers to provide additional PPE beyond what employees would usually wear, outside of clinical settings, and employers should not encourage use of extra PPE. Businesses should focus first on activity like social distancing; hand washing; and reducing the frequency and number of contacts their employees may engage with.
- Carolyn, we got some important clarifications from the Chancellor on the JRS on Tuesday. Can you update us on businesses’ reactions to that announcement, and the possible next steps for the government’s support schemes overall?
- It’s important to remember that while many businesses are actively planning for the restart, there are still many firms struggling with an uncertain future.
- The Chancellor’s announcement of the extension of JRS until the end of October was welcomed across sectors – as it showed government is listening.
- Business is aware that – given the scale and cost of scheme – the scheme can’t continue indefinitely.
- We also got an update from HMT on the latest lending figures for the finance schemes.
- £8.3 billion lent via Bounce Back Loans
- £6 billion lent via CBILS
- £360 million lent via CBILS+.
- One of the key questions on many people’s minds is how we pay for this in the long-term.
- We’re expecting further details towards the end of May.
- Josh, on Monday, you ran us through the Unions’ position on the restart, can you take us through where things stand now?
- The TUC welcomed the guidance as a step in the right direction. But they’re still very concerned around the grey areas.
- There is a benefit to some of this ambiguity, in that it provides flexibility within a framework. But it also potentially increases the risk of disagreement.
- For the CBI and the TUC, the objective is the same: to keep employees and the public safe.
- There are no magic answers, but collaboration is essential. And – as we’ve said throughout this crisis – that goes right across the board.
- We need this to be a joint national effort, built on openness and trust – with business, the government, the unions and the public working together.
- We’re still in the very early days of the restart. But, contained within the government’s plan is the recognition that we’re going to be living with this ‘new normal’ for a while. So, what thinking is there about how we can learn the lessons of this crisis, and build back better?
- As you say, we could be looking at very long lead times for developing a vaccine. Let’s not forget, there is still no vaccine for SARS.
- It’s likely businesses will need to work with the reality of the new normal for the foreseeable future – and adapting their operations to meet the demands of the environment we’re now faced with.
- As we’ve said, obtaining clarity on key enablers – education, transport, etc – is critical for gearing up operations while keeping staff safe.
- It’s clear that many of the issues we were grappling with before the crisis took hold – such as inequality, sustainability, technology adoption, infrastructure and reskilling – are going to be incredibly important in the path ahead.
- Investment is critical, not just to boost the economy, improve infrastructure and local connectivity, but also to meet ambitions for a sustainable future.
- Josh, building on what Carolyn said, are you able to give us any more detail on what the plan might cover?
- As Carolyn said, it’s still too early to talk in specific detail. I think everyone around the table is focused on the immediate priority of ensuring a safe, secure restart.
- We only need to look at the GDP figures released on Wednesday – with UK GDP falling, driven by a sharp monthly decline in output – to see we’re still right in the heart of this storm.
- Our broad-brush principles are:
- Health first: The UK will be working, living and managing the economy with the virus still present. Health will remain the driving consideration.
- Unified voice: We need to be open and honest about success and failure, across organisations, within organisations, with the public, and the nations. This is the only way to build trust and confidence.
- A new vision: a Beveridge report for post-Covid Britain – building health and economic security in a changed global environment and how this drives sustainability, inequality, good work, and levelling up.
- Fast, no regrets tactics: Learn from the crisis and act fast. New solutions will be needed to be the enablers of the vision: infrastructure, education, technology, regeneration, and competition.
- Backed by immediate action: We need clear, practical steps that business and government can take urgently, and immediate action on demand, supply chains, transport, ways of working, and pensions.