Weekly Health Summary

Covid-19: Weekly Health Summary – 22 April

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

Pandemic response

The Covid-19 vaccine rollout has continued with momentum this week. On Monday the Government confirmed that 1 in 5 adults have received both doses of the vaccine after more than 10 million people received their second dose. Announcing the news, Prime Minister Boris Johnson said: ‘Vaccines offer us the best possible protection from the virus, so it is fantastic that 10 million people have now received their second dose. This is another remarkable milestone in our vaccination programme, which has already saved thousands of lives.’ 

Antivirals Taskforce 

On Tuesday, the Government launched a Antivirals Taskforce to roll out innovative Covid-19 treatments this autumn. The taskforce will search for the most promising novel antiviral medicines that can be taken at home. It will support the development of the antivirals through clinical trials to ensure they can be rapidly rolled out to patients as early as autumn. It is aimed that the Taskforce will be a vital tool to combat any future increase in infections and limit the impact of new variants, especially over the flu season later this year.  

Sir Patrick Vallance, Government Chief Scientific Adviser, said: ‘Antivirals in tablet form are another key tool for the response. They could help protect those not protected by or ineligible for vaccines. They could also be another layer of defence in the face of new variants of concern. The taskforce will help ensure the most promising antivirals are available for deployment as quickly as possible.’ 

The Pharmacy Collect service 

90% of community pharmacies in England now offer free, rapid tests for home use. This follows the launch of the ‘Pharmacy Collect’ service, which provides an additional route to regular testing, making it as easy as possible for people without Covid-19 symptoms to access testing twice a week. It is hoped that testing will form a crucial part of the pandemic response as society reopens from lockdown.  

Pandemic Preparedness Partnership launched 

The Government launched a new Pandemic Preparedness Partnership (PPP) this week to protect against future diseases and prevent another global pandemic. The PPP will advise the UK G7 Presidency on how to meet the Prime Minister’s ambition to slash the time to develop and deploy high quality vaccines for new diseases from 300 to 100 days. The Partnership will also provide recommendations for therapeutics and diagnostics, looking at greater global co-operation on research and development, manufacturing, clinical trials, and data-sharing. 

£16m of funding to Coalition for Epidemic Preparedness Innovations (CEPI) will support global vaccine supply and development. CEPI’s work to coordinate research, development, and manufacturing of vaccines will aid efforts to have millions of doses of vaccine available for emergency use 100 days from a variant of concern being identified. 

Healthcare backlog in the NHS 

NHS Providers have laid out a ‘bold transformative approach’ to address the ‘concerning’ backlog in the health service following the pandemic. Their approach is based on 5 elements: increase physical and workforce capacity, build capacity, improve NHS efficiency and productivity gains, reconfigure hospitals to deal with future waves of COVID-19 and winter pressures and rapidly adopt new ways of treating patients. Chief Executive Chris Hopson said: ‘Early work by trust leaders shows there is a huge backlog to clear. Trust leaders are going as fast as they can in tackling the most urgent cancer, surgery, and other cases. They are only too aware of the impact of delays. The scale of the backlog ahead is very worrying.’ 

This comes as research published by the Royal College of Physicians last week showed that 59% of their members think it will take at least 18 months for the NHS to recover from the pandemic with 69% of doctors reporting feeling exhausted and 31% demoralised. 

In a Westminster Hall debate this week the Minister for Health Edward Argar said that the Government and NHS are working very hard to reduce the backlog in elective care, which now stands at 4.7million. The Government has laid out additional funding for the NHS, including £6.6 billion to support the recovery over the next 6 months. 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 15 April

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

GDP 

UK gross domestic product (GDP) is estimated to have grown by 0.4% in February 2021, as Government restrictions affecting economic activity remained broadly unchanged. February’s GDP is 7.8% below the levels seen in February 2020, compared with 3.1% below the initial recovery peak in October 2020. Latest estimates show that January’s GDP fell by 2.2%, an upward revision from negative 2.9%.  

The latest National Institute of Economic and Social Research (NIESR) tracker suggests that GDP is likely to have fallen by around 1.5% in the first quarter of this year. Assuming that the vaccination and re-opening programmes continue to run to schedule, NIESR estimate growth to be 4.6% in Q2, driven by pent-up demand and a return towards pre-Covid levels in the hospitality and retail sectors. 

Their month-on-month forecast for March, when many children returned to school, is for growth of 1.8%. April is then forecast to see growth of 2.2%, driven by the partial re-opening of pubs and restaurants. 

Rory Macqueen, Principal Economist – Macroeconomic Modelling and Forecasting at NIESR, said: ‘Despite little change in restrictions, a return to growth in February and upward revisions to January GDP mean that the contraction in the first quarter will be much smaller than anticipated. Clearly much of the economy has adapted to cope with Covid-19 restrictions. If the vaccine programme and lifting of restrictions continue on schedule, this provides a firm basis for continuing growth in the second quarter and 2021 overall. The third wave in Europe and the success of other countries in vaccinating their populations will also have relevance for the recovery of the UK, as an open economy.’

Economic impact 

A new report from the Resolution Foundation think tank finds that young people have experienced a ‘sharp rise’ in unemployment during the pandemic, with the increase fastest among recent education leavers and young Black people.

The report attributes the rise to disproportionate employment in sectors such as hospitality and leisure which have been worst hit by the pandemic, adding that the unemployment rate for 18-24 year-olds rose 18% between April-June and July-September of last year. Those who recently left education face a 40% increase in unemployment, as the think tank warns of a double hit on 18-24 year-olds of both losing their jobs and being unable to find work in the first place. The Resolution Foundation calls on the Government to do more to protect young people from the impact of long-term unemployment by expanding and extending its Kickstart youth jobs scheme. 

Recovery 

On the day that non-essential shops and other businesses in England reopened for the first time since January, studies suggested that the bounceback in the economy could be broader and faster than previously expected. According to analysis by YouGov and the Centre for Economics and Business Research (CEBR), consumer confidence has risen to its highest level since August 2018.

The CEBR has predicted that savers will unlock more than a quarter of £192bn in lockdown rainy-day funds this year, adding £50bn to consumer spending. About £314m is expected to be spent in the newly reopened hospitality sector in this week alone, it said, while figures from the Post Office showed that Britons withdrew £590m in cash in March, the highest monthly figure since September. 

Deloitte’s survey of bosses at some of the UK’s biggest public companies found that the potential spending boom was helping to fuel record levels of optimism among chief financial officers in charge of companies’ purse strings. Respondents said they now expected a ‘strong recovery in profits over the next 12 months, with profit expectations back to the previous high seen in mid-2014 at the top of the economic cycle’. 

Among smaller firms, the Federation of Small Businesses (FSB) said it had found the greatest level of optimism among its members since 2014. Just over half (58%) of the 1,700 companies questioned expect their performance to improve this quarter, while 31% expect it to worsen. The FSB’s small business index has risen to +27.3 for the first quarter of 2021, a marked improvement on the -49.3 score at the end of last year. 

Former Bank of England Governor warns of post-pandemic inflation 

Mervyn King, who served as Governor of the Bank of England between 2003 and 2013, has warned of rising inflation as Covid-19 restrictions are eased. Speaking at the Royal Economic Society’s annual conference, Lord King said that central banks and finance ministries across the world are becoming overly dependent on stimulus as a means to support economic recovery from the coronavirus pandemic.

This analysis contrasts with views expressed by most members of the Bank’s Monetary Policy Committee, but it chimes with projections made by the Bank of England’s chief economist Andy Haldane, who has previously warned of cost of living pressures as lockdown measures are relaxed. 

King said he believed Governments should focus on providing targeted assistance for workers and businesses that have suffered most during the crisis using the tax and benefits system rather than stoking overall demand by pumping billions into fresh stimulus programmes. He suggested that heavily indebted firms should be allowed to collapse in order to boost growth and optimise Britain’s post-pandemic recovery, stating that there is ‘no argument for a dramatic set of expansionary policies’.

Weekly Health Summary

Covid-19: Weekly Health Summary – 15 April

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

Vaccine programme target hit   

Vaccination efforts have continued this week as the Government hit its target to offer everybody in phase 1 of the vaccination programme a jab. More than 32 million people have been given their first dose of a COVID-19 vaccine with jabs offered to everyone aged 50 and over, health and care workers and the clinically vulnerable. This group accounts for 99% of all COVID-19 deaths during the pandemic, so it is hoped that the most vulnerable are now protected.

Celebrating the ‘remarkable achievement’ Health and Social Care Secretary Matt Hancock said: ‘I’m delighted that across the UK, we’ve met our target to offer a vaccine to everyone in the top nine priority groups, ahead of the deadline of 15 of April.’ 

Data from Public Health England’s real-world study shows that both the Pfizer and Oxford/AstraZeneca vaccines are highly effective in reducing COVID-19 among older people aged 70 years and over. It estimates that over 10,400 deaths have been averted as a result of the COVID-19 vaccination programme up to the end of March 2021. 

Phase 2 of the vaccine rollout  

Phase 2 of the Government’s vaccine rollout commenced this week, with people aged 45 to 49 invited to book their appointments. This comes as the Joint Committee on Vaccination and Immunisation (JVCI) advised that the continued vaccination rollout is based on age. It has also said that unvaccinated individuals who are at increased risk of severe outcomes from COVID-19 on account of their occupation, male sex, obesity or ethnic background are likely to be vaccinated most rapidly by an operationally simple vaccine strategy. The NHS Confederation has called this approach ‘reassuring’ and called for more operational guidance for primary care teams.  

It has also been confirmed that the Moderna vaccine, approved by the Medicines and Healthcare Products Regulatory Agency in January, will also be deployed in England across more than 20 vaccination sites. NHS medical director Professor Stephen Powis said: ‘The Moderna rollout marks another milestone in the vaccination programme. We now have a third jab in our armoury and NHS staff will be using it at more than 20 sites from this week, with more coming online as supplies expand.’ 

Chris Hopson, the Chief Executive of NHS Providers, has welcomed the successes of the vaccination programme but called for caution in the ongoing Covid-19 pandemic. He highlighted that the under 50s and the most vulnerable not yet vaccinated must receive their jabs. As society opens up this week, with non-essential shops, gyms, and beer gardens opened on Monday, he said: ‘We need to balance celebration with caution. The underlying reality of this horrible virus remains the same – as we increase social contact, the rates of transmission will go up as well.’ 

NHS England waiting lists  

Statistics from NHS England, published this morning, highlight the ongoing backlog in NHS services, particularly for routine hospital care with a waiting list now at 4.7 million people. The number of people waiting for a key diagnostic test at the end of February was 1,151,200.  

The Health Foundation responded to the statistics: ‘The Government and NHS leaders now need to be clear and realistic with the public about how they intend to get the NHS back to full strength. This includes dealing with the backlog of care, achieving the ambitions to modernise the NHS as set out in the long-term plan and anticipating the effects of long COVID and an expected rise in poor mental health. There will need to be significant investment at the next Spending Review if we are to see improvement on waiting lists and plugging staff shortages, which are holding back progress.’ 

NHS England has published a statement on the statistics where it highlighted that: ‘NHS staff completed almost two million operations and other elective care in January and February while also providing hospital treatment for almost 140,000 Covid patients. 

Weekly Health Summary

Covid-19: Weekly Health Summary – 8 April

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

Oxford/AstraZeneca Vaccine
This week the Government announced that people under the age of 30 with no underlying health conditions will be offered an alternative vaccine to the Oxford/AstraZeneca drug where possible. This followed a statement by the Joint Committee on Vaccination and Immunisation which confirmed reports of an extremely rare blood clots following vaccination with the first dose of AstraZeneca.

Given the very low numbers of events reported overall, there is currently a high level of uncertainty in estimates of the incidence of this extremely rare adverse event by age group. However, the available data does suggest there may be a trend for increasing incidence of it with decreasing age, with a slightly higher incidence reported in the younger adult age groups. The decision is a precaution, and the Government has encouraged the public to continue to take up their offer of the vaccine.  

Professor Martin Marshall, Chair of the Royal College of GPs responded to the news: ‘Today’s announcement from the MHRA, and also the EMA, should be taken as reassurance for patients that overall, the benefits of taking the AstraZeneca vaccine for COVID-19 outweigh the risks… It’s vital that patients understand that the risk of developing blood clots after receiving the AZ vaccine is incredibly low for all patient groups.’ 

Roadmap out of lockdown 
The Prime Minister announced on Monday that the country would go ahead with the next stage of the Government’s roadmap out of lockdown. From Monday 12 April, non-essential shops will reopen along with personal care services and indoor gyms. Outdoor hospitality will also open up, including pub beer gardens.  

With this the Government confirmed that everyone in England, including those without symptoms, will be able to take a free rapid coronavirus (COVID-19) test twice a week. Alongside vaccine rollout, it is hoped that regular testing will help the reopening of society, helping to suppress and control the spread of variants. Updates to the NHS Covid-19 app will also be made to coincide with the new test offering.

Health and Social Care Secretary Matt Hancock said: ‘Around one in three people who have COVID-19 show no symptoms, and as we reopen society and resume parts of life we have all dearly missed, regular rapid testing is going to be fundamental in helping us quickly spot positive cases and squash any outbreaks.’ 

Danny Mortimer, chief executive of the NHS Confederation said that lockdown easing must be done cautiously ‘to ensure the NHS has capacity to tackle the huge backlog of treatment, deal with the growing demand for mental health services, and also allow its exhausted and overstretched staff the respite they so desperately need.’ He also welcomed the new commitment on testing but said that there must be resources in place for people to self-isolate if they receive a positive test.  

Covid-19 transmission 
An update to the REACT-1 study, one of the country’s largest studies into COVID-19 infections in England, has been published today. Findings show infections fell by approximately 60% from the last REACT study in February, with only one in 500 people infected. However, the prevalence of infections has now plateaued, showing it is critical everyone continues to follow the guidance and rules to help control the epidemic. 

The study also found that the correlation between prevalence of infections and deaths has diverged, suggesting that infections may have led to fewer deaths since the start of widespread vaccination through the Government’s vaccination programme. 

NHS Providers said: ‘We need to be alert to a possible rise in COVID-19 infections with lockdown restrictions being eased next week and the ongoing risk from variant strains which now pose the greatest threat to our efforts to control this pandemic. It is absolutely crucial that everyone continues to follow the guidance to prevent a rise in infections and further deaths.’ 

 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 8 April

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

Reopening economy
At a Downing Street briefing early this week, the Prime Minister said he plans to stick ‘like glue’ to his plans for easing current measures. He confirmed that step two – where shops, hairdressers and beer gardens can reopen – will go ahead on 12 April as planned. 

Analysis from Springboard indicated there was ‘pent up demand’ from consumers for bricks-and-mortar shops, with the firm predicting a 48% increase in sales after the next stage of lockdown easing on 12 April. On a similar note, data from Barclaycard showed that spending on leisure and entertainment increased by 136% last week. 

Business insights and impact on the UK economy
The percentage of businesses currently trading has increased gradually from 71% in early January 2021 to 75% in late March 2021. This is a similar level to that seen in July 2020, but lower than the 84% seen in mid-December 2020.  

The percentage of currently trading businesses experiencing a decrease in turnover, compared with normal expectations for this time of year, has fallen from 46% in January 2021 to 40% in mid-March 2021. 

Prior to August 2020, when the first lockdown restrictions in response to the coronavirus pandemic were in place, the percentage of currently trading businesses experiencing a decrease in turnover, compared with normal expectations for this time of year, was consistently above 50%, reaching 65% in early June 2020 (when comparable estimates began). When compared with the 40% of businesses experiencing a decrease in turnover in the most recent estimates, this suggests current lockdown restrictions do not seem to be having the same scale of impact, perhaps because of businesses adapting. 

The proportion of businesses’ workforce on furlough leave increased from 11% in early December 2020 to 19% in mid-March 2021. This level was last seen in late July 2020, when coronavirus restrictions were easing after the first national lockdown in the UK. The 19% of businesses’ workforce on furlough leave in mid-March 2021 equates to approximately six million people. 

Signs of a recovery in the jobs market have emerged with recruiters reporting that permanent hiring activity reached a six-year high in March. The latest labour survey by KPMG and the Recruitment and Employment Confederation recorded that month-on-month growth in permanent placements was the highest since April 2015. Demand for temporary staff rose at the fastest rate since November 2017.

Business support
A new Government-backed loan scheme launched this week to support firms through the gradual reopening of the economy from Covid-19 lockdown measures. The Recovery Loan Scheme follows on from the previous support offered by lenders via the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS), and Coronavirus Large Business Interruption Scheme (CLBILS). Under the new scheme, businesses can apply for loans between £25,000 and £10 million which are 80% guaranteed by the Government. 

Recovery
Stronger recoveries from the Covid-19 pandemic in the US, the UK and other rich western countries will result in faster than expected growth for the global economy this year, the International Monetary Fund (IMF) has predicted. The IMF suggested that the UK will be the fastest growing advanced economy in 2022 as a result of the successful vaccination scheme and Treasury spending, with it likely to return to its pre-pandemic level of activity in late 2022. 

According to accountancy and business advisory firm BDO, the UK economy may see a significant boost to its recovery as close to 86% of UK mid-tier businesses told BDO they are looking to recruit more staff over the next six months, with over half (54%) planning permanent appointments. More than a third (36%) of business leaders said they would now hire apprentices as a direct result of the Government’s £3,000 apprenticeship grant announced in the Budget. This came as part of a larger 70% of businesses planning to recruit in this area regardless of the incentive.

Investment plans also received a boost in the March budget. Nearly half of businesses (47%) are planning new investments following the ‘super deduction’ initiative, which allows companies to cut their tax bill by up to 25p for every £1 they invest. According to the data from accountants at BDO, three-quarters of the UK’s medium-sized businesses state that 2021 is the time to invest, and 26% of them are already planning to invest in new locations or M&A.

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 1 April

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

Economic outlook
UK gross domestic product (GDP) is estimated to have increased by 1.3% in Quarter 4 (Oct to Dec) 2020, revised from the first estimate of 1.0%. The level of GDP in the UK is now 7.3% below its Quarter 4 2019 level, revised from the previous estimate of 7.8%.

There have also been some revisions to earlier quarters in 2020. GDP in Quarter 2 (Apr to June) 2020 is now estimated to have fallen by 19.5%, while it is estimated to have increased by 16.9% in the third quarter. However, the annual picture is largely the same. Over the year as a whole, GDP contracted by 9.8% in 2020, slightly revised from the first estimate of a 9.9% decline.

This is the largest annual fall in UK GDP on record, while historical figures from the Bank of England point to this being the largest annual contraction since ‘The Great Frost’ of 1709.  

Separately, the UK economy was the worst performer among the G7 group of wealthy nations last year, in part reflecting that the public health restrictions imposed have been in place for longer, as well as having higher levels of stringency. 

The latest monthly GDP estimates for January 2021 show that there was a 2.9% contraction in the UK economy, as the third national lockdown weighed further on GDP. The latest Business Insights and Conditions Survey showed that 42% of trading businesses had experienced a fall in turnover in early March 2021, compared with normal expectations for this time of year. This is an improvement from earlier in the year, implying that there might be a slight rebound in output in March.

The Flash UK Purchasing Manager’s Index for March paints a similar picture, finding higher levels of business activity in March underpinned by the prospect of the lifting of restrictions. This included ‘forward bookings from domestic consumers, while some manufacturers cited advanced orders from hospitality businesses and high-street retailers’. 

Recent figures from the Bank of England (BoE) showed that in March, businesses estimated that their sales in 2021 Q1 would be 20% lower than they otherwise would have been because of Covid-19, with employment 9% lower and investment 21% lower.

Overall, uncertainty continued to fall in March. The percentage of businesses that viewed overall economic uncertainty as high or very high fell from 67% in January and 58% in February to 57% in March, the lowest level since February 2020.

The number of payrolled workers declined by 693,000 between February 2020 and February 2021, while there are 4.7m employees furloughed as of the end of February 2021 that are mostly concentrated in the accommodation and food service activities, and wholesale and retail trade industries.  

According to a new report from the Learning and Work Institute and The Prince’s Trust, supported by HSBC UK, youth unemployment will remain high after other areas of the economy begin to recover. The economic cost of youth unemployment, in terms of lost national output, is forecast to rise to £6.9bn in 2022. The fiscal cost of youth unemployment, in the form of lower tax revenue and higher benefit spending, is forecast to be £2.9 bn in 2022.

The long-running scarring cost to young people entering the labour market in 2021, in terms of lost earnings and damage to employment prospects, is forecast to be £14.4bn over the next seven years. 

Plan for Growth and second meeting of the Build Back Better Business Council
On Tuesday, Prime Minister Boris Johnson hosted  the second meeting of the Build Back Better Business Council, which was established in January as a high-level forum for engagement between businesses and the Government. There, they set out how to make 2021 the ‘year of economic recovery’.

Ahead of the meeting, Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng wrote an open letter to businesses on the Government’s Plan for Growth. 

The Plan for Growth looks ahead, building on the best of the Industrial Strategy set out in 2017 and refreshing the Government’s long-term strategy for growth in light of a new economic landscape, including the pandemic, the net zero target and the UK’s new place on the world stage as an independent nation outside the EU.

The Plan for Growth sets the path to invest in infrastructure, skills and innovation to ‘build back better’, while harnessing the strengths, resilience and creative spirit seen from businesses over the past year. This Government will focus on achieving three priority objectives: tackling geographic disparities, enabling the transition to net zero and supporting their vision for Global Britain. 

Tuesday’s Council meeting particularly looked at the innovation pillar of the Plan for Growth and discussed the Government’s upcoming Innovation Strategy, due to be published this Summer. 

Minimum wage rises
Around two million of the UK’s lowest-paid workers will get a pay rise from Thursday as the minimum wage goes up. The National Living Wage will rise 2.2% to £8.91, the equivalent of over £345 a year for a full-time employee. And for the first time since it came into effect in 2016, more younger people will be eligible for the National Living Wage, as the age threshold will be lowered from 25 to 23 years old. The rise means someone working full time on the National Living Wage from April 2021 will be taking home £5,400 more annually than they were in 2010.

The new rates – announced at the Chancellor’s Spending Review 2020 – were recommended by the independent body the Low Pay Commission, following extensive consultation. 

 

Weekly Health Summary

Covid-19: Weekly Health Summary – 1 April

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

Roadmap 
This week saw the next phase of the Government’s Roadmap out of lockdown restrictions. As of Monday, the public is allowed to meet six people outdoors and do outdoor exercise. Speaking at the Downing Street Press Conference, the Prime Minister said that despite infections falling to the lowest number in six months, ‘we must proceed with caution’.  

Vaccination hesitancy and uptake  
While positive vaccine sentiment has increased to 94% in the latest period (17 to 21 March 2021), from 78% when the data were first collected (10 to 13 December 2020), there are higher levels of hesitancy among some groups, including young people (12%), Black or Black British (22%) and those living in the most deprived areas (12%).  

Research from the Office for National Statistics published this week on the Covid-19 vaccine highlights the uptake across the population. It showed the percentage of people vaccinated was lower among all ethnic minority groups compared with the White British population; the lowest vaccination rates were observed among people identifying as Black African and Black Caribbean (58.8% and 68.7% respectively). Those living in deprived areas were also less likely to have taken up their offer of a vaccine. While people who have a disability also had lower rates of vaccination at 86.6%, compared with those who were non-disabled at 91.0%.  

The NHS Confederation has argued that the results show there is ‘more work to do’. It has said that we need to ensure that the vaccine is equitable, and we need to overcome vaccine hesitancy, ‘as marginalisation clearly plays a major part in pushing uptake down.’ 

Poor mental health among emergency responders
Data from a survey of more than 250 staff and volunteers across police, fire and ambulance services in Wales has laid bare the scale of poor mental health within the emergency responder communities. The online survey found that mental health has worsened across 999 services, with ambulance staff worst affected.

Only one in three (33%) ambulance staff reported their current mental health as very good or good compared to two in five police (44%) and almost one in two (49%) survey respondents working within the fire service. Ambulance staff were the most likely (72 %) to say their mental health has worsened since the start of the coronavirus pandemic, compared to police (56%) or fire (61%). 

The highest proportion of respondents saying they had poor mental health were within the ambulance service, at almost one in three (30%). This compares to just under one in four (22%) respondents from the police service and just under one in ten (11%) within the fire service who rated their mental health as poor currently. 

Mental health support
Over the weekend, the Government announced a £500m Mental Health Recovery Action Plan to respond to the impact of the pandemic. The plan will support the expansion and improvement of mental health services, including NHS talking therapies and community services. The funding forms part of the Government’s plans to level up mental health and wellbeing across the country.

Announcing the plan, the Health and Social Care Secretary Matt Hancock said: ‘As part of our response to this global pandemic we not only want to tackle the public health threat of coronavirus but ensure our clinicians have the resources to deal with the impact on people’s mental health.’  

Responding to the Mental Health Recovery Action Plan, Paul Farmer, chief executive of Mind said: ‘As we continue to deal with the effects of the pandemic and the economic recession, the true scale of the nation’s mental health is only beginning to emerge. It could be many months or even years before we fully recognise the pandemic’s toll on our collective wellbeing. That’s why we welcome the UK Government’s recovery plan, which will need to see departments working more closely than ever to deliver on its promises given the multiple social challenges we face.’ 

Office for Health Promotion
The Government has announced more information on its reform to public health, following its decision to dissolve Public Health England last year. The new Office for Health Promotion, which will lead the country’s efforts to improve and level up the health of the nation, it set to be established in the Autumn.  

The Office’s remit will be to systematically tackle the top preventable risk factors causing death and ill health in the UK, by designing, implementing and tracking delivery policy across Government. It will focus on areas including, obesity and nutrition, mental health across all ages, physical activity, sexual health, alcohol and tobacco.

Announcing the plans, the Prime Minister said: ‘Covid-19 has demonstrated the importance of physical health in our ability to tackle such illnesses, and we must continue to help people to lead healthy lives so that we can all better prevent and fight illnesses.’   

The Health Foundation has welcomed the cross- departmental approach to address the wide determinants of health. However, it raised concern about funding the new Office and highlighted that this year’s public health grant allocations represented a 24% cut in real terms per capita – equivalent to £1bn – compared to 2015/16.

It said: ‘The pandemic makes it all more urgent that we prioritise keeping people healthy. The Government faces a crucial window of opportunity in which to create a public health system equipped to take on the major health issues facing the country including rising obesity, a mental health crisis and a growing gap between the health of the richest and poorest’.  

The King’s Fund welcomed clarity on public health reform, but argued: ‘today’s announcement does not add up to a compelling vision for creating a healthier society and needs to be swiftly followed by a clear plan for improving the health of the nation.’

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.

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 25 March

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

The UK’s debt has reached a new high as Government borrowing hit £19.1bn last month as it continues to battle the coronavirus pandemic and the economic fallout of lockdown. The Office for National Statistics (ONS) said the public sector had borrowed more last month than during any other February since records began in 1993.

The debt owed by public bodies has increased by £333bn since the start of April, the first month of full lockdown in the UK. It brings the total debt to £2,131.3bn or around 97.5% of GDP, the ONS said.

Central Government bodies are believed to have spent around £72.6bn running their day-to-day activities in February, a rise of £14.2bn compared with February 2020. This came as the Bank of England’s (BOE) Monetary Policy Committee voted unanimously to maintain the Bank Rate at 0.1%.

The BOE expects inflation to return quickly to its 2% target but has played down concerns about rising borrowing costs and fears of rapid inflation. The strong vaccine rollout, coupled with a lower fall to GDP in January than expected, have led to cautious optimism from the BOE regarding the overall economic outlook.

The BOE has also indicated it will likely revise its forecast for unemployment down to match the 6.5% peak figure forecast by the Office for Budget Responsibility.

The UK unemployment rate, in the three months to January 2021, was estimated at 5.0%, 1.1% higher than a year earlier and 0.1% higher than the previous quarter. However, the bigger picture is one of stability in the last few months, after the labour market deteriorated through the autumn.

The furlough scheme has stopped the effects of lockdown feeding into falling employment in the latest months. In fact, the number of payrolled employees has now increased for three months in a row, although since February 2020, the number of payroll employees has fallen by 693,000.

While the headlines are encouraging, data again underlines the impact of the crisis on young workers. Payrolled employment in February was down 11% on pre-crisis among under 25s, compared to being down 1% among other age groups.

The Centre for Economic and Business Research released analysis of the cost of coronavirus to the UK economy. The report suggests that COVID-19 has been the predominant cause behind a £251bn reduction in the UK’s gross value added over the past year, a fall roughly equivalent in size to the entire annual output of the South East of England in pre-pandemic circumstances and nearly twice the output of Scotland.

Business confidence has returned to its highest level since 2018, with 65% of firms confident about their growth prospects over the next three years, according to the Santander Trade Barometer.

Weekly Health Summary

Covid-19: Weekly Health Summary – 25 March

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

Anniversary of the first Covid-19 lockdown
In the week that marks a year since the first lockdown was announced in the UK, the Prime Minister spoke of the ‘epic endurance’ of the British people. Speaking at the Downing Street Press Conference he said: ‘For month after month our collective fight against Coronavirus was like fighting in the dark against a callous and invisible enemy, until science helped us to turn the lights on and to gain the upper hand’.

The Prime Minister gave his thanks for the efforts behind the vaccine roll-out as well as the ongoing effort of public sector workers including in the NHS, social care, education and the police.  

The Government is yet to confirm its plans to hold a public inquiry to the handling of the coronavirus pandemic, despite calls from the Opposition. During Prime Minister’s Questions this week, Opposition Leader Kier Starmer spoke of the ‘shocking’ numbers of people who have lost their lives to Covid-19. He said: ‘As soon as restrictions lift, there must be a full public inquiry, because that is the only way we can get to the bottom of the many mistakes that were made during the pandemic and find justice for those who have suffered so much.’

The Prime Minister said that there will be an inquiry into the lessons learned as soon as it is right to do so, when it won’t diverge the attention of the key officials involved.  

UK Health Security Agency
The Health Secretary Matt Hancock has announced that a new agency, UK Health Security Agency (UKHSA), will be established in April 2021 to lead protection against future health threats. The UKHSA, which is to replace the short-lived National Institute for Health Protection, will become the UK leader for health security, providing intellectual, scientific and operational leadership at national and local level, as well as on the global stage.

The body is ran by Deputy Chief Medical Office, Dr Jenny Harries and will bring together the key elements of Public Health England with the Joint Biosecurity Centre (JBC), and NHS Test and Trace. UKHSA will initially focus on the continued fight against the COVID-19 pandemic.  

Responding to the announced, NHS Providers said: ‘We welcome further clarity from the Government on the new public health infrastructure. The pandemic has highlighted why it is so important to have long-term investment in public health services in recognition of the vital role they play in supporting overall health and wellbeing and building resilience in health protection’.

The new agency has also been welcomed by Cllr Ian Hudspeth, Chairman of the Local Government Association’s Community Wellbeing Board, who said: ‘The UKHSA needs to be able to operate nationally as a global player to major health threats. This needs to be aligned with councils’ ability to react swiftly on the ground, using their local knowledge, expertise and skills.’ 

There have also been wider calls for clarity on the other areas of public health, surrounding the broader determinants of health, including from the Health Foundation who said: ‘While the focus now is on organising to make sure the country can respond better to a future pandemic, much more important in the long run is making sure that Public Health England’s existing function to improve the health of the population is strengthened, and commands more political focus and investment.’

Speaking at the Local Government Association Annual Public Health Conference 2021, Hancock suggested he would lay out wider public health reform plans in the coming days. 

The Coronavirus Act 
The Coronavirus Act will have its annual debate in Parliament today. Members are expected to keep the Act in place, but the Government has suggested the removal of some of the Act’s components. Most notably as part of the it’s one-year report, the Government has concluded that it will seek to end the controversial ‘Care Act Easements’ which relaxed the duties for local authorities to provide care.

In England, only eight local authorities (LAs) have used these powers, but not since 29 June 2020. The Government said that over the past year, support groups and the social care workforce have remained resilient under significant pressure, and continued to deliver their duties without the need to operate under easements.  

Adult social care
A report published by The National Audit Office today on adult social care has concluded that innovation and investment in the sector have been hampered by short-term funding and the lack of a long-term vision.

It said: ‘COVID-19 has focused attention on social care as never before. It has highlighted existing problems with social care and emphasised significant gaps in the Department’s understanding of the market’.

Responding to the report, Danny Mortimer, chief executive of the NHS Confederation, said that the ‘pandemic has shone a harsh light on how fragile and severely under-resourced the country’s social care system has become after failures by successive Governments of all parties to act.’

He has called for the Government to rapidly deliver on its manifesto pledge to transform the sector. The Nuffield Trust said that the report has exposed the fundamental flaws and fragility of the social care provider market: ‘Organisations providing adult social care were struggling long before the pandemic took hold, with years of delay to any meaningful reform of the sector storing up the problems exacerbated by the pressure of Covid-19.’

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.

 

 

Weekly Health Summary

Covid-19: Weekly Health Summary – 18 March

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

Vaccine roll-out
The Government has confirmed that more than 25 million people in the UK have received their first dose of a COVID-19 vaccine. This includes 95% of people aged 65 and over, and nine in 10 of those clinically extremely vulnerable.

The announcement comes as a letter from NHS England has said that health services should stop booking under-50s for their first-dose appointments for the whole of April. The letter explained that the move was necessary because of a ‘significant reduction in weekly supply’.  

However, speaking at the Downing Street Press Conference on Wednesday, the Health Secretary Matt Hancock praised the vaccination roll-out and confirmed that the Government is on track to offer the first dose of the vaccine to all over-50s by 15 April, as well as all adults by the end of July.

He confirmed that from Wednesday all people over 50 are invited to come forward and get their first Covid-19 jab. He also highlighted the importance of the vaccine rollout and showed data which demonstrates that after a first dose, protection against hospitalisation is around 80% and protection against death is around 85%.  

Professor Martin Marshall, Chair of the Royal College of General Practitioners, has responded to the news of potential vaccine supply issues, he said: ‘This disruption to supply is disappointing and will understandably be frustrating for patients, as it will be to GP teams running vaccination sites who want to protect as many people as quickly as possible – but we continue to receive assurances that this delay is temporary, and the vaccination programme remains on target.’ 

Digitalisation of the health services 
The Health Foundation published research this week on the positives of the use of healthcare technology during the pandemic. It found that around three fifths of NHS users increased their use of technology to access care during the first phase of the Covid-19 pandemic and an overwhelming majority of these (83%) viewed their experience positively. However, when compared to traditional models of care, NHS users are not so favourable to the use of technology in health services. Notably, NHS users 55 and older reported slightly higher proportions of negative experiences with the digitalisation of the health services.  

The Health Foundation recommends that there should be more research on the use of the technology in the NHS to ensure quality in long-term digitalisation of services, and so that changes are user centred. They also call for a refresh of the NHS Long Term Plan to optimise the use of recent technological innovations to meet longer term quality and productivity goals.  

Today the Health Secretary confirmed more NHS hospital trusts would benefit from the Digital Aspirants programme. 32 more trusts will now join those already participating in the programme. Seven will get up to £6m each over the next three years. The rest will get £250k seed funding to help them develop business cases for further digital investment. 

Impact of Covid-19 on health services
A report published by the Institute for Public Policy Research this week claims that the ambitions of the NHS Long Term Plan risk being severely disrupted by the coronavirus pandemic without a significant funding boost. It has suggested a £12bn blueprint to ‘build back better’, and made recommendations including creating a sustainable workforce, greater funding for the NHS, upgrading digital care and reforming social care making it free at the point of use.  

Marking a year since the first Covid-19 lockdown was announced
The Office for National Statistics (ONS) published a report on the impact of the pandemic a year on from when the first lockdown was announced. Since March 2020 more than 140,000 people have now died with Covid-19 in the UK. The number of adults in critical care in hospitals was far higher than previous winters. In the last week of January 2021, more than 5,000 adult critical care beds a day were occupied in hospitals in England, compared with around 3,000 a day in the same week in 2020.

The report also highlighted the wider impacts of the pandemic, including on the labour market, unemployment, the economy, and crime.   

NHS Providers said that the report lays bare the terrible toll of Covid-19 and the ‘immense pressure’ on the NHS over the past year. 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 18 March

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

Office for National Statistics (ONS) data for January suggests that the economy was hit less by the renewed lockdown than expected. UK GDP is estimated to have fallen by 2.9% in January 2021 compared to the predicted 5%. The output approach to GDP shows that January’s level was 9% below that seen in February 2020 and was 4% below levels seen in October 2020 – the initial recovery peak. 

The National Institute of Economic and Social Research (NIESR) said that January’s smaller than expected fall in GDP means that it now estimates a contraction of 2.4% in the first quarter of 2021. This would leave GDP in the first quarter of 2021 around 9% lower than its level in the last quarter of 2019, before the pandemic struck. 

Real-time data and NIESR analysis imply that GDP is likely to resume its growth in February and March, by 0.3% and 1.1% respectively, on the back of higher contribution from Government services and improving consumer confidence as infection rates come down. As a result, the first quarter of 2021 is likely to see a smaller contraction than widely anticipated. However, the pace of recovery from the second quarter will crucially depend on how the opposing effects of the vaccine roll-out and lifting lockdown affect the path of Covid-19, as well as how consumers and businesses react. 

Bank of England governor Andrew Bailey said that the UK economy should recover to its pre-pandemic size by the end of this year. Speaking in an interview with BBC Radio 4’s Today Programme on Monday morning, Mr Bailey said the Bank was ‘not out of firepower’ in defending the economy as it recovers from the pandemic, adding that it was looking at ‘new tools’ which could include negative interest rates. However, he warned that new variants of the virus could still pose a risk to the economic recovery. The Bank of England governor also remarked that the economic effects of the pandemic had been ‘very unequal’, with women, ethnic minorities and the low-paid all disproportionately impacted.  

OBR committee member and former Bank of England deputy governor Sir Charlie Bean said last week to the Commons Treasury Committee that he does ‘not expect households to go out and blow [their savings] all within the next quarter or two’ but it will be ‘spread out over several years’. According to a recent report by the Centre for Economics and Business Research, UK households will go on an estimated £50bn spending spree once lockdown restrictions are lifted. It warned that ‘if interest rates are kept low, there is a real threat that inflation could rise rapidly above the Bank of England’s 2% target and be difficult to control.’ 

Weekly Health Summary

Covid-19: Weekly Health Summary – 11 March

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

NHS Test and Trace

A report published by the Public Accounts Committee (PAC) on NHS Test and Trace (NHST&T) has argued that despite the ‘unimaginable’ cost, the scheme has failed to deliver on its central promise of averting another lockdown. The Committee argued it is hard to justify the cost of the scheme, which is over £37bn, after it found no clear evidence of the NHST&T’s overall effectiveness and its contribution to reducing Covid-19 infection levels.

The Committee Chair Meg Hillier said: ‘DHSC and NHST&T must rapidly turn around these fortunes and begin to demonstrate the worth and value of this staggering investment of taxpayers’ money…British taxpayers cannot be treated by Government like an ATM machine. We need to see a clear plan and costs better controlled.’

Labour said that the report shows the failures of the outsourced scheme and that it ‘underlines the epic amounts of waste and incompetence, an overreliance on management consultants, taxpayers’ cash splashed on crony contracts, all while ministers insist our NHS heroes deserve nothing more than a clap and a pay cut. The Conservatives’ wasteful obsession with outsourcing must end and contact tracing should be run by our public health teams.’

Although the Government is yet to respond to the report, the Prime Minister has recently praised NHST&T for its impact on getting children back into school and enabling the country to ‘cautiously and irreversibly’ reopen its economy. Also on Tuesday, the Health Secretary Matt Hancock praised the NHST&T team for successfully testing 1.5m people in one day.

NHS staff pay rise

The debate on NHS staff pay following on from their work during the pandemic has continued this week. This comes after last week the Government proposed a 1% rise in NHS staff pay, which Labour argues is actually a pay cut after inflation.

Speaking to the House of Commons on Wednesday, Labour Leader Kier Starmer said: ‘The mask really is slipping, and we can see what the Conservative party now stands for: cutting pay for nurses; putting taxes up on families. He has had the opportunity to change course, but he has refused to do so.’

NHS Providers called the pay proposal a ‘disappointment’ and said a real terms pay increase ‘would go some way towards recognising and rewarding the contribution and the sacrifices that the NHS workforce has made over the past year.’

The Government has repeatedly justified its decision; on Wednesday the Prime Minister highlighted that the Government has delivered a 12.8% increase in the starting salary of nurses over the last three years and has boosted nursing recruitment. An independent pay review will make a final recommendation for NHS staff pay in the coming months, until then, it is likely that this debate will rumble on.

NHS waiting lists 

NHS England data published this morning shows the full extent of the impact of the second coronavirus wave on non-Covid-19 health services. 4.59m patients were waiting to start elective care treatment at the end of January 2021, with 304,044 of these patients waiting over a year. Waiting times for cancer treatment have also increased.

Nuffield Trust highlighted that the NHS waiting list is now at the highest point since records began in August 2007. It suggested that although non-Covid activity has been higher than in the first wave, the pandemic response has slowed the stream of routine and it is likely that with referrals to GPs also falling in January, there is a hidden patient group not yet on the waiting list that will need treatment in the future. It calls for a plan to boost NHS capacity, with additional resources as the damage from the pandemic is likely to be felt in years ahead.

The Health Foundation also called for additional support for the NHS and staff. Dr Jennifer Dixon, Chief Executive of the Health Foundation, said: ‘The Government and NHS leaders will now need to be clear with the public about how they intend to deal with the backlog of unmet need, as well as achieve the ambitions to modernise care set out in the NHS long term plan. This will need significant investment at the next Spending Review, in particular if we are to see improvement on waiting lists and plugging staff shortages, which are holding back progress.’

Covid-19 vaccine

The roll out of the Covid-19 vaccine has successfully continued this week, with latest figures showing that over 22m people have had their first dose. The roll out is now reaching all people over 55 and those in the priority groups. 40,000 unpaid careers are also eligible for the vaccine from this week. The Health Secretary Matt Hancock recently said that the Government is on track to offer a first dose to the entire adult population by the end of July.

In a speech to the Global COVID-19 Vaccine Supply Chain and Manufacturing Summit, Hancock attributed the UK’s vaccine success to investing early into vaccine research and clinical trials around the world, as well as adopting an ambitious roll-out schedule.

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 11 March

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

During last week’s Budget, the Chancellor tried to balance the support provided to the economy with the need to begin the work of fixing our public finances. As expected, the Chancellor extended existing support, such as the job support schemes, the Universal Credit uplift, business rate holidays and VAT cuts to reflect the cautious reopening of the economy set out in the roadmap.

While some argued that the Universal Credit uplift should have been extended beyond the six months announced, others welcomed the increase in generosity of the self-employed scheme. Given the different impact on different sectors of the economy, the targeted Restart Grants to the sectors worst hit by restrictions have been much welcomed by small firms in the hospitality industry with cash problems. The Chancellor also announced a new Recovery Loan Scheme that will provide lenders with a guarantee of 80% on eligible loans.

Further ahead, in April 2023, the rate of corporation tax paid on company profits will increase to 25% on profits over £250,000. To soften the blow, the Chancellor announced that for the next two years, companies can reduce their tax bill when investing via a ‘super deduction’ of 130% of the cost. He also froze income tax thresholds from next April for four years, which is considered a good way for the Government to raise revenue without causing economic distortion.

The Office for Budget Responsibility (OBR) thinks the economy will ‘bounce back’ in the near-term as restrictions are eased. The OBR expects growth to return from Q2 2021, with GDP forecast to reach pre-Covid levels earlier than previously expected and unemployment to be better than forecast.

When Commons Treasury Committee members talked about the huge stimulus package in the US and asked if the Chancellor did enough to stimulate growth, the OBR committee member and former Bank of England deputy governor Sir Charlie Bean explained that the size of the output gap is difficult to measure because the response to the pandemic has involved pushing down on both demand and supply in roughly equal measure. As the restrictions are eased, he expects both of them to come back.

In its central forecast, the OBR does not think there is that large a margin of spare capacity, the output gap is quite small, so it would not make sense to have a large demand stimulation. He mentioned that in respect to the Biden plan in the US, many economists who are generally in favour of greater use of fiscal policy think the size of the stimulus is far too big relative to the likely size of the output gap.

If you are considering supporting demand, it is not obvious that there needs to be substantial policy stimulus at this point. It might turn out that this is wrong, and that demand does not recover as quickly as supply, in which case it will be sensible for either the Bank of England or the Chancellor to add additional stimulus. But as things are at the moment, the margin of spare capacity is expected to be quite small during the reopening phase of the economy.

While the Financial Secretary to the Treasury previously said that if the economy is strong, they might not need to raise taxes to fix public finances, Sir Charlie Bean told MPs on the Commons Treasury Committee that the important thing here is not so much slightly faster growth next year but really the scarring assumptions. If they do not see a high level of scarring, then the same sort of fiscal consolidation is not needed in the medium-term. Equally, if the scarring turns out to be greater than they expect, potentially more consolidation will be required. OBR’s central assessment is 3% medium-term scarring, but that number could go either way.

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. 

Weekly Economy Summary

COVID-19: Weekly Economy Summary – 25 February

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

The rate of unemployment in the UK rose to 5.1% in the three months to December, official figures showed this week. The Office for National Statistics (ONS) said 1.74m people were unemployed in the October to December period, up 454,000 from the same quarter in 2019. The figures show 726,000 fewer people are currently in payrolled employment than before the start of the pandemic, almost three-fifths of this fall, 425,000, has come from those aged under-25.

A report from the National Institute of Economic and Social Research has shown an explosion in the number of people ‘living in destitution’, putting pressure on Chancellor Rishi Sunak not to abandon support schemes in next month’s budget.

The report has shown the total has risen from 197,400 to 421,500 households in 2020, suggesting the crisis would worsen if the Chancellor ends the furlough scheme or cuts Universal Credit. It also showed stark regional disparities and warned the official unemployment statistics are failing to reflect reality.

‘As a result of lockdowns, levels of destitution seem to be rising across the country,’ Professor Jagjit Chadha, the NIESR’s director commented. He added: ‘The kind of unemployment numbers we’ve currently got seem to be underreporting the true level of unemployment. Given the level of activity we’ve had in the economy – the extent to which it’s fallen – unemployment could rise to at least 8% or 9%, or even further.’

Looking ahead to the Budget on 3 March, Keir Starmer has called for 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.

During the Labour party’s first opposition day debate this week, Shadow Chancellor Anneliese Dodds demanded U-turns on the planned cut to Universal Credit, the council tax hike being forced on councils and the public sector pay freeze.

During the second opposition day debate, Labour’s Shadow Chief Secretary to the Treasury Bridget Phillipson, called on the Government to support businesses and individuals still struggling as a result of the coronavirus crisis in the forthcoming budget by:

  • Extending business rates relief for at least another six months
  • Extending the temporary 5% reduced rate of VAT for three months after restrictions are lifted or for another six months, whichever is later
  • Helping British businesses struggling under the burden of Government-guaranteed debt by ensuring that small businesses can defer paying loans back until they are growing again
  • Extending and reforming the furlough scheme so that it lasts while restrictions are in place and demand is significantly reduced
  • Immediately confirming that the fourth Self-Employment Income Support Scheme grant will be set at 80% of pre-coronavirus crisis profits
  • Extending eligibility to that scheme to include anyone with a 2019-20 tax return and fixing the gaps in coronavirus support schemes to support those who have been excluded from the beginning of the crisis

The Resolution Foundation think tank published new research that calls for a £100bn Budget package to boost Britain’s economic recovery from the impact of the coronavirus pandemic. The think tank says that Chancellor Rishi Sunak should combine a £30bn extension of emergency COVID-19 support with £70bn in additional stimulus in order to kickstart the economy’s recovery, and calls for a series of measures including a retraining and job support package, extending Universal Credit, an £18bn green investment scheme, and a £9bn voucher scheme focused on supporting Britain’s high streets and retailers.

Weekly Health Summary

Covid-19: Weekly Health Summary – 25 February

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

The Prime Minister announced his roadmap to ease lockdown restrictions on Monday. The four-step plan would see schools reopen to all pupils on 8 March, non-essential shops, outdoor dining and beer gardens open no earlier than 12 April, and indoor mixing, drinking and dining, hotel visits and limited crowds at sporting events to return from 17 May at the earliest. If all goes to plan, all the final restrictions, including on nightclubs and mass-attendance events like football matches could be lifted from 21 June.

The Prime Minister said that these ‘cautious’ easements plans would be based on ‘data not dates’ with assessments of the easing of restrictions based on four areas:

  1. Vaccine deployment
  2. Evidence showing that vaccines are effective in reducing hospitalisations and death
  3. Infection rates and hospital capacity
  4. New variants of concern.

He told the House of Commons: ‘The end really is in sight and a wretched year will give way to a spring and a summer that will be very different and incomparably better than the picture we see around us today.’

Leader of the opposition Kier Starmer said that this current lockdown has to be the last, highlighting that this is the third time the country has come out of a national lockdown. He said that the success of the vaccine rollout will be essential, while track, trace and isolate must also be working effectively. He proposed a £500 payment for workers so that they can isolate if necessary, as well as better protection for school children and teachers.

NHS Providers welcomed the cautious approach to releasing restrictions. Chief executive Chris Hopson said: ‘While the cautious approach outlined in today’s Roadmap won’t be fast enough for some, history has sadly taught us that rushing headfirst into lifting lockdown leads only to rapid reimposition, tragic loss of life and avoidable patient harm.’

Hopson also called for continued momentum behind the vaccination programme and an effective strategy to rapidly identify and control future outbreaks from variant strains. NHS Confederation’s chief executive Danny Mortimer echoed this point, arguing that there needs to be more clarity on the four tests laid out by the Government and effective public messaging, warning, ‘we can cannot afford a fourth national wave of COVID-19, which would risk even greater damage to a fragile and tired health service’.

The Health Foundation said that easing of lockdown should be used as an opportunity to Build Back Better: ‘As we see the light at the end of the tunnel, the Government needs to ensure that no one is left behind, particularly the most vulnerable. Longer term there must now be a major Government focus on eradicating the deep-seated health inequalities that the pandemic has exposed.’

In other news, the Health and Social Care Secretary came under fire this week for claiming that the NHS did not run out of Personal Protective Equipment (PPE) during the peak of the pandemic last year. This comes after a judge last week found that the Health Secretary had breached his legal obligation to publish details within 30 days of PPE contracts being signed. Hancock has since claimed that details were published late because his Whitehall staff were focused on ensuring that there was no national shortage of PPE.

Speaking in the House of Commons Shadow Health Secretary highlighted that there were instance off PPE shortages, he said: ‘The National Audit Office reported on it, we saw nurses resorting to bin bags and curtains for makeshift PPE, hundreds of NHS staff died.’ He called for greater scrutiny of the PPE contracts and any money to be recovered on contracts which produced unusable PPE.

It was announced that people with severe learning disabilities would be given greater priority in the Vaccines Delivery Plan. The Joint Committee on Vaccination and Immunisation (JCVI) confirmed that all those on the GP learning disability register would be invited to receive a vaccine as part of cohort 6. This is because of their perceived risk to Covid-19, due to issues including that individuals in the group are more likely to have underlying health issues and that some people with learning disabilities are more exposed to Covid-19 if they live in residential care.

Responding to the decision, Disability Right’s UK said: ‘People with learning disabilities are six times more likely to die from coronavirus than people without learning disabilities. It is hugely welcome news that everyone with learning disabilities can now be urgently protected by vaccination.’ The Learning Disability charity Mencap also welcomed the ‘fantastic news’.

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.