Court case backlog

The backlog of court cases: impact on the legal/justice system

The COVID-19 pandemic has had a huge impact on the justice system and has created an unprecedented backlog of court cases, presenting a challenge to the courts like never before. The impacts of lockdowns and social distancing has minimised court appearances, citing safety concerns for both staff and everyone involved.

The BBC reported that towards the end of 2020, that the most serious cases have piled up to 195,000 which may not be completely addressed until 2024. The issues within the legal system is not one that has stemmed from COVID and in fact the backlog of court cases predates the pandemic but has now reached record levels. The need for Government intervention to reform the courts and the judicial system is clear to see. Many issues are created because of these problems both to the victims, defendants and wider society, however the pandemic has also revealed ways to modernise and adapt our court systems and continue to make them more accessible.

Analysing why the backlog of court cases started before the pandemic reveals various factors and issues that have led to an overstretched system. A report produced by the House of Lords Select Committee on the Constitution which focused on COVID-19 and the Courts discussed some of these longer standing failures which have resulted in this situation. These issues included the decrease in Government funding over the last decade which has fallen by 21%, the decrease in legal aid budgets which have fallen by 40% and the fact that fewer staff were being employed into the workforce by HM Courts & Tribunals Service. All of this has led to a system under intense strain, exasperated by the unprecedented effects of COVID-19, where the Government had left the justice system exposed by a lack of risk assessments and preparation for an emergency situation like this.

The Crown Prosecution Service have highlighted the level of change faced for the justice system, where court workload is 44% higher now than it was prior to the pandemic and that waiting times for crown courts have increased by 25% since last year. The concerning aspect of this situation is that justice delayed is justice denied and there is a risk that victims and witnesses will lose interest and hope in their cases if they are continuously pushed back, with an outcome to their cases unclear. The backlog of court cases also has a domino effect to the rest of the criminal justice system, it has also led to an increase of remand prisons who are kept in an uncertain position, with no access to programmers and support which they would have if they were convicted, leading to a growing group of disgruntled prisoners kept in the unsettling nature of custody.

The reaction of the court systems to try to tackle these issues in the short term, has increased an avenue which can continue to be used more in the future. The Coronavirus Act 2020 extended the use of remote hearings which have acted as a good substitute and should be considered as a widely used alternative form of serving justice in the future . This has led to many adapted procedures, such as prerecorded interviews and statements from both vulnerable witnesses and victims, which has provided them with a more comfortable and confident environment to communicate their evidence. Remote hearings also allow live streaming so that the public can see and hear them. In the longer term, this method can help to clear this backlog as it speeds up and makes court processes easier to carry out. The success of remote hearings has been presented by the Institute for Government who have stated in their performance tracker 2020, that:

‘On 23 March, 550 court or tribunal hearings used video or audio technology. Two weeks later, the figure stood at more than 3,000, accounting for around 90% of the total cases processed.’

This shows that although the backlog of cases has grown substantially, the situation would have been much worse without remote hearings. There is a need for the Government to assess both the success and failures in introduced technologies during the pandemic to improve the ability to digitise our court services and improve access to justice.

Government reaction to this, both in the short term and long term, is crucial to tackling this issue of court case backlogs and the underfunding of the judiciary system. In terms of an immediate response, the Government has focused on investing more money into the courts, opening temporary courtrooms to increase the accessibility/availability of environments for trials to take place. However, this is a not a long-term solution nor is it at the rate needed to sufficiently tackle this backlog.

The recent Queen’s Speech revealed details around the Government’s plan in reforming areas of the legal system, with many measures welcomed, albeit overdue. Within the Queen’s Speech, the Government spoke about modernising court processes through documentation being transferred to more electronic means and more procedures being completed online, such as stating pleas. The Government’s focus is ensuring legislation as ensures the timely administration of justice. The Government has focused funding towards the roll out of new technology – though virtual and remote hearings, hiring more staff and adding up to 60 nightingale courtrooms, totaling investment of over £250mn. In reference to victims losing trust in the courts system as they have continuously seen their cases pushed back, the Government also committed to increased funding for victim support services this year, totaling to £151mn and an additional £5mn for Witness Care Units, to support witnesses/victims through these court processes.

Overall, the Government is investing over £1 billion to transform the courts and tribunals system and a further £142 million in COVID-19 funding to support court recovery and upgrades necessary to tackle these growing issues. Although an assessment on the successes of Government intervention can only be made after an extensive period, we have already seen some stabilisation of the court backlog, where the rise of the backlog has stalled, acting as a good indication that the Governments interventions are having an immediate effect.

G7 overview

Overview of the G7

The G7 communique, published at the end of the summit last Sunday, sets out six areas of global action: 1) End the pandemic and prepare for the future, 2) Reinvigorate our economies, 3) Secure our future prosperity, 4) Protect our planet, 5) Strengthen our partnerships and 6) Embrace our values.

Among these goals, there are ambitions to help developing countries recover from the pandemic and ‘build back better’ for the future. Despite the ambitious pledges, there are still concerns from the international development sector on the level of commitment shown by the G7 leaders, particularly the UK which is the only G7 country to have reduced its foreign aid budget in light of the economic cost of the pandemic.

Covid-19 vaccine distribution
Ahead of the summit, G7 leaders committed to providing 1bn Covid-19 vaccines over the next year, including 100m surplus coronavirus vaccinations from the UK. The UK has committed to delivering 5m doses by the end of September, beginning in the coming weeks, primarily for use in the world’s poorest countries. Of the 100m doses, the UK will donate 5m doses by the end of September, beginning in the coming weeks, primarily for use in the world’s poorest countries. 25m more will be donated by the end of 2021. 80% of the 100m doses will go to COVAX and the remainder will be shared bilaterally with countries in need. At the end of the summit, the communique totaled the final commitments at 870m, just short of the 1bn planned.

UNICEF has welcomed the commitment from the G7 to rollout vaccines, emphasising that without a global vaccination programme, the world will be more at risk of variants that could threaten the vaccinated and unvaccinated. They also call for an accelerated timetable in light of several forecasts which suggest that G7 countries will have enough vaccine supplies to donate 1 billion doses by as early as the end of 2021, rather than the 2022 goal proposed.

Moreover, despite the large numbers of vaccines promised, it is not clear that they will go far enough. In a critique, former Prime Minister Gordon Brown argued that 11bn vaccine doses are needed to guarantee all countries the same levels of anti-Covid protection as the west. He said: ‘The gift of 1bn doses from the richest countries to the poorest is headline-grabbing and welcome. But it falls billions of doses short of a solution and does not answer what Johnson called “the greatest challenge of the postwar era”.’

Alongside the communique, the G7 set out frameworks to strengthen its collective defences against threats to global health. This includes the ‘Carbis Bay Declaration’ which promises to reduce the time taken to develop and licence vaccines, reinforce global surveillance networks, and reform and strengthen the World Health Organisation.

Education
Girls’ education has been a primary objective for UK foreign policy in recent years so it was no surprise that this was a focal point for the UK, particularly with the Global Partnership for Education (GPE) coming up next month. The UK pledged £430 million to the GPE to get the world’s most vulnerable children, particularly girls, into school. This funding pledge is on top of the £400m of UK aid which will be spent this year on bilateral efforts to increase girls’ access to education.

At the session, G7 leaders discussed also how to build back better from the coronavirus pandemic in a way that creates opportunities for everyone. Leaders reaffirmed their commitment to targets set at the G7 Foreign Ministers’ meeting in May to get 40 million more girls into school and 20 million more girls reading by the age of 10 in the next five years.

Plan International has welcomed the funding commitments from the G7 and the action plan to address the ‘devastating impact’ of the pandemic on girl’s education. However, it argues that the G7 funding commitments to GPE, totaling $2.75 bn will not be enough. GPE hopes to raise $5bn from donors, including $3.5bn from the G7.

Meanwhile, ActionAid has highlighted that the new funding pledge for girl’s education comes at the same time as the Government is cutting its aid budget on girls’ education by 40%. They argue that advancing girl’s education should form part of a wider Government response to gender equality, including by tackling violence against women and girls.

Climate change
Under the Prime Minister’s plans to Build Back Better for the World he laid forward a new approach intended to give developing countries access to more, better and faster finance while accelerating the global shift to renewable energy and sustainable technology. It includes a £500m Blue Planet Fund to protect the ocean and marine biodiversity and a Nature Compact to reverse biodiversity loss by 2030. WWF has welcomed these announcements but has called for pledges to be converted into concrete policy goals and implemented at pace to reach the targets of the Sustainable Development Goals by 2030. This will be vital ‘to abate the induced catastrophes the world is increasingly experiencing and will continue to unless we urgently transform our broken relationship with the natural environment.’

Alongside this UK, Germany and USA announced new action to scale up protection for the world’s most vulnerable communities against the impacts of climate change. The £120m new funding from the UK and £125m new funding from Germany will enable quicker responses for vulnerable people when extreme weather and climate-linked disasters hit. This will protect those most at risk in Africa, South East Asia, the Caribbean, and the Pacific and help reduce losses and damage to communities, infrastructure and livelihoods caused by climate change.

Finally, the G7 Development Finance Institutions (DFIs) and multilateral partners also pledged to invest over $80 billion in the private sector in Africa over the next 5 years. The investments will support the long-term development objectives of African economies, including those which have been negatively hit by the COVID-19 pandemic. With investments focused on renewable power, infrastructure, manufacturing, agriculture, and technology sectors it is aimed that they will provide clean, reliable power to millions of people, help create jobs and reduce poverty.

Investment in education

Reactions to the resignation of the Education Recovery Commissioner

The Education Recovery Commissioner Sir Kevan Collins’ letter of resignation followed the Government’s announcement that it was offering a further £1.5bn in education catch up support for young people, around 10% of what he had suggested was needed.

Sir Collin was direct about the impact of this gap between the two figures, stating: ‘I do not believe it is credible that a successful recovery can be achieved with a programme of support of this size’. He also said he believed ‘the settlement provided will define the international standing of England’s education system for years to come’.

This link to international standards in education was picked up by Labour leader Keir Starmer at last week’s Prime Minister’s Questions. Starmer pointed out the funding, equivalent to £310 per child over the next four years, paled in comparison to the US’s catch up plan worth over £1,600 per child and £2,500 in the Netherlands. He quoted Sir Kevan Collins describing the catch up as ‘too small, too narrow and too slow’.

Labour responded to the announcements with an opposition day debate on investing in children and young people, which Shadow Education Secretary Kate Green commented that the amount of catch up funding offered is inexplicable given the Prime Minister’s claim that children’s education is his priority. The Secretary of State for Education Gavin Williamson did not attend the debate and it was instead taken by the Secretary of State for School Standards Nick Gibb. The entire House voted to issue a motion of regret of the resignation of the education recovery commissioner and:

‘…agrees with Sir Kevan’s assessment that the current half-hearted approach risks failing hundreds of thousands of young people; and therefore calls on the Government to bring forward a more ambitious plan before the onset of the school summer holiday which includes an uplift to the pupil premium and increased investment in targeted support, makes additional funding available to schools for extracurricular clubs and activities to boost children’s wellbeing, and provides free school meals to all eligible children throughout the summer holiday.’

The Government has expressed that what has been announced is only part of the full catch up plan, of which more is to be revealed at the Spending Review. This is despite previous commitments to have Sir Collins’ recommendations delivered outside of that process, and a catch-up programme in place by September 2021. As Green rightly pointed out, Johnson has repeatedly said that education and the future of young people is a priority and key element of the coronavirus response. This makes the comparably low funding which caused the Commissioner to seems strange and out of touch with the Government’s skills drive, particularly given the lack of support for 16-19 education within the support programme. Pundits have wagered the Treasury ‘took a carving knife’ to more substantial plans set out by Secretary of State Gavin Williamson, leading calls for his resignation. Researchers at the IFS, however, commented that the decision may have been taken out of fears of the benefits of extra tuition and education support leading to a permanent increase in spending.

During a media round following the resignation news, vaccines minister Nadhim Zahawi recentred teachers’ unions as detrimental to education catch up, mentioning their opposition to extending the school day. Angela Rayner hit back, stating Tory Minister’s ‘always try to attack unions to distract from their own failures’.

Although the investment in education recovery so far totals over £3bn, as Sir Collins said, reducing spend in education at this point is a false economy. Further, the Institute for Fiscal Studies noted that if the losses to learning over the last year are not addressed ‘costs could easily run into hundreds of billions as a result of lost skills and productivity’. The sector will eagerly await the next announcements at the Spending Review, although it seems unlikely that it will meet the former Recovery Commissioner’s recommendations amongst a package of spending. The question left after that is whether Sir Collins was right in his estimations of what failing to make up for the learning loss of the pandemic will mean.

Sector responses:
• Labour Shadow Education Secretary said:
‘Kevan Collins’ resignation is a damning indictment of the Conservatives’ education catch-up plan.
He was brought in by Boris Johnson because of his experience and expertise in education, but the Government have thrown out his ideas as soon as it came to stumping up the money needed to deliver them.’

• Liberal Democrat Spokesperson for Education Daisy Cooper said:
‘Sir Kevan was a good appointment and many of us were cheering him on. The Government’s pitiful offer of a £1.4bn to support a generation of young people who have lost months of learning was an insult to him and to our young people.

Our children deserve better than this useless Education Secretary. Time and time again he keeps getting it wrong. It really is the last straw – the Education Secretary has to go.’

• Director of Education & Skills at Nacro Lisa Capper commented:
‘We must see more focus on closing the clear and significant attainment gap among 16-19-year-olds, an often-overlooked group. It is also vital that no matter where you learn, all 16-19 year olds see the benefit of this funding, including those who learn with charitable and independent providers. These students are often those most in need of support to catch up, and who benefit from the wrap around support these centres provide.’

• Sutton Trust Executive Chair and Education Endowment Foundation Chairman Sir Peter Lampl said:
‘Creating an ambitious, sustainable recovery plan to support every pupil is a considerable challenge. The extension of tutoring for the most disadvantaged young people is crucial as it’s a highly cost-effective method of making up for lost learning. The focus on quality teaching, investing in the teaching profession and early years practitioners is also much needed.

‘However, the proposed funding is only a fraction of what is required. Low-income students who have already been most heavily impacted by Covid-19 will be disadvantaged even more and overall standards, which have fallen dramatically, will be very slow to recover.

‘Sir Kevan Collins is right that much more will be needed if we are to mitigate the long-term impact of the pandemic.’

• National Association of Head Teachers General Secretary Paul Whiteman said:
‘Today’s statement confirms the disappointing scope and scale of the government’s ambition for children and young people. The government has missed an opportunity to make a real difference to the lives of young people in the short term, and ignored the necessity of putting down some firm recovery foundations for the long term. By every measure, this is a low-cost option when what pupils deserved was something first class.’

• Education Policy Institute
The EPI found that the new education recovery package of £1.4bn amounts to around £50 extra per pupil per year – a fraction of the level of funding required to reverse learning loss seen by pupils since March 2020. They commented the Government ‘decided not to take the opportunity’ to offer evidence-based interventions to protect against long-run negative impacts to education and wellbeing.

• Association of Colleges Chief Executive David Hughes said:
‘The plans for the next steps of the recovery plan will disappoint colleges and students with the least amount of time left in education. The extension of the tuition funding is good news but the failure to fund additional teaching hours or to extend the pupil premium to age 18 means that many disadvantaged students may fall through the gaps.’

Global Tax Reform

Global tax reform

The G7 has agreed to back a historic two pillar international agreement on global tax reform that will mean the largest multinational tech giants will pay their fair share of tax in the countries in which they operate – and not just where they have their headquarters. As part of this landmark deal, Finance Ministers also agree to the principle of a global minimum rate that ensures multinationals pay tax of at least 15% in each country they operate.

The plan is based on two ‘pillars’ that have long been under discussion by the OECD, Group of 20 (G20) countries and their so-called Inclusive Framework. Under pillar one, countries would get a new right of taxation over a share of profits generated in their jurisdiction by an overseas-headquartered multinational. This would mean taxing the source of a company’s revenue regardless of the firm’s physical location. This would crack down on profit-shifting to low-tax jurisdictions. The rules would apply to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate.

Under Pillar Two, the G7 also agreed to the principle of at least 15% global minimum corporation tax operated on a country by country basis. This is lower than a 21% proposal put forward by the US president, Joe Biden, earlier this year and lower than what the Labour party has been calling for. However, it is still regarded as a turning point, and the inclusion of “at least” in the G7 deal means it could be negotiated higher.

Which companies would it apply to?
The burden is likely to fall primarily on technology and pharmaceutical firms that have been able to place their business locations and intangible intellectual property in low- or no-tax locations and book their revenues in those jurisdictions. The details about which firms would be affected have yet to be worked out. The Biden administration has proposed that about 100-150 multinationals would be within the scope of pillar one. At any rate, the digital profits tax would apply only to firms making profit margins of over 10%–meaning many firms with low margins, including possibly Amazon – would remain exempt (its profit margin in 2020 was only 6.3%).

Moreover, the Chancellor Rishi Sunak is reportedly pushing for the City of London to be carved out of the G7’s plans for a global tax agreement. The Financial Times quotes an official close to the discussions as saying that the UK was one of several countries pushing for ‘an exemption on financial services’.

How much would it raise?
The OECD estimated last October that as much as $81bn (£57bn) in additional tax revenues each year would be raised under the reforms. Pillar one would bring in between $5bn and $12bn, while pillar two, the global minimum rate, would collect between $42bn and $70bn. However, this assumed that a global minimum rate of 12.5% would be applied under pillar two. It also captures a larger number of multinationals under pillar one. The Tax Justice Network advocacy group estimates that a 21% minimum rate would bring in $640bn in underpaid tax each year.

There are various estimates for how much individual countries would recover. According to the Institute for Public Policy Research thinktank’s Centre for Economic Justice, the UK would reap an extra £14.7bn annually from a 21% global minimum rate. IPPR reported that a global minimum corporation tax rate of at least 15% could raise £7.9bn for the UK, but warned this rate would not be enough to end the race to the bottom on tax. The Labour party said that the lower rate of 15% would let big multinational firms off £131m per week which could be used to fund the NHS and other public services instead.

What next?
The topic will be discussed at OECD group meetings in Paris on 30 June – 1 July 1st, and then again when G20 Finance Ministers and Central Governors meet in Venice on 9 – 10 July.

However, global corporate tax reform will prove difficult to implement. In the EU the plans will require a directive, subject to veto by the low-tax economies such as Ireland or Hungary, and passage of associated changes by national parliaments. Ireland’s finance minister Paschal Donohoe tweeted: ‘I look forward now to engaging in the discussions at @OECD. There are 139 countries at the table, and any agreement will have to meet the needs of small and large countries, developed and developing’. The battle for low-tax countries is likely to be about building support for a lower minimum rate (closer to Ireland ‘s current rate of 12.5%) or seeking certain exemptions.

Political prospects are difficult in the US too. Biden team could probably push through the global reform in the evenly divided Senate under so-called ‘reconciliation’, which requires a simple majority, if they can do so before the November 2022 mid-term elections or do not lose seats in that electoral contest.

Cabinet office

Cabinet reshuffle speculation

This is a post from Daniel Loman and Jennifer Prescott. 

Despite Number 10 saying there is no reshuffle planned speculation continues to mount as to what changes the Prime Minister may decide to make to his Cabinet. And if as Number 10 said in late May there are no plans for a reshuffle it does not mean one cannot happen in the weeks or months to come or events cannot transpire that forces the hand of the Prime Minister. Here are our thoughts based on reports and the Government’s direction and policy priorities of where each member of the current Cabinet stands.

Chancellor of the Exchequer, Rishi Sunak: Despite Sunak’s stock not being as high as it was this time last year it would be very shocking to seem him depart the Treasury. For the moment he seems to have been unharmed from the Greensill lobbying row. Sunak was also probably received the most praise during Dominic Cumming’s mammoth committee appearance, but in the eyes of the Prime Minister that could be a negative.

Secretary of State for Foreign, Commonwealth and Development Affairs; First Secretary of State, Dominic Raab: Dominic Raab has managed to stay out of any Covid related scandals and when Johnson was in hospital he acted as deputy PM. Dominic Cummings said the Foreign Secretary did not get ‘enough credit as he should have done’. Similar to Sunak, praise from Cummings could do more to harm Raab than help him.

Home Secretary, Priti Patel: Towards the end of last year it seemed inevitable that Patel would be moved from the Home Office. However despite the finding that she had broken the ministerial code of conduct Patel now seems to be on more steady ground. Patel also seems quite central to the Government’s priorities and the Prime Minister would probably have some people scratching their head if he moved on from Patel now considering he has backed her throughout everything that has already been.

Minister for the Cabinet Office, Chancellor of the Duchy of Lancaster, Michael Gove: There has been speculation that Gove could take over as Health Secretary, with sources claiming he is a consensual figure within the Cabinet, as well as one of the most experienced. Dominic Cummings spoke favourably of him, insisting that he was not responsible for the failings of the Cabinet Office. However, recent reports that he acted unlawfully by awarding a Government contract without tender process may jeopardise his promotion.

Lord Chancellor and Secretary of State for Justice, Robert Buckland QC: Publicly there has been little to suggest the Prime Minister would have a reason to move on from Buckland. The impact of Covid on prisons hasn’t really been a headline issue and neither has the court backlog. Buckland has spent more time in his job than the four people who held it before and he is probably good value to continue, he is also the first QC to have the job since Ken Clark (2010-2012).

Secretary of State for Defence, Ben Wallace: Another Minister who is probably safe, the Prime Minister will likely want someone with some experience after the announcements made in the Integrated Review earlier this year.

Secretary of State for Health and Social Care, Matt Hancock: Dominic Cummings has claimed that Hancock should have been fired for ‘15, 20 things’ so surely, he will be moving on from the Department of Health and Social Care. It seems most commentators (including us) think Hancock will be moved on. However it is worth considering that Number 10 will probably be eager to avoid validating Cumming’s concerns. The Prime Minister may also take the view that he wants Covid as far back in the rear-view mirror as possible before changing Health Secretary and that may be a little further down the line.

COP26 President, Alok Sharma: Sharma is thought to be safe in his role, especially as it could be disruptive to switch ministers just months ahead of COP26 in Glasgow.

Secretary of State for Business, Energy and Industrial Strategy, Kwasi Kwarteng: Having only being in role since the beginning of the year, it seems unlikely that Johnson would choose to move Kwarteng, who is seen as a passionate champion of the PM’s plans for a green industrial revolution.

Secretary of State for International Trade and President of the Board of Trade, Minister for Women and Equalities, Elizabeth Truss: There are rumours that Liz Truss could be in line for a promotion to the role of Foreign Secretary. She has consistently been ranked as one of the most popular figures of the Cabinet amongst Conservative members and her performance as Trade Secretary has impressed many.

Secretary of State for Work and Pensions, Dr Thérèse Coffey: The Work and Pensions Secretary sent a tweet to footballer Marcus Rashford questioning his comments about low income families just hours before the PM performed a U-turn over the provision of free school meals vouchers, which was seen as an embarrassment for Downing Street.

Secretary of State for Education, Gavin Williamson: Williamson is perhaps the Minister who is the surest thing to either be sacked or reshuffled. The resignation of Sir Kevan Collins and the constant criticism for a lack of support for pupils during the pandemic are things Williamson is having put at his door and this doesn’t even speak on what went on around free school meals.

Secretary of State for Environment, Food and Rural Affairs, George Eustice: Eustice has been a very vocal opponent of tariff-free meat imports from Australia, positioning himself against Liz Truss and the PM. This could be a reason for Johnson to remove him. It is reported that Eustice and Truss have rowed over the deal, which Eustice believes is a bad for British farmers. Another reason he could possibly lose his role is that he is not fully on board with the green agenda the Government is pushing. There is talk that chief whip Mark Spencer could take over as Environment Secretary.

Secretary of State for Housing, Communities and Local Government, Robert Jenrick: Jenrick is a strong ally of Rishi Sunak’s and seems to be well liked by the PM, however, it is uncertain whether this would be enough to save him in a reshuffle after his role in the ‘cash-for-favours’ housing bid scandal.

Secretary of State for Transport, Grant Shapps: Shapps is perceived to have done a decent job as Transport Secretary and has become one of the Government’s more reliable communicators. He managed to secure a deal with France to open the border back after the Covid variant scare in December and despite being in Spain last summer when his Department changed the quarantine rules, he has largely managed to avoid any negative attention.

Secretary of State for Northern Ireland, Brandon Lewis: Lewis has kept a relatively low profile, apart from when he made the news after stating in the Commons that the Government would go against international law as part of a new Brexit proposal for trade across Northern Ireland’s borders.

Secretary of State for Scotland, Alister Jack:  Jack will probably stay in post as presuming the Prime Minister would only accept an MP from a Scottish constituency there are only five alternatives. Douglas Ross is also the leader of the Scottish Conservatives and an MSP, so he is surely of the running, David Mundell was sacked as soon as Boris Johnson became PM. That leaves only John Lamont, David Duguid and Andrew Bowie as possible candidates so Alister Jack is probably safe.

Secretary of State for Wales, Simon Hart: Simon Hart seems to be doing a good job of selling the Government’s Levelling Up agenda in Wales. There is no obvious reason the PM would want somebody else to take over the role.

Leader of the House of Lords, Baroness Evans of Bowes Park: Baroness Evans has been Leader of the House of Lords since Theresa May’s first Cabinet. There would be no apparent reason to move Evans so unless the Prime Minister just feels like a change, she should be safe.

Secretary of State for Digital, Culture, Media and Sport, Oliver Dowden: Dowden finds himself in a situation not too dissimilar to Robert Buckland, Covid has had a big impact on the area he oversees, but with the exception of Andrew Lloyd Webber’s defiance none of it has really been headline news.

Minister of State, Lord Frost: Frost has been in the news a lot recently as he has been angering EU diplomats over his approach to the Northern Ireland Protocol, so much so that the EU has reportedly been urging Boris Johnson to remove Frost from his Cabinet role.

Minister without Portfolio (Co-Chair of the Conservative Party), Amanda Milling: There is no real reason to think Milling will be moved, however the position she occupies lends itself to the possibility of her being moved.

Chief Secretary to the Treasury, Steve Barclay: Barclay stands as a figure who is probably unlikely to see himself drop out of the Cabinet, he might be an outsider for a position of Secretary of State if Johnson finds himself with one too many positions to fill.

Lord President of the Council, Leader of the House of Commons, Mr Jacob Rees-Mogg: Rees-Mogg is a controversial figure as one of the Conservative Party’s highest profile Brexiteers and a key member of the European Research Group. His latest gaffe was his attack on a journalist under cover of parliamentary privilege. A reshuffle could be a chance for the PM to get rid, however, not having Rees-Mogg on his side could be even more troublesome.

Chief Whip, Mark Spencer: Spencer is being touted for the top job at DEFRA if Eustice departs, if this happens there has been some rumblings that Gavin Williamson could go back to being Chief Whip.

Attorney General, Michael Ellis QC: Ellis is currently filling in for Suella Braverman QC who is on maternity leave, so it is unlikely to expect any change here.

6 May Elections: what to expect

Several elections are set to take place across Britain on 6 May. Voting will take place for the Scottish Parliament, Welsh Parliament, London and Metro Mayors, London Assembly, Local Authorities and Police Commissioners.

With Covid lockdown restrictions still in place, the campaigns for each of these elections are far from ordinary and some of the issues that will impact who voters choose to cast their ballots for will also be far from ordinary.

Vuelio has teamed up with the Local Government Information Unit (LGIU) to provide a weekly bulletin with the latest news and updates, ones to watch and campaign information from the elections taking place across the country.

You can sign up to receive the weekly bulletin, starting on Wednesday 7 April, here.

Local Elections
In England, the 2021 local elections slated include over 150 local authority elections in hundreds of wards and divisions for both the delayed elections of 2020 and the scheduled elections of 2021, as well as:

  • Directly elected Mayors and Metro Mayor from 2020 and 2021
  • Parish Councils
  • By-elections
  • Neighbourhood Plan referenda
  • 40 Police and crime commissioner posts

Every single eligible citizen in England is due to be an elector in 2021. All areas are holding Police and Crime commissioner elections, except for Greater Manchester and London where these powers rest with the directly elected mayor. In many areas, electors will be voting on four or more different ballots.

This isn’t just about the sheer volume of decision making. It’s about choosing the people who will be deciding on vital services, dealing with social care in crisis, and making the tough choices as councils are struggling through an unprecedented financial crisis after a decade of unprecedented financial cuts. Local government is fundamentally about where people live and voters will be choosing the people who will help lead us to sustainable economic recovery as we emerge from the Covid crisis.

Scottish Parliament
In Scotland, 129 MSPs will be elected with the SNP hoping to regain the majority they lost in 2016. However, things have not been smooth sailing for the SNP with questions relating to the integrity of senior members of the party in the handling of the Alex Salmond scandal, all the way up to first Minister of Scotland Nicola Sturgeon. Former leader of the SNP Alex Salmond has launched his new Alba Party and it will be interesting to see how much it can deliver on his ambition for a clear majority supporting Scottish independence.

Leader of the Scottish Conservatives Douglas Ross is putting efforts into creating a unionist alliance going into the election to combat the SNP and Alba, and Ross also seems willing to serve as both an MP and an MSP (providing he is elected). Anas Sarwar will have been the leader of the Scottish Labour Party for less than three months by the time the election comes around and has so far been unwilling to enter into any agreement with the Scottish Conservatives.

Ross, Sarwar and the Leader of the Scottish Liberal Democrats Willie Rennie all seem to be making a similar argument that now is the time for recovery from the coronavirus pandemic and the discussion of independence is a distraction.

Welsh Parliament
In Wales, 60 MSs will be elected and the initial campaign focus has been on judging how well the Welsh Government has handled the pandemic. First Minister of Wales and Leader of Welsh Labour Mark Drakeford has presented his plans as ‘honest and realistic’, as he has said Wales is not likely to return to normality in 2021.

The Welsh Conservatives are taking a different view and are campaigning to end social distancing restrictions earlier than suggested by Drakeford. The Welsh Conservatives will be hoping for similar success as in the 2019 General Election, where the Conservatives gained six seats in Wales at the expense of Labour.

The decision to build or not to build the M4 relief road will also play a part as a key campaigning issue, with the Welsh Conservatives pledging to build the road if they win in the election. Drakeford has previously said the plans cannot go ahead because of the cost and the impact on the environment.

London Mayor
In London, Sadiq Khan faces no shortage of opponents, the following candidates will be attempting to take his spot: Shaun Bailey (Conservative), Siân Berry (Green), Luisa Porritt (Liberal Democrats), Kam Balayev (Renew Party), Valerie Brown (Burning Pink), Peter Gammons (UKIP), David Kurten (Heritage Party), Mandu Reid (Women’s Equality Party) and Laurence Fox (Reclaim Party). Independent candidates include Brian Rose, Nims Obunge, Charlie Mullins, Winston McKenzie, Farah London, Max Fosh, Drillminister, Piers Corbyn and Count Binface.

Baily, Berry and Porritt are likely to present Khan with his sternest opposition. Porritt is campaigning on a platform of taking London forward with ideas such as converting office space into affordable homes and improving air quality in London.

Berry has run to be London Mayor twice, in 2008 when she got 3.2% of the vote and 2016 when she got 5.8% of the vote and came third. The Green’s are focusing on fairness and tackling inequality and are presenting themselves as an independent voice in politics that can often be dominated by the Conservatives and Labour. The Green’s may also seek to capitalise on those who have drifted away from Labour since Corbyn stopped being leader.

Despite numerous criticisms to the approach so far, Bailey seems set on basing the campaign on how Sadiq Khan has failed as Mayor and how he can give London the fresh start it needs. Interestingly, it seems as though both Khan and Bailey are blaming each other for crime in London; Bailey blaming Khan as he is the Mayor and Khan blaming Bailey as he was a special adviser on crime during David Cameron’s time as Prime Minister.

Keep up with all the latest election news from Vuelio and the LGIU.

Auditor image as the industry experiences a shake up

Audit sector reforms: Government publishes white paper

Today sees the release of a wide-ranging package of reforms for the audit sector by the Government, in the form of a white paper called ‘Restoring trust in audit and corporate governance’.

Launching the document, Business, Energy and Industrial Strategy Secretary Kwasi Kwarteng said: ‘It’s clear from large-scale collapses like Thomas Cook, Carillion and BHS that Britain’s audit regime needs to be modernised with a package of sensible, proportionate reforms’ and ‘restoring trust in our corporate governance regime and encouraging greater transparency’ would ‘provide investors with clarity and certainty, cement the UK’s position as the best place in the world to do business, and protect jobs across the country’.

How did we get here?
The audit industry has come under increasing scrutiny over the last few years, with cases such as those mentioned by Kwarteng drawing public and political attention to the sector’s practices and its regulation.

The joint report on the Carillion collapse by the Commons Business, Energy & Industrial Strategy and Work & Pensions Committees criticised the ‘Big Four’ audit firms. It noted that KPMG was ‘complacently signing off the directors’ increasingly fantastical figures’, Deloitte was ‘either unable to identify effectively to the board the risks associated with their business practices, unwilling to do so, or too readily ignored them’, EY provided ‘six months of failed turnaround advice’ and PwC had ‘benefited regardless of the fate of the company’, having advised Carillion and the Government prior to the collapse and served as its special managers subsequently. The Committees concluded that they had ‘no confidence’ in the sector’s regulator, the Financial Reporting Council.

These concerns have led to three reviews of the industry, whose findings today’s white paper reacts to:

  • In December 2018, Sir John Kingman’s Independent Review of the Financial Reporting Council It described the FRC as ‘an institution constructed in a different era – a rather ramshackle house, cobbled together with all sorts of extensions over time’ and called for it to be replaced by a new Audit, Reporting and Governance Authority.
  • In April 2019 the final report of the Competition and Markets Authority’s statutory audit market study proposed legislative change to improve competition in the sector in December 2018, including separating audit from consulting services and introducing a ‘joint audit’ system under which audits of FTSE350 companies would have to be conducted by two firms, one of which would be outside the Big Four.
  • In December 2019, the final report of Sir Donald’s Brydon’s Independent Review into the Quality and Effectiveness of Audit was published. Brydon called for ‘a fundamental shift in definition and approach’ and a ‘change in mindset’, noting that while ‘audit is not broken’, it ‘has lost its way and all actors in the audit process bear some measure of responsibility’. He stated that the central objective of his review was ‘making audit more informative to its users’.

What is proposed?

The 232-page document contains a wide range of detailed proposals, which stakeholders will be grappling with in the weeks to come. Key proposals include action to tackle the dominance of the ‘Big Four’ firms in the market. Large companies will be required to use a ‘challenger’ firm to conduct a meaningful portion of their annual audit and, if competition doesn’t improve, there could be a cap on the Big Four’s market share of FTSE350 audits.

There will be a new regulator, the Audit, Reporting and Governance Authority (ARGA), replacing the Financial Reporting Council, with the power to impose an operational split between accountancy firms’ audit and non-audit functions to reduce the risk of conflicts of interest. It will be backed by legislation, funded by a mandatory levy and would have stronger powers to enforce standards. Audit and assurance professionals will be encouraged to work towards a new audit profession, rather than being a subset of the accountant profession. The definition of ‘Public Interest Entity’ will be widened to include very large non-listed companies, which will need to meet more stringent requirements.

Auditors and directors are to be given new reporting obligations on detecting and preventing fraud, and audit will be extended beyond companies’ financial reports to consider wider performance, such as on climate targets.

There are also a range of proposals to increase the accountability of directors of large companies, including fines and suspensions for the most serious failings and measures to reclaim directors’ bonuses in the event of these failings or company collapses. Large companies will also be required to be more transparent about their finances, not paying out dividends or bonuses when they could be facing insolvency, and being required to publish annual ‘resilience statements’ setting out how they are mitigating short and long term risks, such as climate change.

What has the reaction been?

Given the scale of the Government’s proposals, it’s clear that a lot of bodies in the sector will be taking their time to arrive at a detailed assessment of their implications. Nevertheless, they seem to have been broadly welcomed. Maggie McGhee, executive director of ACCA, said that the Government’s proposals contain ‘a lot to consider’ but her organisation’s initial response was ‘to welcome the depth and breadth of what is being proposed’. Michael Izza, ICAEW Chief Executive, said that ‘modernising corporate governance is a vital part of sustaining public confidence’ and urged the Government ‘to get on with implementation as quickly as possible’.

Deloitte has urged a wide range of bodies to give their input into the consultation, with UK managing partner Stephen Griggs noting that ‘only widespread input from across the business community will ensure audit and the whole corporate governance regime evolves to better meet society’s expectations’, and claiming the white paper ‘provides a significant opportunity to enhance the reputation of the UK as a leading capital market and strengthen its position in the global economy’.

This position was echoed by PwC, whose Chairman and Senior Partner Kevin Ellis said reform could make ‘the UK an even more attractive destination for foreign investment’ and ‘the views of a wide range of businesses, investors and other interested parties will be key’. KMPG agreed that the reforms would ‘demonstrate we are a fantastic country to invest in’ and welcomed the introduction of ‘a resilience statement, including Environmental, Social and Governance disclosures’.

Labour’s Shadow Business, Energy and Industrial Strategy Secretary Ed Miliband said there were ‘real questions’ about the sufficiency of the measures. He said he welcomed proposals such as ‘tougher penalties for individual company directors where there are serious failings’ but regretted that some independent reform proposals had been watered down, including ‘mandatory joint audits between the big four and challenger firms’. He called for ‘a structural split between the audit and non-audit parts of business practises’ to remain an option.

What happens next?

The consultation on the proposals in the white paper is open until 8 July 2021. The Government says that responses to this will inform draft legislation to be laid before Parliament when time allows, while many measures not requiring legislation are being taken forward by the Financial Reporting Council. It notes that auditors and others have the scope ‘to take action on their own initiative’ in the meantime, such as on ‘defining and developing a new audit profession’.

Kwarteng claims that an ‘appropriate timetable’ will be followed to implement the plans given ‘the serious challenges that businesses are facing because of the pandemic’. The Government says its overall approach will be to quickly bring into effect measures that don’t ‘directly impact on businesses’ and to quickly commence ‘measures with significant impacts on those regulated by the new regulator’ (perhaps with phase in or transition periods), but to consider ‘measures with significant impacts on wider business’ for later commencement, a transition period or phasing in.

 

 

Economy opening

Budget 2021 Speculation: rebooting the economy and protecting jobs

The economic outlook for 2021 is highly uncertain. Having started the new year with a renewed lockdown and an economy that shrank 9.9% in 2020, a stronger than expected vaccine roll-out offers hope for a recovery in the months ahead. The upcoming Budget on 3 March will be critical in terms of shaping the strength and nature of that recovery from this Covid-induced crisis.

The Chancellor has been under pressure to address two main issues: he has immediate decisions to make over many aspects of the emergency support packages that are due to expire soon, as well as a need to start looking at how to pay for the £394bn the UK is estimated to have borrowed in the past year.

Sunak warned that the Government could not ‘borrow our way out of any hole’. Speaking in the Commons after the third lockdown was announced, he warned that the public finances were ‘badly damaged and will need repair’. While the Chancellor has said that he wants to ‘balance the books’, the Government has also highlighted the ‘end to austerity’ for public spending. This suggests sizeable net tax rises will, at some point, be needed.

Many economists have warned the biggest risk to the economy in 2021 was that an ‘over-thrifty’ Chancellor would damage the recovery by tightening fiscal policy too early. According to analysis by the Institute for Fiscal Studies (IFS) and Citi Research, next month’s Budget should focus on securing the economic recovery from the Covid-19 pandemic, rather than trying to fix public finances. Similarly, former Chancellor Lord Darling has warned Rishi Sunak against ‘choking off’ the Covid recovery with higher taxes.

However, HM Treasury has announced it will publish a range of tax consultations three weeks after the Budget, a move some have suggested will allow the Government to announce a ‘good news’ agenda focusing on economic recovery while delaying decisions on potential tax rises until later in the year. Moreover, because of the slow path to reopening the economy announced on 22 February, it has been reported that the Chancellor has been forced to delay decisions on tax increases until he delivers a financial statement in the autumn.

It seems that Treasury officials are examining plans for major stimulus to the economy and are shelving plans for tax rises. Sources now say the Budget is likely to echo Sunak’s autumn ‘plan for jobs’ and be dominated by measures to protect jobs and shore up support for shuttered sectors.

Outside of fixing public finances, as already mentioned, the Chancellor has decisions to take on the support measures introduced in response to the pandemic, which are set to expire shortly. Many, including Paul Johnson at the IFS, have argued that these support measures should be extended for as long as restrictions are in place and phased out gradually as restrictions are phased out rather than coming to an abrupt halt. Budget decisions that need to be made include:

  • £20 per week boost to Universal Credit. While there is a case for maintaining the uplift and extending it to legacy benefits, if it is not to be made permanent it should be at least phased out over several months. Members of the Work and Pensions Committee argued that the Chancellor must maintain for another year ‘at the very least’ the £20 uplift. According to The Times, Boris Johnson is expected to support Sunak by backing plans to only extend the £20 increase in Universal Credit for six months, rather than a year.
  • Job Retention Scheme and Self-Employment Income Support Scheme. Britain’s most influential business groups and the trade union movement warned the Chancellor of mass unemployment unless he extends the schemes. Unemployment could reach 5% or 2.5m people by the end of the year if the job schemes end in April. IFS warned that the schemes should not be extended much beyond the point at which most restrictions are eased, otherwise it will actually choke off recovery. A much more tightly targeted version may be needed where activity is more restricted for longer: perhaps the aviation and airport industry for example.

    The Daily Telegraph reports that self-employed workers may be offered a new wave of grants of up to £7,500 through the Self-Employment Income Support Scheme, before the scheme ends in May. Labour and members of the Treasury Committee have also urged the Chancellor to open his support scheme for the self-employed; to the 200,000 people who only have a 2019/20 tax return.

  • Business rate holiday and VAT deferrals and cuts. An extension to the Chancellor’s business rates holiday and VAT reduction would create tax cuts of £9.4bn and £3.5bn respectively in 2021-22, a total of £12.9bn. According to the TaxPayer’s Alliance this could be key to reviving the economy, boosting the hospitality sector and saving summer holidays. On a similar note, IPPR published new analysis which concludes that more than half a million UK employers are at risk of collapse in the spring without the extension of business support, as cash reserves fall ‘perilously low’. According to The Daily Telegraph, the Chancellor is reportedly set to announce further VAT and business rate cuts.

Alongside the existing measures, the Labour party suggested converting the Bounce Back Loans scheme into a ‘student-loan style’ arrangement, so that businesses only have to start repayments when they are making money. Labour also called for the establishment of a British Business Recovery Agency that would manage the Coronavirus Business Interruption Loans Scheme and Coronavirus Large Business Interruption Loan Scheme in order to create terms that secure the future of businesses, including employee ownership, preference shares and subordinated debt.

Labour also proposed the introduction of Covid recovery bonds which could raise billions of pounds for the National Infrastructure Bank and would give financial security to millions, many of whom have saved for the first time. Keir Starmer also explained how he would directly help to create 100,000 small businesses across the country over the next five years by boosting funding for start-up loans. Shadow Chancellor Anneliese Dodds also demanded U-turns on the council tax hike being forced on councils and the public sector pay freeze.

The Resolution Foundation said that Chancellor Rishi Sunak should combine a £30bn extension of emergency COVID-19 support with £70bn in additional stimulus. This should include a £9bn voucher scheme focused on supporting Britain’s high streets and retailers.

The Daily Mail suggested that Treasury officials are examining plans for major stimulus to the economy. This could include vouchers for high street shoppers and lower alcohol duty for restaurants and pubs, and perhaps a return of last summer’s Eat Out to Help Out.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Covid-19 vaccine with syringe

Budget 2021 Speculation: supporting the vaccine rollout and boosting the health and social care sector

The Spring Budget will likely set out what the Autumn Spending Review of last year attempted to achieve: support the health sector in its immediate efforts to reduce the spread of Covid-19 transmission and then help the wider sector recover from the battering of the pandemic.

Another coronavirus wave later, the Budget needs to support the continued roll out of the Covid-19 vaccine and NHS Test and Trace. As it is hoped that the current lockdown is the last, the Budget should lay forward plans to drive improvement across health and social care following on from the pandemic. This imperative given the wide impacts Covid-19 has had on NHS health services and social care.

Measures to prevent the spread of the pandemic have proven costly during the past year. The controversial NHS Test and Trace scheme has seen its budget for 2020-21 grow over time, now standing at £22bn. Despite initial concerns that the system was only having a ‘marginal impact’ in reducing Covid-19 transmission, figures in recent months are more promising. More than three million people were tested during a single week in February and NHS Test and Trace successfully reached 87% of those who received a positive test result, and 93.5% of their contacts.

However, even with this progress, the scheme is far from perfect. Giving evidence to the Science and Technology Committee in early February, Dido Harding, Chair of NHS Test and Trace, said an estimated 20,000 people a day who are asked to isolate were not doing so fully.

With testing and contact tracing expected to be used for the country to come out of lockdown during spring, it seems likely that political focus will once again switch to NHS Test and Trace, with long term commitment to the scheme essential to keep the country out of lockdown.

The roll out of the Covid-19 vaccine will need continued momentum from the Treasury. The Government has already invested over £300m into manufacturing a successful vaccine. This includes securing 100m doses of the Oxford/AstraZenca vaccine and 40m doses of Pfizer/BioNTech vaccine, which are both currently in deployment. However, the emergence of Covid-19 variants across the world could hinder the effectiveness of these vaccines, and new vaccines may need to be developed and deployed in the future.

The Health Secretary suggested earlier this month that new treatments and vaccines would play an important role in turning Covid-19 from a pandemic into another illness that we have to live with, like we do with flu.

Aside from the pandemic response, the upcoming budget must support the wider health sector. With many non-Covid treatments cancelled and delayed over the past few months, the think tank Reform has suggested that 10m patients could be on an NHS waitlist by April 2021.

Large amounts of funding have already been earmarked for NHS services, including a £3bn NHS recovery package announced in the Spending Review last autumn. £1bn of this was allocated to support the NHS in tackling the elective care backlog and support hospitals to cut long waits for treatment by carrying out extra checks, scans and additional operations or procedures.

It is likely that this support will have to be expanded in the upcoming Budget to account for the pressures faced by the health sector in recent months, which saw hospitals severely stretched by unprecedented levels of Covid-19 hospital admissions, almost double the number seen during the first wave in spring 2020.

Cancer Research recently argued the sustained disruption of the pandemic has ‘left a deep rift in cancer care’, with 40,000 fewer people starting cancer treatment across the UK last year. Meanwhile, the British Heart Foundation (BHF) has highlighted that tens of thousands of potentially life-saving operations have been cancelled or delayed during the pandemic. BHF has called for the Chancellor to announce an additional £10bn investment this year to deliver the aims of the NHS Long Term Plan as well as invest in public health programmes.

NHS Providers has appealed for support to tackle the growing and long-term pressures arising from Covid-19, as well as funding to drive forward improvements in patient outcomes, quality and efficiency. Additionally, it has called for the Government to recognise the contribution to the pandemic response from NHS staff over the past year, with a pay rises and a workforce plan.

Social care cannot be forgotten in the upcoming Budget. When the Government published its White Paper on NHS reform earlier this month, it promised to publish separate proposals for social care later this year. It would be encouraging if the Budget could set out some of this essential long-term investment for the sector.

NHS Providers said that this is vital considering the impact the Covid-19 pandemic has had on social care. The Association of Directors of Adults Social Services also recently called for wide reform across social care including a commitment to long- term funding.

Vuelio Political clients will receive the Budget Summary on 3 March. 

DCMS budget

Budget 2021 Speculation: supporting digital growth while saving culture and sport

The effects of Covid have created extensive issues that have decimated the creative sector and it now needs to be supported by the upcoming Budget. However, Covid has also scaled digitalisation across the UK and may prompt Chancellor Rishi Sunak to drive more funding towards the roll out of digital connectivity.

The creative sector is predominantly made up of freelance artists who have been badly affected because of lockdown measures. Many freelancers have been unable to find work due to cancellations of events, with some forced to retrain to find employment.

There have also been stark criticisms directed towards the Government as the Self Employment Income Support Scheme (SEISS) did not cover those with jobs that involve moving from freelance contract to freelance contract on a short-term basis. This includes many people who work in creative industries, such as musicians. The Treasury Committee’s third report on the economic impact of coronavirus: ‘Gaps in Support and Economic Analysis’ stated that ‘ONS data indicates that 3% of all self-employed in the UK have become self-employed since April 2019, which, roughly estimated, suggests that around 150,000 newly self-employed are unlikely to be eligible for support under the SEISS.’

It is therefore essential that the upcoming spring Budget tackles this issue and in the words of Mel Stride MP: ‘the Chancellor must not forget those who have fallen through the gaps around previous support packages and must provide the necessary workforce support measures and economic plan for the self-employed.’

Another issue within the creative sector has been the complete cancellation of festivals and gigs. The flagship economic study by UK Music by Numbers revealed that before COVID-19, the UK music industry contributed £5.8bn to the UK economy, with live music making up £1.3bn of this and contributing to the employment of 34,000 people. As all these events were cancelled last year, this left a huge financial gap in takings for the industry, and prospects for events to go ahead this year look increasingly unlikely.

In a recent DCMS Committee evidence session, which focused on the future of UK music festivals, witness Sacha Lord, co-founder of Parklife and The Warehouse Project, spoke about necessary Government intervention that is needed for events to restart and go ahead this year, including the need for a Government-backed Coronavirus cancellation insurance scheme, an extension to the VAT rate reduction on tickets carrying on at 5% for the next three years, extension on business rate reliefs, and a ‘more nuanced, specified furlough scheme for specific industries, for festivals’ until events are fully running with 100% capacity.

These are all measures that could be introduced in some capacity in the upcoming Budget.

Committee chair Julian Knight has also called for the Government to address these issues, where he has emphasised the need to introduce a Government-backed Coronavirus cancellation insurance scheme, saying: ‘Insurance must be the first step in unlocking the huge contribution that festivals make to our economy, protecting not only the supply chains, but the musicians who rely on them for work’, and that ‘the industry says that without Government-backed insurance, many festivals and live music events just won’t happen because organisers can’t risk getting their fingers burnt for a second year.’

The upcoming spring budget provides the Government with the perfect opportunity to introduce this much needed measure.

Both of these issues have been highlighted by the Creative Industries Federation, which has set priorities it expects from the upcoming spring budget that include: extending the Self-Employed Income Support Scheme for as long as restrictions on work remain, urgently plugging the gaps in support for freelancers, extending the Job Retention Scheme, temporary business loans, grants and rate reliefs across all UK nations for as long as restrictions remain, introducing a Government-backed insurance scheme for live events, extending the VAT rate reduction on tickets beyond March 2021 and repurposing the Tradeshow Access Programme to support virtual, not just physical, events.

It also expects the Budget to reevaluate and boost funding towards digital connectivity, especially as COVID-19 emphasised the need to boost digital connectivity. The pandemic has forced the workforce towards remote working and has digitalised many aspects of society.

Focusing on digital connectivity, it is widely expected that the upcoming budget will replace the current Rural Gigabit Connectivity Programme (RGC), which is due to end by 31 March 2021, with a new progamme and fresh funding.

The RGC was launched in 2019 and focused on helping properties in rural locations to access faster broadband. A main part of this was a voucher scheme that, as defined by Building Digital UK, allowed ‘community and small to medium sized businesses to aggregate vouchers together in group schemes to fund the cost of gigabit-capable broadband to their community.’

DCMS has reported that an independent review revealed that ‘The £2.6bn Government scheme to roll out superfast broadband to ‘commercially unviable’ parts of the UK sparked a surge in home values of up to £3,500, according to a new report, and more than 96% of homes and businesses can now access superfast broadband.’

It is expected that a successor programme will be introduced to continue progess on the Government’s £5bn UK Gigabit Broadband Programme, which aims to provide ‘gigabit-capable’ network coverage to a minimum of 85% of society by the end of 2025. DCMS also recently published the Planning for Gigabit Delivery in 2021 report, in which it stated that ‘following the success of the Gigabit Broadband Voucher Scheme, we’re keen that we continue voucher-supported delivery during 2021’, and ‘the voucher team will continue to work with suppliers and communities to transition smoothly from the current to the new voucher.’ The question remains of how much funding will be made available for the new voucher, expected to be announced in next week’s budget.

The closures of gyms and leisure centers because of COVID-19 has become a worrying issue that also needs to be addressed. This issue has been highlighted by Rebecca Passmore, the managing director of PureGym, at a DCMS committee oral evidence session. She said: ‘Gyms have had no income for 34 of the last 54 weeks, we have had no revenue coming in. We haven’t been able to do click-and-collect or takeaways. It’s clearly taking its toll on operators. Balance sheets are being pushed to their limits.’

The Guardian reports the measures representatives from gyms and leisure centers are seeking from the Government to help them recover and survive from the effects of coronavirus. The Budget could include these measures, which ask the Government to apply ‘the same VAT rules to the physical active sector as it does the hospitality industry, which has had to pay the Government only 5% of the 20% VAT it has collected in lockdown’, and calls for the Government to ‘extend the rent holiday and to also legislate so that the burden of rent was shared between landlord and tenants during the lockdown.’

The BBC has also reported that ‘A coalition of athletes, celebrities and health bodies have written to the prime minister asking for the “fullest possible support” to help sports and exercise facilities survive the pandemic.’ Overall, there is a clear need and expectation that the upcoming budget will outline plans and funding towards the survival and recovery of gym and leisure centers.

It is clear that digital, cultural and sport sectors are among the most adversely affected by COVID-19 and the upcoming budget is expected to outline plans to resolve these issues, and support Covid recovery and job protection. At the same time, the acceleration of digitalsation within the UK because of COVID-19 could see accelerated measures introduced to boost digital connectivity.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Budget 2021 education predictions

Budget 2021 Speculation: the education and skills crisis

According to the Institute for Government, the upcoming Budget will focus on the Treasury’s ‘Plan for Growth’, although growth may be a little hard to envisage while the UK remains in lockdown and unemployment rises. However, it safe to assume, even in ‘the new normal’, that much of the Budget this year will focus on protecting jobs and promoting skills.

According to IPPR, half a million employers are at risk of bankruptcy once job support schemes close, together employing approximately nine million people. Labour is joined by a plethora of voices calling for Chancellor Rishi Sunak to announce an extension to the furlough scheme, due to end in April, to prevent more large-scale job losses.

Despite emerging data on the positive impact of the UK’s vaccine roll-out on transmission and severity of illness,  2021 will undoubtedly pose another challenging year for the labour market. It is therefore essential that Sunak sets out how crisis support will meet the winding down of restrictions.  Another furlough extension does seem quite likely, given that the last extension was granted before the current lockdown was announced.

The Government already set out a plan for jobs last summer, with a number of schemes to incentivise businesses to take on apprentices or to support individuals to upskill in order to find work, so one could assume these bases have already been covered. However, the Lifetime Skills Guarantee won’t come in until April this year, with the further education sector already voicing concerns about the probability of its success. These worries join concerns about the uptake of incentives like Kickstart, despite the Education and Skills Funding Agency recently sharing how employers are benefitting from the scheme.

At a time when young people are struggling the most to gain and maintain paid work, it is essential that job support is offered where it is needed, and that schemes for job creation are changed quickly if found to be ineffective. Such changes have been suggested by the Institute of Fiscal Studies, who support an extension to the Kickstart Scheme beyond 2021. A strong focus on jobs is therefore essential if the Government is to deliver on the mantra of ‘building back better’ from the pandemic.

One way to do this is to keep the commitment to raising the minimum wage in April, which would go some way to addressing the low pay of keyworkers we have all relied on over the course of the last year. However, as the Learning and Work Institute argues, this must be part of a broader package of ‘good work’ practices to reduce job poverty and improve standards in the UK.

Another obvious and immediate need is for a well-resourced catch-up programme for children who have now been learning from home on and off for a year, with a devastating impact on education across the board. Anyone who regularly listens to Prime Minister’s Questions will have heard Prime Minister Boris Johnson say that remedying the damage to children’s education is a focus for the Government.

Large amounts of funding have already been allocated for tutoring, catch-up and digital access, although there is further discussion on how best to implement catch up. This funding has recently been supplemented with a further £300m, in light of the delay to reopening schools. However, there are reports that even this amount will not cover the damage, and that schools per pupil funding has fallen in real terms this year to below what it was in 2010-11 due to the pandemic. Despite this, it seems unlikely that more catch-up support will be offered in this years’ Budget although it would be welcome.

Yet to be addressed (depending on who you ask) is the need for an equivalent catch up programme for the early years sector, requested by The Sutton Trust last year. Crucial to educational attainment and even job prospects later down the line, lost access to high quality early education either through choice or forced closure is already having an impact on school readiness. But as Fleur Anderson MP recently pointed out in a session of the Education Select Committee, with ministers Nick Gibb and Vicky Ford, there has been no catch-up programme for the early years. Ford, the Minister for Children and Families, said this was due to providers staying open in lockdown while schools had to close. This has not stopped Labour’s Shadow Minister for Children and Early Years Tulip Siddiq asking the Secretary of State for Education Gavin Williamson what discussion on a long-term funding settlement for maintained nursery schools he has had with the Chancellor.

The Budget this year is likely to feature heavily on job support and creation, as the job market continues to be impacted by restrictions caused by the pandemic. Although it is clear the Government will have to prioritise certain areas of support after an incredibly difficult year, the consequences of inadequate funding for education and the early years sector has the potential to push another crisis further down the line.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Green recovery budget 2021

Budget 2021 Speculation: How might Rishi Sunak deliver a green recovery?

Much has changed since Chancellor Rishi Sunak delivered his last Budget almost a year ago, but one thing which hasn’t is the need to tackle climate change and to protect the environment, both in the UK and internationally.

When the Treasury announced that 2021’s Budget would be on 3 March, it said that it would ‘set out the next phase of the plan to tackle the virus and protect jobs’. As the widespread calls, both from within the Government and from a wide variety of interested parties, to ‘build back better’ and deliver a ‘green recovery’ show, these two aims can be delivered in parallel.

So far, the Government has released some of the building blocks to inform and help deliver these aims. We’ve had the Ten Point Plan for a Green Industrial Revolution, the National Infrastructure Strategy, the Energy White Paper, the interim report of the Treasury’s Net Zero Review and the Dasguta Review on the Economics of Biodiversity. More strategies are promised, digging into some of the toughest areas of decarbonisation: heating, transport, energy-intensive industries. With the UK hosting COP26, the UN’s climate change conference, this year, the Government will want to show that it is leading by example.

But to deliver on these strategies, the Chancellor will need to pull some of the levers at his disposal. To look at it in the most simplistic way, the Government has two ways of doing this: spending and tax. Sunak could announce investment in technologies and projects to deliver a ‘green recovery’ or changes in taxes to incentivise others to do so, such as new reliefs. Equally, he could announce increases or adjustments to taxes to penalise those responsible for emissions and environmental damage, embracing the ‘polluter pays’ principle.

One tax which could rise is fuel duty. The Daily Telegraph recently reported that Conservative backbenchers believed that an increase is ‘inevitable’. A ‘Northern Tory’ told the paper that ‘the Government can wrap itself up in the green cloak of COP26 and the British public might not love it, but they will stomach it’. However, ending the decade-long freeze would not be without political problems. The Sun, which strongly backed the freeze, has already mobilised against the change, enlisting backbenchers Robert Halfon, who said ‘a fuel duty increase would level down – far from building back better and would damage the foundations of economic recovery’, and Craig Mackinlay, who claimed it would be ‘bad for the economy, bad for business and bad for jobs’.

The Times has reported that the Government has been considering options for new carbon taxes, with departments ordered to set ‘prices’ for emissions from all parts of the economy as part of a plan to ‘implement some form of carbon pricing’ in the next decade. This would form part of a strategy to ‘deliver a carbon price for the whole economy’ ahead of COP26. However, this plan has been blocked by Boris Johnson according to the Daily Mail.

BDO suggests that further changes to taxes linked to climate and the environment could be announced, such as capital allowances ‘that support the Government’s carbon reduction agenda’, new taxes on more single-use items such as coffee cups, or higher VAT rates for ‘environmentally damaging goods and services’.

If the Government is minded to go down this route, it would do well to examine the findings of a recent National Audit Office report that concluded the Treasury and HMRC ‘tend to focus more on the revenue that environmental taxes raise rather than the environmental impact they achieve’ and ‘do little’ to identify measures ‘which impact on Government’s wider environmental objectives but which are not recognised as environmental in nature’. If the Government wants to use the tax system to incentivise environmentally beneficial behaviour and penalise irresponsible activity, it needs to be sure that it’s doing so in an effective way.

Of course, another way in which the Government can act is for Rishi Sunak to produce the national chequebook. As the Institute for Fiscal Studies notes, ‘we need a plan for measures that increase the productive capacity of the economy and help steer and ease the transition to a new normal’ which should include ‘investments in physical and digital infrastructure, training, and science’ to help ‘achieve goals such as reaching Net Zero by 2050’.

The use of Government investment to deliver this green recovery is being advocated by business and unions. The TUC is continuing to push its plan to create 1.24m jobs in green infrastructure by bringing forward at least £85bn of infrastructure investment. This would see investment across a range of industries, including energy, land, buildings, transport, waste, manufacturing and digital, delivering a range of positive outcomes both for the environment and the economy.

The CBI has recommended that the Government commit to deliver seven more gigafactories by 2040 (these build batteries for electric vehicles), ensure that private sector investment is crowded-in by the new National Infrastructure Bank and invest in sustainable aviation fuels, as well as introduce reliefs for businesses which invest in property and machinery energy efficiency.

The Institute for Directors has advocated the creation of a ‘new digital and green Recovery Credit incentive for SMEs’, helping to support their investment in digital and green technologies, noting that at the moment British small businesses ‘tend to lag peer nations when it comes to adopting best practice’. It also wants a ‘retraining Recovery Credit incentive for SMEs’, which would especially focus on digital and green skills.

One area to particularly watch out for will be the future of the Green Homes Grants. Launched with much fanfare by Sunak as part of his Plan for Jobs last summer, recent news has not been encouraging. The grants were advertised as being worth £2bn, allowing homeowners and landlords to apply for vouchers for energy efficiency improvements. However, 95% of the £1.5bn for householders has not been spent and, while the grants have been extended until March 2022, the funding is not being rolled over to the next financial year. Instead, £320m will be available from March – a much smaller sum.

Shadow Business, Energy and Industrial Strategy Ed Miliband said that the Government was ‘denying homeowners the energy improvements they need, denying installers the work they need and denying the country the green transition we need.’ The Government blamed the low take-up on ‘an understandable reluctance on the part of the public to welcome tradespeople into their homes.’ If Sunak does want to revisit the design or funding of the scheme, the Budget would be a good opportunity.

With so much happening in the environmental and climate policy landscape in 2021 – including another budget, the UK’s Sixth Carbon Budget – it would be a missed opportunity if the Chancellor didn’t take the Budget as an opportunity to ensure that the Government’s tax and spending decisions were in line with its ambitious climate ambitions.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Budget speculation Housing

Budget 2021 Speculation: Housing

In the run up to next month’s Budget, housing industry bodies have been leading numerous campaigns – from protecting leaseholders from cladding costs, to extending various tax cuts, to accelerating the decarbonisation of buildings.

Here are six policies that could be included in the Chancellor’s statement.

1. Stamp Duty holiday extension
Many in the housing sector are calling for the six-month Stamp Duty holiday to be extended beyond the current 31 March expiry date. Both buyers and sellers have called for an extension to the six-month tax break, introduced to support the property market during the pandemic. Experts have predicted that the end of the scheme could see house prices decrease significantly. Other than setting the end of the Stamp Duty holiday to another date, the Chancellor could choose to introduce exemptions for buyers already at a certain stage along the process, or permanently maintain the threshold for eligibility at properties over £500,000.

2. Property tax
There have been reports that Stamp Duty could be scrapped altogether, along with council tax, to be replaced with a new property value tax. This could appear in the form of a proportional property tax – a levy that homeowners would have to pay each year on the value of their property. For landlords with more than one residential property, the tax would apply for each property owned. There have been suggestions that the money raised from the levy could be split between the Treasury and the local authority.

Housing Secretary Robert Jenrick has already announced that developers seeking permission to develop certain high-rise buildings in England will have to pay a ‘Gateway 2’ developer levy. In addition to this, a new tax will be introduced for the UK residential property development sector, expected to raise at least £2bn over a decade to go towards cladding remediation costs. Details of this will be the subject of a consultation paper, which could be put forward at the Budget.

3. Domestic reverse charge
The ‘domestic reverse charge’ change means companies in the construction supply chain will no longer receive their 20% VAT payment when they submit bills. The VAT cash will instead be paid direct to HMRC by the customer receiving the service, who will reclaim it in the normal way.

Despite the changes coming into effect on 1 March, industry bodies, such as the Construction Leadership Council and the Federation of Master Builders (FMB) are hoping for a last-minute change of plan ahead of the Budget, warning that more than 150,000 construction companies will experience a 20% drop in cash flow as a result. In a letter to the Chancellor, Chairman of the Construction Leadership Council Andy Mitchell argued that the policy ‘risks reversing any recovery industry has made from Covid-19 and will limit the scope for protecting and creating jobs across the UK’. An Early Day Motion expressing concern over the Treasury’s decision to go ahead with the policy was tabled last week by SNP MP Kirsten Oswald.

4. National Retrofit Strategy
There have been numerous calls from industry bodies, including the National Housing Federation and the FMB, for a National Retrofit Strategy. Decarbonising homes and buildings is a vital step in achieving net zero emissions by 2050. In its Energy White Paper released in December, the Government said a programme for retrofitting homes to improve energy efficiency will be introduced. This could happen at the Budget.

5. Another extension to the Green Homes Grant
The Green Homes Grant has already been extended once, until March 2022, however, poor uptake of the scheme – described as complex and difficult to access – has led the Government to cut funding by £1.5bn from April. Chair of the Environmental Audit Committee Philip Dunne argued that unless the scheme is further extended, it will fail to meet its ambitions.

6. Extension to the Universal Credit uplift
Universal Credit claimants have been receiving a weekly £20 rise during the coronavirus pandemic. The Government is under increased pressure to extend the rise past 31 March, however, speaking on the Andrew Marr Show, Foreign Secretary Dominic Raab said it was a ‘temporary measure’ and that the Budget would set out support ‘in the round’.

Instead of extending the rise, there have been numerous reports in the media that the Chancellor is contemplating offering Universal Credit claimants a one-off payment of £500. However, this was rejected by Work and Pensions Secretary Thérèse Coffey.

Vuelio Political clients will receive the Budget Summary on 3 March. 

Healthcare

Health and care system reform

The Government laid out wide ranging reform of the health and care system yesterday. The White Paper ‘Integration and Innovation’, marks a structural shift away from the coalition Government reforms of 2012, and sets out ambitious legislative proposals for a new Health and Care Bill. 

The main aims of the proposals are to integrate healthcare systems, reduce bureaucracy and strengthen accountability in the sector. Announcing the plans, Health and Social Care Secretary Matt Hancock said: ‘Even before the pandemic, it was clear that reform was needed to update the law, to improve how the NHS operates and to reduce bureaucracy… All parts of the system told us that they want to embrace modern technology, to innovate, to join up, to share data, to serve people and, ultimately, to be trusted to get on and do all that so that they can improve patient care and save lives.’

The plans propose that Integrated Care Systems (ICS) are rolled out across the country, bringing together NHS organisations, local government and wider partners at a system level. In order to increase collaboration, bureaucracy will be reduced and there will be greater flexibility for the workforce with increased data sharing mechanisms. Aiming to improve accountability and public confidence, the Secretary of State will have greater powers of intervention, including over a newly merged NHS England and NHS Improvement organisation.

Response to the proposals is mixed; although plans to integrate the healthcare system are largely positive, there is some concern over moving power away from NHS England to central Government. Additionally, with the health system still battling an acute wave of the coronavirus pandemic, some are concerned that now is simply not the right time for reform.

Shadow Health and Social Care Secretary Johnathan Ashworth welcomed integration plans, but asked for greater clarity on how the new structures will be governed. He called the decision to give more control to the Government a ‘power grab’ and suggested that changes to competition rules would leave the door open for ‘institutionalised cronyism at the top’.

NHS Providers suggested that the proposals provide an ‘important opportunity to speed up the move to integrate health and care at a local level’, but called for greater detail on the Secretary of State’s new powers over NHS England.

NHS Confederation called the reforms ‘vital for improving patient care’ after the 2012 reforms have ‘largely failed’.

Lou Patten, CEO of NHS Clinical Commissioners and NHS Confederation ICS Lead, called the decision to establish ICSs across the country a ‘logical step’ to build on the progress seen from the past few years. He called for greater detail on how the new systems will be governed, highlighting that retaining the expertise of senior staff throughout the restructuring process is essential.

Alzheimer’s Society said that with the pandemic exposing how ‘truly broken’ the social care system is, greater integration between health and social care is a ‘good step forward’. It argued that any reforms should come in conjunction to a social care system ‘overhaul’.

The Health Foundation also welcomed the decision to increase collaboration between services, suggesting that the proposals could bring ‘real benefits’. However, it argues that with the NHS facing huge challenges due the pandemic and rising waiting lists, a reorganisation of the health system could cause ‘distraction and disruption’. Furthermore, the decision to increase Government power is ‘politically driven’, it argued that ‘the Government’s handling of Covid-19 is no advert for more ministerial intervention in the health system’.

The King’s Fund also welcomed greater collaboration across the heath and care sector. Richard Murray, Chief Executive of The King’s Fund, said: ‘These new plans could give the NHS and its partners greater flexibility to deliver joined-up care to the increasing numbers of people who rely on multiple different services.’

However, it worries that under the new proposals, the day-to-day clinical and operational independence of the NHS will be diminished, and argued that devolving greater power to NHS England was one of the ‘successes’ of past reforms.

In a similar vein, the Institute for Government’s Nicholas Timmins has said greater ministerial control ‘threatens to take the NHS back to the wrong sort of future’. He suggests it could lead a ‘constant chopping and changing of goals’ and less public pressure from within NHS England, which would ultimately be to the detriment of long term performance.

Vuelio Political clients received their copy of the white paper summary yesterday. Find out more about our political products and services.

Scottish budget Kate Forbes

Scottish Budget 2021-22

Vuelio’s Ingrid Marin writes about the highlights of the Scottish Budget, which aims to rebuild a fairer, stronger and greener economy.

As the Scottish Budget itself observes, this year’s publication ‘is like none before it, and is informed by the experiences and impacts of the past twelve months.’

The Budget has been developed against the backdrop of the clear and significant threat still posed by the virus, but also the hope for better days ahead, with Cabinet Secretary for Finance Kate Forbes claiming: ‘this is a Budget to provide help in the immediate term, but also to rebuild a fairer, stronger and greener economy’.

READ THE FULL SCOTTISH BUDGET SUMMARY HERE

The Scottish Fiscal Commission forecasts published with the Budget suggest that GDP will fall by 5.2% in the first quarter of 2021, but the vaccine rollout will allow a return to growth in 2021-22, though GDP is not expected to return to pre-pandemic levels until the start of 2024.

These forecasts have assumed that the Coronavirus Job Retention Scheme will end in April and will not be replaced, acting as a driver for the forecast that unemployment will reach 7.6% in the second quarter of 2021. The Scottish Budget also notes the impact of Brexit on the Scottish economy; Scottish GDP could be 6% lower by 2030, compared to full membership of the EU.

In the immediate term, health must come first and lowering transmission rates remains the Scottish Government’s priority. The Budget supports the safe and sustainable recovery of the NHS, with record funding in excess of £16bn – an increase of over £800m in core Health and Sport funding. Acknowledging the impact Covid-19 has had on a significant number of people’s mental health, overall spending on mental health will be in excess of £1.1bn.

The Budget’s tax choices recognise the impact the pandemic is having on people, households and businesses. For example, in recognition of the unique pressures created by the pandemic on household incomes, the settlement includes an additional £90m to compensate councils who choose to freeze their council tax at 2020-21 levels.

The Scottish Government also announced that the 100% non-domestic rates relief for Retail, Hospitality, Leisure and Aviation sectors will be extended for at least three months. Should the UK Government bring forward an extension to their equivalent RHL relief that generates consequential funding, the Scottish Government will match the extension period as part of a tailored package of business support measures.

The Budget also helps people and households by securing £3.5bn for social security and welfare payments, including £68m for the ‘game changing’ Scottish Child Payment, which once fully rolled out will help lift an estimated 30,000 children out of poverty.

Seeing the first signs of hope and optimism for a better future, with the approval and roll-out of vaccinations and looking ahead to the COP26 summit, being hosted in Glasgow in November 2021, the Budget sets out a five year green economic recovery plan. The Scottish Government plans to spend £2bn on low carbon investment across the next five years, starting with £165m in 2021-22 towards large scale green infrastructure projects.

Similarly, over the next Parliament, the Scottish Government will deliver a new £100m Green Jobs Fund. This will invest £50m through enterprise agencies to help businesses which provide sustainable and/or low carbon products and services to develop, grow and create jobs. A further £50m will support businesses and supply chains to take advantage of public and private investment in low carbon infrastructure, and the transition to a low carbon economy, boosting green employment. In 2021-22, £14m will be allocated from the Green Jobs Fund.

The Scottish Government will provide £2.7bn across the Education and Skills budget. To ensure that the workforce can take advantage of the new and emerging employment opportunities as part of a green economic recovery, the Scottish Government will be providing support for individuals to retrain and upskill. In particular, it has developed the Climate Emergency Skills Action Plan and is planning to establish a Green Jobs Workforce Academy.

While this is an ambitious Budget to both protect and renew Scotland, Forbes highlighted that it also comes with significant fiscal uncertainty. She said: ‘In the absence of a UK Budget, much of the information we need to plan with certainty is missing. We must persevere with a Budget based on a partial

Weekly Health Summary

COVID-19: Weekly Health Summary – 28 January

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Official statistics this week showed there have been 100,000 deaths attributed to Covid-19 since the start of the pandemic. Speaking at the Downing Street press conference, Prime Minister Boris Johnson said: ‘I am sorry to have to tell you that today the number of deaths recorded from Covid in the UK has surpassed 100,000, and it is hard to compute the sorrow contained in that grim statistic.’

In the House of Commons on Wednesday, he said he takes full responsibility for all the actions that Government has taken during the pandemic and promised to learn the lessons of what has happened. Meanwhile, Labour Leader Kier Starmer called the number of deaths a ‘tragic milestone’ and accused the Government of being slow in its response to the pandemic, including on entering lockdown, distributing PPE, protecting care homes and securing borders.

NHS Providers said it is a ‘tragedy’ that there have been over 100,000 deaths from Covid-19 and paid tribute to the commitment of NHS and care staff. It added: ‘We won’t know the true impact of Covid-19 for a long time to come because of its long-term effects – but, as well as the high death rate, it’s particularly concerning that this virus has widened health inequalities and affected Black, Asian and minority ethnic communities disproportionately.’

The Health Foundation has argued ‘the scene for the current crisis was set long before the virus arrived’, and suggests that a lack of long-term planning and historic underinvestment in public services led to an inadequate social care system, staff shortages in the NHS, and low capacity in public health. The Foundation has called for a full inquiry on the pandemic, which assesses if health and economic inequalities in the UK have hindered its response.

On Monday, the Office for National Statistics released figures on coronavirus related deaths by occupation. It found that between March and December 2020 there were nearly 8,000 Covid-19 related deaths in England and Wales within the working age population (those aged 20 to 64 years). Nearly two-thirds of these deaths were among men, with men in elementary occupations or caring, leisure and other service occupations having the highest rates of death involving Covid-19. Men and women who worked in social care or nursing occupations had a significantly higher rates of death involving Covid-19.

NHS Confederation said the figures ‘demonstrate all too clearly the toll the pandemic has taken’ on frontline workers and said that there must be measures to protect workers who are more exposed to the virus. Meanwhile, the Royal College of Nursing (RCN) has called for more detailed information on how Covid-19 is impacting health and care workers, including factoring in ethnicity. RCN Chief Executive and General Secretary Dame Donna Kinnair said: ‘The loss of life of health care workers is heart-breaking and is felt profoundly by every member of the nursing community…The fact the rate of death amongst nursing staff is significantly higher than the general population highlights the absolute need to properly investigate why this is happening and give them the protection they need.’

Speaking to the Health and Social Care Committee on Tuesday, NHS England Chief Executive, Sir Simon Stevens highlighted the pressures on the NHS front line in light of the ongoing pandemic. There are just under 33,000 Covid-19 inpatients in hospitals within England over the last two weeks, this is a sharp acceleration from Christmas, where the total was around 18,000. The level of coronavirus rates differs across the country, with the Midlands reporting that 75% of its critical care wards are filled with Covid-19 patients.

The latest Real-time Assessment of Community Transmission of Coronavirus (REACT-1) survey, published today, shows that although infections in England have flattened, case levels remain very high. Professor Paul Elliott, director of the programme at Imperial College London, said: ‘We’re not seeing the sharp drop in infections that happened under the first lockdown and if infections aren’t brought down significantly, hospitals won’t be able to cope with the number of people that need critical care.’

The Health and Social Care Secretary Matt Hancock said the figures are a ‘stark reminder of the need to remain vigilant’.

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 28 January

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Recent Office for National Statistics (ONS) data shows that the UK unemployment rate, in the three months to November 2020, was estimated at 5%, 1.2 percentage points higher than a year earlier and 0.6 percentage points higher than the previous quarter. While youth unemployment has stopped rising, young people are bearing the brunt of the UK’s pandemic-induced economic crisis, with 18-24 year-olds accounting for almost half (46%) of the employment fall since the crisis began.

While the Government’s £2bn Kickstart jobs scheme was introduced to ameliorate the impact of the pandemic on young people, data from the Department for Work and Pensions showed that fewer than 2,000 young people have so far started new roles under the scheme. However, the programme, which launched in September, did create 120,000 temporary jobs to date. Chancellor Rishi Sunak said that coronavirus restrictions were making it harder for more young people to get started but he expected the number to rise once restrictions are lifted. Anticipating a rise in numbers, the Government has made it simpler for smaller firms to benefit from joining the scheme by removing the limit requiring they create a minimum of 30 vacancies to apply directly. This means that any business will be able to directly access the Department for Work and Pensions scheme without the need of Kickstart gateways.

Despite unemployment rising, a recent British Chambers of Commerce and Totaljobs survey of business recruitment intentions revealed that there was a ‘modest’ increase in the number of businesses attempting to recruit during Q4 compared to the previous quarter, though the figures are still below pre-pandemic levels. Firms in the public, voluntary and construction sectors were most likely to recruit, with hotels and catering firms the least likely.

During this week’s Treasury oral questions, the Chancellor recognised the significant impact of Covid-19 and stressed that the Treasury will review all its economic measures supporting businesses and jobs at the upcoming Budget in March.

Ex-Prime Minster Gordon Brown called for emergency measures to support businesses in the Budget after new research from the LSE warned almost 1m UK companies – employing 2.5m people – were at risk of failure in the next three months. Using data published by the Office for National Statistics, LSE found that the UK’s micro businesses, with less than ten employees, were particularly at risk of going under. Brown commented: ‘Governments cannot afford to be behind the curve – especially in a crisis. They have to be at least two steps ahead’.

According to analysis of a Bank of England survey by the Labour Party, the Chancellor’s ‘out of touch’ plan for economic recovery is set to ‘unravel’ because only 3% of UK households plan to spend the savings built up during 2021. Citing comments on savings and spending made by Rishi Sunak last month, Labour says the Chancellor ‘is wrong to pin his hopes solely on a consumer boom to get Britain on the path to recovery’, and calls on the Government to take urgent action to build confidence in the economy ahead of a series of ‘cliff edges’ including the deadline for applications to the Self-Employed Income Support Scheme and withdrawal of the £20 Universal Credit uplift.

There has also been much talk this week about those who are still not covered by the Chancellors economic measures. According to a report by the Institute for Fiscal Studies, over 1.5m self-employed workers who do not qualify for support through the Self-Employment Income Support Scheme could be supported at modest cost to the Government. The report says ministers have ‘actively chosen to exclude these people’ from the scheme, and the think tank argues that the Government could help the 1.3m people who receive less than 50% of their income through self-employment and another 225,000 people who have profits more than £50,000. Extending SEISS grants to those with income between £50,000 and £100,000 would cost £1.3bn per quarter with a payment of £7,500 per person, while extending the scheme to people with less than 50% of their income from self-employment would cost between £500m and £800m per quarter.

Weekly Health Summary

Covid-19: Weekly Health Summary – 21 January

The Health Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

The Government has reported the highest daily death toll since the coronavirus pandemic began this week, with daily figures from Wednesday showing that there were 1,820 deaths within 28 days of positive test. Prime Minister Boris Johnson has called the figures ‘appalling’. He said: ‘I must warn people there will be tough weeks to come, but as the vaccine goes in and that programme accelerates, there will be, I think, a real difference by spring.’

Furthermore, Office for National Statistics published data on the number of deaths registered for the week ending 8 January, which showed a large increase in fatality from the previous week. Responding to the data, Nuffield Trust said the rise can be attributed to the rapid spread of Covid-19 throughout December. The Trust highlighted that with over a third of deaths registered attributed to Covid-19 and with Covid-19 accounting for over half of hospital deaths, there is a ‘real pressure’ on services.

Research from the Royal College of Physicians (RCP) published this week shows that pressures placed on doctors by the pandemic are taking a significant toll, with more than one in four doctors reporting that they have sought mental health support during the pandemic. In a survey of its members the RCP found that the majority of doctors (64%) feel tired or exhausted, and many are worried (48%). The RCP argues that the second wave of coronavirus is ‘undoubtedly hitting the NHS far harder than the first’ with the rapid rise in cases is being felt by doctors across the NHS. Additionally, delays to treatment in other areas of medicine due to the prioritisation of COVID-19 patients are also being acutely felt.

Meanwhile, efforts to distribute the Covid-19 vaccine continue. On Tuesday, the Department for Health and Social Care confirmed that more than four million people received first dose of a Covid-19 vaccine. This translates to more than half of those aged 80 and over and more than half of elderly care home residents. Speaking at the press conference on Monday, Health Secretary Matt Hancock said: ‘We’re on track to deliver our plan to vaccinate the most vulnerable groups by the middle of February, the groups that account for 88% of COVID deaths.’

This comes as the Government confirmed it now has the capacity to roll out vaccines to people aged from 70 years and clinically extremely vulnerable people. Though vaccinating the over 80s and care home residents will remain the priority, vaccination sites that have enough supply and capacity for vaccinating further people are allowed to offer vaccinations to the next two cohorts.

Responding to the news, NHS Providers called the development a ‘major milestone in our fight against COVID-19’. However, with intense pressure on NHS services, it warns ‘the pandemic is far from over’. It said: ‘Rising admissions rates mean trust leaders are becoming increasingly concerned about ensuring there is enough capacity – in terms of beds and staff – to safeguard the quality of care for patients.’

Finally, amid increasing staff absences and infection rates in care homes, the Government announced that the social care sector will receive £269 million to boost staffing levels and testing. The new funding will protect and support the social care sector, including care homes and domiciliary care providers, by increasing workforce capacity and increasing testing. Vital infection prevention and control guidance on staff movement in care will also be reinforced. Minister for Care Helen Whatley said the Government is ‘continuing to listen to care providers to make sure they have the help they need, from free PPE to extra testing, along with all the work to vaccinate care home residents, staff and the wider social care workforce.’

Vic Rayner, Executive Director of the National Care Forum welcomed the news and called for the funding to be urgently dispatched. She said that it is positive that the Government has recognised the extreme staffing pressures currently faced by care providers, but suggested that social care funding must be kept under continuous review, so care organisations are ‘properly supported now and in the future’.

Weekly Economy Summary

Covid-19: Weekly Economy Summary – 21 January

The Economy Summary is part of our Weekly COVID-19 Bulletin, sent every Thursday. You can sign up to receive your copy here.

Recent ONS data showed that the UK economy shrank by 2.6% in November as lockdown restrictions reduced economic activity. The decline followed a six-month growth spell, undoing some of the recovery in the economy. It means GDP is 8.5% below its pre-Covid-19 level from February 2020.

The economy is generally doing better than the OBR expected back in November – largely due to data revisions but also because of a smaller lockdown effect in November. However, with even tighter restrictions coming into force at the start of 2021, a ‘double dip’ recession looks inevitable.

The National Institute of Economic and Social Research argued that temporary and permanent adjustments post Brexit transition period are likely to also weigh on growth in the early part of the year, but the vaccine roll-out provides some encouragement for consumption and investment in the second half of 2021 and beyond.

Treasury minister Jesse Norman MP has suggested that tax rises may not be necessary if the economy bounces back strongly following an effective roll-out of the coronavirus vaccination programme. Speaking to the Treasury Select Committee, Norman said the economy could be sufficiently boosted by households and businesses unleashing pent up demand once restrictions are lifted.

The British Chambers of Commerce called for the Chancellor to provide urgent support for businesses across the UK that are facing a bleak future from the ‘debilitating squeeze’ of coronavirus restrictions. The BCC said that businesses cannot afford to wait until the Chancellor’s March budget, and proposes immediate measures to support cash flow including expanding business rates relief, prolonging VAT deferrals and offering an immediate, further round of upfront cash grant support, as well as maintaining the Job Retention Scheme at least until the end of July 2021.

Similarly, ahead of the Budget, the CBI also proposed extending the Job Retention Scheme to the end of June, lengthening repayment periods for existing VAT deferrals until June 2021 at the earliest, and extending the business rates holiday for at least another three months. It also calls for business rates reform to be ‘top of the list’ of action to be taken at the Budget.

Labour’s Shadow Chancellor Anneliese Dodds has stepped up her calls on counterpart Rishi Sunak to amend the Coronavirus Job Retention Scheme to give working parents the legal right to request paid flexible furlough. Currently, parents can ask to be furloughed for childcare reasons, but employers can reject the request. Labour said it wants the current request system to be turned into a legal and enforceable right to apply – with an expectation that employers would grant furlough, except in exceptional circumstances.

The Resolution Foundation joined opposition parties, anti-poverty campaigners and many Conservative MPs in urging the Government to extend the £20-a-week uplift in Universal Credit introduced during the first wave of the pandemic. They warned that not extending it would contribute towards the number of children in poverty increasing by 730,000 and would mean Boris Johnson would not be able to claim to be ‘levelling up’ the UK.

With one in three children projected to be living in relative poverty by the end of this Parliament, Children’s Commissioner for England Anne Longfield also called on the Government to extend the £20 Universal Credit uplift in the short term, but said it’s a sticking plaster ‘made as a result of short-term political embarrassment’, and argued for an overhaul of the current system.

Conservative backbenchers representing 65 Northern seats, many of them ex-Labour ‘red wall’ constituencies, have joined calls for the Prime Minister to cancel a planned reduction in the benefit. Labour has called an opposition day debate on the issue in the House of Commons last Monday, but Johnson has ordered his own MPs to boycott the vote rather than risk a significant rebellion. A non-binding Labour motion calling for the universal credit top-up to be kept in place beyond 31 March passed by 278 votes to none after the  Commons debate. Six Tory MPs defied party orders to abstain and voted with Labour, adding to the pressure on the PM on the issue. The motion, which will not automatically lead to a change in policy, was put forward by Labour as a way to put additional pressure on the Government to continue the increase.

Green world

Baroness Bennett: The future of the world has to be Green

Green peer Baroness Natalie Bennett of Manor Castle writes about the challenges of getting the Government to agree to environmental standards and the kind of people therefore needed in opposition.

There are, it appears, two Government trade policies. One is a cutting-edge, environmentally revolutionary plan to be ‘world-leading in standards of environmental health, slashed carbon emissions, best-in-game workers’ rights and respectful of human rights. The other is ‘Singapore-upon-Thames’ Elizabethan ‘buccaneering’, polluting, rights-abusing goods flowing through wide-open freeports where the rules are abolished and neoliberal capitalism rules raw in tooth and claw.

It is a function of our first-past-the-post politics that profoundly incompatible coalitions, such as that between the Thatcherite ideologues of the South East and the fed-up impoverished, ignored ‘Red Wall’ seats, get into Government and produce such policy paradoxes.

The issue of making the UK a democracy is something I’m always working on, but in the meantime I’m also doing what I can on trade to push us in the direction of a policy that acknowledges that there is no exchange of goods and services on a dead planet, and ours is right at, or beyond, its physical limits.

One tactic is to try to get the Government to commit, as the House of Lords has collectively been trying to do for years through the Trade Bill, the Agriculture Bill, the Internal Market Bill and many others, to put ‘on the face of the Bill’, as we say, commitments to decent standards. Even the National Farmers’ Union has, however, been unable to get Tory MPs from the rural seats to stand with us in what we call the ‘Other Place’.

Second-best, but still worth trying, is to get verbal commitments, which is why this week I asked the Government if it planned to sign up to the New Zealand-led Agreement on Climate Change, Trade and Sustainability (ACCTS), a still fairly modest but important initiative, operating within the World Trade Organisation framework, that aims to end fossil fuel subsidies (in the UK now at about £10 billion a year, far above what is being put into renewables), agree tariff-free trade in environmental goods and services, and agree a global eco-labelling scheme.

You can see the debate here, or read the debate for yourself in Hansard. If you watch the video through once, you might be positively surprised. It is clear, as the Talk Radio host Julia Hartley-Brewer grumbled to me last year, that everyone is now talking Green.

But were you to sit down to analyse every sentence, check the meaning of each clearly very careful assemblage of works, you have to conclude that when it comes to the Government’s commitment to, or even interest in, ACCTS, as Politico’s morning trade newsletter put it: ‘close but no cigar’. It concluded: ‘Trade minister Lord Gerry Grimstone, who will also lead on the Government’s new Office for Investment, sidestepped.’

Which is where we come back to the politics. The Government won the last election with a strategy of mobilising the disaffected, uniting and energising the angry and the self-interested, with a populist, Trumpian, evidence-free repeating of simple slogans. It is clear which policy approach fits with that.

The politics seems unlikely to change any time soon. Which indicates that we need to build new coalitions in opposition, of the sensible, the evidence-driven, the practical people – who know that the future of the world has to be Green.

People who know that businesses that get ahead of the curve for the transformatory circular economy, one-planet living, model, will flourish. That communities built around strong local economies with food and good production for local consumption, promoting biodiversity and wildlife (just look at Paris), providing security for all (hello Universal Basic Income) will be attractive to the educated and capable in a world in which human resources are in increasingly short supply with plummeting birth rates.

Buccaneering belongs in the time of Queen Elizabeth (the First that is). As we’ve seen with its management of Covid-19, it’s New Zealand that’s the truly leading world nation, with a very different model of politics, society and trade. But it is equally clear this Government has no intention of following its lead.

This blog post is part of a cross-party series on Vuelio’s political blogPoint of Order which publishes insight and opinion to help public affairs, policy and comms professionals stay ahead of political change and connect with those who campaign on the issues they care about. To find out more or contribute, get in touch with Vuelio Politics.