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Westlake Legal Group > Posts tagged "employment"

Graham Brady: As it stands, the quarantine plan won’t work, will wreck holidays, damage aviation – and lose jobs

Sir Graham Brady is Chairman of the 1922 Committee and is MP for Altrincham and Sale West.

Just as the Government’s focus starts to shift from handling the acute phase of the Covid-19 crisis towards what needs to be done to ensure that all those furloughed millions have jobs to return to, the quarantine policy threatens to do enormous damage.

It would deter the vast majority of people from flying to and from the United Kingdom, leaving airlines unable to fly near-empty aircraft economically; it would place hundreds of thousands of jobs in jeopardy and would cut Global Britain off from global markets.

For what? I wouldn’t have a problem with quarantine if it was attached to a real, identified risk. Passengers flying from a coronavirus hotspot could be required to quarantine and to take the necessary tests, but a blanket quarantine that includes the countries that have very low rates of infection would make no sense at all.

When the Government sets out its plans, it should at the same time either announce a number of countries that are considered safe: which could be included in ‘air bridges’ with exemption from the new measures, or at least set out the criteria on which such exemptions will be based.

Failure to give sufficient clarity about how and where restriction-free flights can take place will push many parts of an aviation sector that has already been hit harder than most into some very rapid decisions: job cuts and routes that won’t reopen this year.

Announcing those crucial details a week or two after the announcement would be too late for many, because the airlines need a significant lead time to get their planes and staff in the right places in order to reopen routes. If what looked like a well-informed leak to the Guardian yesterday morning proves to be accurate, this damage would be caused by something that might not even be recognisable as quarantine. The freedom to use public transport and to go out for your grocery shopping might suggest that no-one really thinks that high-risk individuals are involved here.

There are other ways of ensuring safety. Dubai and Austria are amongst those countries which are basing their strategy of reopening air travel on testing passengers. This option should be explored rapidly for Britain. In the UK, the Aviation Health Expert Panel has produced comprehensive recommendations for the safe resumption of air travel too.

So if quarantine is introduced, it should be as narrowly defined as possible. Ideally there should be a short list of destinations that are deemed to be high risk, rather than a short list of ‘air bridge’ exemptions. The criteria for exemption should be clearly announced, and any list of exempt destinations should be reviewed frequently against them.

After a difficult, often tragic few months, many people will feel that a summer break is vital therapy for them, young people who have been locked-down with Mum and Dad might need a break for their mental health; couples who have been apart will want to make up lost time and emergency workers who have been hard at work throughout the crisis might like to take a break too.

But this is about so much more than summer holidays. It is about a million jobs directly employed in aviation. It is about the businesses that depend on the ‘belly hold’ freight of passenger aircraft to carry their high value exports. It is about the network of international connections that can bring us the medicines that we need.

At a time when there is a danger that the UK might have ended lockdown and got back to work later than many of our competitors, it is, crucially, about making sure that our businesses are out there winning contracts, not sitting in quarantine while others corner the world’s markets.

As Britain goes back to work, moving on from being urged to ‘work from home if possible’ towards an assumption that people should go to work as long as their workplace is safe to go to, it would be a sad irony if we chose to shut down the international connectivity on which so much of our prosperity depends. This is exactly the time when we need to be telling the world that Britain is open for business – not a time for putting unnecessary obstacles in the way.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Howard Flight: In my judgement, the economy is on track for a relatively short V-shaped recession.

Lord Flight is Chairman of Flight & Partners Recovery Fund, and is a former Shadow Chief Secretary to the Treasury.

We are in the middle of the sort of economic recession for which Keynes prescribed large Government deficit – spending support. It was a pity that Keynes was misinterpreted in the 1950’s and 1960’s. Right now, the UK economy needs all the business and financial support which Government can organise and provide. It is fortunate that interest rates are virtually zero and, in some cases, negative. The question is as to whether Government can channel enough economic stimulant, quickly enough, to turn around the economy.

In my judgement Andy Haldane, the eminent Bank of England economist, has it right. The economy is on track for a relatively short V-shaped recession. Spending has already picked up by more than even the Bank of England expected.

Haldane also expects that little long-term damage will be done to the economy. This is supported by the Government’s important decision to extend the Self-Employed Bail Out Scheme (SEISS) for the self-employed by a further three months, at a cost of £8 billion.

Keeping the self-employed portion of the UK economy afloat is fundamental to economic recovery. The major strength of the UK economy has been the size and spread of its self-employed and SME sectors – comprising some six million SMEs.

In an economic storm, practically, SMEs and the self-employed are more difficult to support than a few dozen large businesses. The Chancellor has thrown all he can at the small company and self-employed sectors. The main vehicle for the SME sector has been guaranteed loans via the Coronavirus Business Interruption Loan Scheme (CBILS). At the time of writing approximately £1.5bn has been lent to small businesses via CBILS. This, however, represents barely more than 6,000 loans, in contrast to Germany where the banks have already lent out seven times the amount.

The problem with CBILS was that, initially, banks participating thought they were obliged to assess whether the businesses requesting loans were eligible for a normal, non-virus, loan. This resulted in companies needing life or death support being tied down with lengthy requests for paperwork. They were then often offered regular loans including taking a director’s home as collateral, which was not the Government’s intention.

The larger banks’ justification for this has been EU State AID rules. Although Britain has left the EU, it transpires that we are bound by the State Aid rules until the end of the transition period. This needs changing speedily. The State Aid rules apply to all loans under CBILS. This appears to have been prescribed in small print by the Treasury, although it have denied knowledge of this. Subsequently, Rishi Sunak has changed the scheme so that banks can lend without first attempting a standard loan deal.

CBILS has also had an equally negative problem. While many Governments are guaranteeing 100 per cent of such loans the UK has been guaranteeing only 80 per cent. Increasing the Government guarantee to 100 per cent has been resisted by the Treasury, again on the grounds of not breaching EU State Aid rules, although Government guarantees are now going up to 100 per cent. In a situation in which the issue is rescuing our economy it is ridiculous to argue that appropriate economic measures can be stopped by EU State Aid rules.

The Future Fund has also had a damaging technical constraint on qualification. Where a company has Enterprise Investment Scheme or Venture Capital Trust investors, this is not tax compatible with required Futures Fund and Convertible Loan Note investment, which would disqualify EIS/VCT investors’ tax relief.

What is now needed is a faster sequential lifting of the lockdown package of constraints, both to accelerate the recovery of our economy and to give us a stronger hand to negotiate Brexit. The Business Secretary has the tools to preside over our economic revival, and his department must become a leading one.

It, too, needs to slash regulations that prevent businesses from getting loans. We also have the opportunity to carry out a revolutionary shift to a pro-business administration with an export led economy on the back of a weak Sterling. Here there is an argument for establishing a national export fund.

“Stay at home. Protect the NHS. Saves lives” now needs to change to “Get back to work. Protect the economy. Save livelihoods.” Our response to Covid-19 should now become more targeted, becayse the risks to millions of people who are younger is very small. Companies have complained about the lack of guidance where the outlook is becoming clearer.

I expect a major advance in the lifting of lockdown for the retail sector in June and, if all goes wel,l much of the lockdown will be lifted by the end of July. There is a range of business measures open to Government to boost the economy on a sustained basis.

The most effective are likely to be increasing the annual (company) investment allowance; reducing stamp duty on houses; rolling furlough arrangements into Universal Credit, providing incentives to work.

Equally important is to repeal regulations in the way of recovery – i.e: we have amongst the highest childcare costs because of our staff ratio laws. Infrastructure investment should be brought forward. Finally, EIS and VCT should be made tax compatible where companies have Future Fund or CBILS investment.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Neil O’Brien: Rebalancing higher and technical eduation. The universities should reform themselves. Or have reform forced on them.

Neil O’Brien is MP for Harborough.

Before coronavirus, universities were tottering on the edge of change. Evidence had emerged that a large proportion of degrees aren’t a good investment for taxpayers or students. The Augar Review had officially recognised the problem of low value Higher Education (HE), and called attention to the huge imbalance in funding between universities and technical education.

A ruling by the Office for National Statistics means the subsidy element of student loans has to be properly accounted for from this year on, scoring against the government’s deficit. No more PFI-style funny money.

Coronavirus has accelerated things. With lucrative foreign students gone, many universities are in financial trouble. So controls on student numbers have, rightly, been reintroduced, at universities’ own request, to allow the system to be stabilised.

Many universities have finally started to provide online learning, an approach which made pitifully little progress before now. But universities still want to charge the full fees, leading to resistance from students.

Youth unemployment is rising. Jobs, apprenticeships and work placements are disrupted. The Government needs to move fast with schemes to help. But it’s also massively in debt, with a big structural deficit to fix.

The stars are aligning for a landmark reform: on one hand, boosting funding for youth job schemes, and putting rocket boosters under plans to build a prestigious, German-style technical education system. And on the other, paying for it by cutting back poor-value degree courses which waste taxpayers’ money, but don’t actually increase opportunities for students.

Before we continue, let me wind back a bit. Back to 1963. Between the end of the Chatterley ban, and the Beatles first LP.

That was the year of the Robbins Report, which said university places “should be available to all who were qualified for them by ability and attainment,” and triggered rapid university expansion.

Participation in HE rose exponentially: from 3.4 per cent in 1950, to 8.4 per cent in 1970, 19.3 per cent in 1990 and 33 per cent in 2000. In September 1999, Tony Blair set a target to get to 50% per cent, which we reached in 2018.

But somewhere along the way we lost sight of the Robbins principle – which wasn’t “more students”, but places for those who can benefit.

Robbins spent a long time pondering economic and academic evidence about how many could benefit. He considered a wide range of different types of education and training.

But under the 50 per cent target, the only rule has been more, more, more. You can go to university now without a GCSE in English and Maths, but the proportion of Firsts awarded has risen four-fold since the mid-1990s: universities are competing for students by debasing standards.

The creation of the Longitudinal Educational Outcomes dataset – initiated by David Willetts – has challenged this. It gives us data on how much graduates of particular courses at different universities earn.  It lets us look at value-added too: how graduates’ earnings compare to people with similar backgrounds and A level results.

It shows us that while university is on average good for those attending – there are many for whom it’s not worth it. Either their earnings are lower than comparable people, or improve so little that it’s not worth the big upfront cost.

The most recent Institute for Fiscal Studies analysis found that, viewed from the point of view of the student, their degree isn’t worth it for around 10 per cent of women, and a quarter of men. This is extraordinary, given they are receiving big taxpayer subsidies.

Viewed from the point of view of the taxpayer, the taxpayer makes “a loss on the degrees of around 40 per cent of men and half of women.” Summing together the effect for society as a whole (the gains to students and taxpayers) “total returns will be negative for around 30 per cent of both men and women.”  In other words, nearly a third of students degrees are not worth it economically.

The variation by degree and institution is even more dramatic. The taxpayer makes huge losses subsidising creative arts courses – only four and a half percent represent a positive investment.

Only 30 per cent of English students earn enough to justify taxpayers’ investment. The taxpayer makes a loss on the majority of students in sociology, psychology, communications, and languages. Many would be better off doing something else.

Median graduate annual earnings five years after graduation were £25,900, compared to £27,240 for Level 4 apprentices five years after completion. If we looked at, say, the bottom quarter of graduates, the case for them doing something else is even stronger.

Yes, for many students, going to university will have a value in itself. To study a beautiful poem has a value. We don’t expect the theology graduate who becomes a priest or a nun to earn a packet. Yes, we should explicitly make losses on some courses for the same reasons we subsidise public art and the like.

But let’s not be so snobby that we think there’s no satisfaction or intrinsic value from technical study. No sense of accomplishment for an apprentice building a jet engine, or a house.

For a country like Britain, deep in debt, lofty thoughts are not enough to justify such huge numbers of students doing things that don’t help them economically, given that’s what many themselves want. Half of young people go down the technical route – more in blue wall seats. They are less well funded.

While no neat comparison is possible, the Augar Review noted that in 2017-18, over £8 billion was committed to support 1.2 million UK undergraduates in England, and only £2.3 billion to support 2.2 million full and part time (FE) students.

That’s roughly £6,600 vs £1,050 each. Further education participation has fallen from 4.8 million to 3.6 million since 2010.  Key higher technical qualifications (HNDs/HNCs) are down by over two-thirds since 2010/11. Universities have become less diverse too. Part-time higher education has fallen by 53% since 2010/11.

We have to rebalance the system from higher to technical education, and put those middle options back in. Gavin Williamson has talked about “stronger alignment of the courses delivered with the economic and societal needs of the nation.”

That’s right, but to get there we need to recognise the limits of market forces. Students choose their course aged 17. What it will do to their earnings at age 50 isn’t front of mind. With lots of public subsidy sloshing around, universities’ incentives are to put on lots of cheap arts courses, charge full fees, and use the money to cross-subsidise other things.

They get the benefit, and the taxpayer the cost. Ministers need to step in to protect taxpayers. A report last year for Onward (I was one author) looked at ways to reshape funding. Ministers could impose a floor on prior attainment like a minimum A level score.  They could directly cut back numbers on poor value courses.

Personally, I’m drawn to the idea of a deals-based approach. Highly subsidised universities would propose to government how they will reduce their cost to the taxpayer. That could mean reducing numbers on some courses, or making them cheaper with shorter degrees, or and doing more online. Or a mix.

If they don’t produce a plan, the sanction would be direct number controls. We’d use the savings to fight youth unemployment, and fund technical education properly.  How does that sound?

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Ryan Bourne: Welcome to the Inefficient Economy

Ryan Bourne holds the R Evan Scharf Chair in Public Understanding of Economics at the Cato Institute. 

Aggregate demand and the public finances dominate most economic policy discourse. What Boris Johnson’s Government could do to “stimulate” activity through taxes or public spending, or how much relief it can sustainably provide, will command most airtime even as economic reopening begins.

Insufficient focus, as ever, is given to the supply-side – our ability to produce goods and services at prices people are willing to pay. Yet Rishi Sunak and Alok Sharma will soon be facing the reality of what I’ll call the Inefficient Economy. There are good reasons to think that economic activity will struggle far beyond the demand-sapping impact of the Coronavirus on travel, hospitality and bars and restaurants.

First, rational changes to business practices will breed inefficiency. Fewer people will be dining in restaurants, going on planes, or getting hair cuts as regularly, yes. But those who do will find middle-seats left free on flights, wide spaces between tables, and extensive cleaning of hairstyling tools. The revenue-potential of an hour of operation in these sectors will fall.

Winning trust from customers and workers will actually require businesses to invest in what would ordinarily be considered inefficiency on their premises. Cleaners will disrupt workplaces more often to keep workspaces sanitised. Temperature testing might delay workers getting to the day job each morning. Employees still working from home often, or in office shifts, or unable to travel internationally, will entrench communication inefficiencies. Then there’s staffing difficulties with workers self-isolating when they get symptoms or disruptions to child-care.

All this inefficiency will be compounded by uncertainty. Why replace those inefficient industrial dryers in your dry cleaning business without knowing when or if your key local hotel customers might re-open? Yes, some businesses will perish from the demand shock. But even those that survive will find they can’t do things as efficiently as they once did.

If that wasn’t enough, the economy will also face a labour market shock. Jobs will be permanently lost, while others will be created. Delivery companies are hiring, as are supermarkets. Some wholesalers who used to sell to commercial outlets may add workers to become more retail-oriented. The demands for consultants, website managers, contact tracers and more may rise in some areas, as companies think of new ways of doing business.

But while we see job churn at the best of times, the scale and breadth of this reallocation will weigh on our productive potential. Many job relationships of people well suited, specialised, or experienced in their previous roles will be lost. It takes time to find the right workers for new positions and resources to train them. That means both elevated unemployment and workplace inefficiency for some time.

All this will prove a headwind against a sharp economic bounce-back. With a vaccine running into difficulties already, and no political or social prospect of a collective decision to just all “go back to normal,” the Inefficient Economy is here for a year, at least.

So are we powerless? We certainly cannot wish away reality. But the Government can take steps to avoid worsening this inefficiency and to allow businesses and workers to find solutions to it. But that requires as bold a deviation from ordinary policy as the extraordinary relief efforts we saw before.

1) Prices

Supply-side inefficiency would ordinarily lead to higher prices in certain product markets. With swings in demand too, prices might jump all over the place as activity re-opens. These price changes play a vital role in coordinating how resources get re-allocated across the economy in this new world.

Yet the government’s Competition and Markets Authority has warned businesses against raising prices during the pandemic, pledging to stamp down on “rip offs.” If businesses take this threat seriously, an unwillingness to raise prices in new situations will create an invisible effective price cap that will cause shortages in certain areas. It is crucial, as lockdowns are relaxed, that the government makes clear prices can be freely set again without reaction, to avoid compounding inefficiency with inefficiency.

2) Business and Worker Regulation

To help companies adjust, the Government should suspend regulations that prevent innovations to opening hours and on-site activities. Some of this has been done already, with councils changing planning and Sunday trading laws to allow restaurants to become takeaways and shops to extend hours.

Working hours’ regulation may also need to be suspended given pent-up demand in certain industries. Careful thought will need to be given to statutory holiday time too – are employees still going to be entitled to 28 days off through the end of the year as businesses struggle during reopening?

Then there’s the national living wage, which the government raised again in April. A lot of low-paid jobs in hospitality, restaurants, and more will be less “productive” than before – the revenue per worker hour will have fallen. If the government insists on maintaining a high wage floor devoid from companies’ ability to pay, some jobs will be lost and the reallocation problem compounded.

3) Labour market policy

In theory, the inefficient economy need not mean high unemployment, however. Companies will need lots of workers for cleaning, security, testing, delivery, repatriated manufacturing businesses and many other roles.

But avoiding permanent scarring from mass layoffs requires a rapid reallocation of workers. This can be encouraged by both deregulation and temporary government activism. Deregulation, in the form of relaxing rules surrounding occupational licensing and suspending the minimum wage. Activism, in the form of tools to help people in job search and financial incentives for workers to take up new roles.

There is a strong case for a temporary “big push” on hiring good job centre personnel and developing better clearing houses for job and re-training opportunities, for example. But we also need financial incentives to work in lockstep.

Here, Jonathan Portes and Tony Wilson’s idea for how to wind-down the furlough scheme has merit: if both worker and employer agree that the prospects for a job that necessitated furlough money are good, then continue partial government support for short-time working.

If either worker or business thinks the job unviable, give the worker the option of a lump-sum grant or retraining, alongside a wage subsidy for a set period in any new job they take. That ensures relief to those with most to lose from the furlough scheme ending, but without compromising economic efficiency too much.

When it came to extraordinary government spending through relief, the Government did the unthinkable by subsidising over a fifth of all employment, and was celebrated for it, even by many classical liberals, given the extraordinary circumstances.

Now we approach a new extraordinary period in regard the economics of this pandemic – the Inefficient Economy – which only business and worker flexibility can partially offset. Let’s see how willing other thinkers are to suspend their ordinary policy priors.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Mike Brewer: Universal Credit – the surprise hero of this crisis so far. But more daunting challenges await it.

Mike Brewer is Deputy Chief Executive and Chief Economist of the Resolution Foundation.

As someone who has always been a fan of combining several benefits into one, it has been painful, at times, to watch Universal Credit’s (UC) lumbering progress since Iain Duncan Smith announced the project in 2010.

Finally, in early 2019, UC was taking new claims in all parts of the country. But the Department for Work and Pensions (DWP) was still taking the roll-out slowly: by the start of 2020, UC had only about a third of its eventual expected final caseload.

Then coronavirus came – and UC was thrust into the frontline as the crucial safety-net benefit, working alongside the Job Retention Scheme, and the Self-Employment Income Support Scheme.

Claims for UC began to grow the day after the Government advised people not to go to pubs or restaurants, to work from home and to avoid non-essential travel. A week later, the lockdown was announced, and UC claims ran at nine times their pre-crisis rate.

Overall, 2.6 million claims for UC were recorded in just eight weeks. To put this surge into context, more claims were made in the first four weeks of this crisis than in the first nine months last crisis in 2008.  Combine this unprecedented surge with UC’s chequered history in terms of its roll-out, and you’ve got a recipe for disaster.

But to DWP’s huge credit, its online systems are performing well, consigning queues outside jobcentres to the past.
Since the crisis hit, DWP say that over 90 per cent of payments due have been paid in full and on time, and the vast majority of advance payments are paid with 72 hours.

Three in four new UC claimants surveyed by us reported they were satisfied or very satisfied with the way DWP handled their claim. We shouldn’t take this for granted. Current experience from the US shows the hardship and health risks that can arise when government systems can’t cope. So far, Universal Credit has proved to be a surprise hero of the crisis.

So who is the system helping? It’s important to remember that as well as helping those with no job, or whose self-employment business has dried up, UC is an in-work benefit. This means it is also topping up the incomes of those on low pay, or whose earnings have fallen following cuts to their working hours or due to being furloughed. Interestingly, just over one in four of the new UC claimants we surveyed were self-employed, perhaps claiming help from UC while they wait for Self-Employment Income Support Scheme grants that are not paid until June.

But despite the emergency £20 a week boost to UC, some of those whose jobs have disappeared are missing out. One example would be a young a couple who are saving for their first mortgage deposit which, if more than £16,000, would prevent them receiving any support from UC should they lose their jobs. To stop this, the DWP should suspend the ‘capital rules’ that are penalising those with savings of £6,000 or over (the point at which UC starts to be tapered away).

Having passed the first test, new challenges await UC. We are going to see labour market disruption carry on into the second half of the year. A second surge of new UC claims may come as the Retention Scheme is phased out, and with that will come a second hit to living standards.

And that hit could be huge. We estimate that those people furloughed see a typical hit to family incomes of just 9 percent, but those made redundant and claiming UC see a typical hit of 47 percent of their in-work income. That doesn’t mean we should extend the current Retention Scheme indefinitely: it means that DWP needs to start preparing now for those extra claims, and politicians need to focus on UC as the key programme protecting families’ incomes throughout and beyond the coronavirus crisis.

DWP will also have to decide when and how to help people look for work. But returning to the light-touch conditionality-plus-sanctions regime in UC will be completely inadequate. A major challenge for DWP is to devise new programmes that can cope with the volume of unemployed people, and whatever labour market conditions we find ourselves in, and it needs to resource these properly.

Finally, it’s not realistic to assume that all of those who lost their jobs last month will find work quickly. DWP will need to monitor carefully how UC recipients are coping with the prolonged hit to their family finances. We think that, to protect family finances through the current crisis, the Government should temporarily suspend or increase the benefit cap, so that all families on UC benefit from the emergency measures. The Treasury should also commit to continuing the additional £20 a week on UC beyond the current financial year, rather than letting it expire next March.

This is Universal Credit’s first experience of an economic crisis and the UK’s first experience of going through a recession with Universal Credit as our key safety-net benefit. It has performed well so far, confounding expectations, and our recommendations will put it in the best position to overcome future challenges.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

James Frayne: More welfare spending. A business tax avoidance clampdown. The new economic policy that voters will want.

At some point, economic concerns will trump health concerns for the majority. Furlough has delayed this, but it’ll shift: when the death rate drops significantly, or when it becomes clear the country can’t sustain the level of support to wages granted until now.When this happens, what will the public want economic policy to look like in the long recovery period? And how should the Government think about public opinion?

Each of these questions is worth an article in its own right, but let’s start with the likely economic position in a few months: significant numbers of businesses will go bust; many cling on at the best of times and reduced demand will finish many off.

In turn, we can expect significantly higher levels of unemployment than during recent times, and more people on welfare.

Many businesses, too, in fear of a second wave of infections, will be cautious about hiring and investing generally; many will terminate or reduce office space and pay rises will be a thing of the past.

We can assume that those parts of the country where the private sector is relatively weak – and relatively much more reliant on consumer spending – will be more severely hit than the affluent South. High streets that were already struggling will be decimated. And we can assume astronomically high levels of debt. All in all, a terrible place to be.

Let’s now consider some of the parameters of policy for Government that will be set by public opinion.

First, public spending. The public will want health spending increased significantly. When people look at why Britain was so badly hit, even if a consensus emerges we should run healthcare differently, it’s inconceivable that one of the conclusions won’t be that the health service needs more money – it’s already what people think.

We can also be reasonably sure of demands for greater spending on social care, given how badly those in care have suffered.

It’s also likely the public will expect additional spending on welfare – to support the rising number of unemployed and more generally to support those communities which have suffered disproportionately during the crisis. While the public are, in normal times, quite sceptical of welfare spending, they are not going to see the new unemployed in the way that they saw (healthy) people without jobs in a near-full employment economy.

It’s also a reasonable bet the public will demand greater support for those in “precarious” work – workers seen to have kept the country going during lockdown. While there are many reasons to suggest those working in the gig economy love the freedom they’re granted and don’t consider themselves “victims” in any way, the likely campaign that Labour will run to reward these workers will have an irresistible attractiveness.

In other words, there will be significantly more money across three major areas of public expenditure. On the flip side, the public are less likely to have the same demands on expenditure on policing; defence; or even education, but these are likely to be dwarfed by the size of the welfare and health budgets.

Second, tax. The public will demand action is taken against those businesses perceived to unfairly avoid tax (presently and historically) – particularly if they have enjoyed bumper sales during the crisis.

When there are bills to be paid during the long recovery period, there will be no longer be any hiding place for them. And there’ll be demands for action against those businesses that splurged cash on high salaries and dividends while furloughing workers.

One area that has had relatively little attention, but could get much more, is the behaviour of commercial landlords across the country. This aspect of public debate could be very ugly.

On the other hand, they’re likely to be very positive towards the idea that tax cuts for small businesses are a necessary stimulus. They are likely to be open to the idea that these businesses need a break from high business rates and high levels of corporation tax.

It’s possible that they will ask for lower personal tax rates so they can start to save to accumulate protection for any possible re-emergence of the virus. Whether the Treasury thinks that such a policy is advisable is something else; but they’ll at least likely have freedom to think about targeted tax cuts.

Whether these two sides balance – higher taxes on a small number of very large businesses, lower taxes on a large number of small businesses – is another question. Together, these spending pressures and the need to stimulate the economy will put enormous pressure on Ministers for some time. It is fortunate that this Government doesn’t seem to have any philosophical adherence to low spending and debt, or the next year would be very uncomfortable.

Thinking about economic policy more broadly, it also seems likely this crisis will open the door to much greater radicalism in a number of areas. The nature of tax, spend, and economic policy could change very substantially.
  • We could end up building a lot more, a lot faster. Construction is an obvious place to go for a fiscal stimulus, and there will be huge pressure on the Government to meet some of its infrastructure promises before its term is up. That requires changing the planning system.
  • We could see much bolder incentives to industries that are essential for “national resilience” – pharmaceuticals and life sciences are the most obvious example, but agriculture and energy would be others. It is probably no coincidence that many of the countries that have done best during Coronavirus have also had decades of effective industrial policy.  There will be a race to replicate it here. (It is hard not to see how, in many parts of the country, universities will be part of the policy mix.)
  • Anything that rebuilds town centres and communities will be enthusiastically welcomed. Completely re-hauling the business rate and general small business taxation system is plausible.
  • Of course, the long-anticipated reforms to the structure of the state have been put on ice while the Government has been trying to deal with Corona. Here, the public simply don’t care that much – but the performance of different parts of Government during the pandemic will, surely, be used as a reason to reshape the state.

None of these are new territory for the Government. It’s the combination of parochial and modern that was obvious in the general election manifesto last year. But while the epidemic has created demands from the public, it does also create space to achieve large amounts in the next three and a half years, and change a lot of rules.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Owen Paterson: The Coalition was formed ten years ago today. I served in Cameron’s first Cabinet – and we can take heart in its achievements.

Owen Paterson was Secretary of State for Northern Ireland in David Cameron’s first Cabinet. He is MP for North Shropshire.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Robert Halfon: Let’s not risk ending lockdown, the virus claiming yet more victims – and having to impose shutdown all over again

Robert Halfon is MP for Harlow, a former Conservative Party Deputy Chairman, Chair of the Education Select Committee and President of Conservative Workers and Trade Unionists.

The case for sticking with the lockdown for a little longer

One of the great drivers towards ending the lockdown, as I wrote in my last Conservative Home column, is a love of liberty and an instinctive scepticism towards the State.

Libertarians don’t like big government deciding whether or not we can leave our home to go about our daily business as a free citizen without a drone from the Old Bill checking whether or not we have breached our 24-hour curfew (one hour, of course, being allowed to walk the dog).

The second driver is not so much liberty, but the strong, British tradition of a stiff upper lip, stoicism and just getting on with things – treating this illness like any other.

The third, and perhaps the most important, is a genuine fear about the state of the economy and employment – or rising joblessness. Those with economic concerns believe that if the shutdown carries on much longer, the years of austerity since 2010 will look like a tea party, as we potentially enter a financial ice age.

Given the choice, I would prefer life to liberty. I think it is easier to defend that position, as I tried to do in my previous article.

As for the second driver, I would normally be on the side of the stoics – I always try to get to work, however run-down or ill I may be feeling.

But coronavirus is different; it is not about the I, but the he, she and we. All of us are walking hand-grenades. So whilst it may appear ‘brave’ in carrying on as before and going to work et al, it is, in fact, potentially incredibly thoughtless. This is because, although the individual may not even be unwell, he or she may be asymptomatic and become a Coronavirus superspreader.

Alongside that, the stoics always present “the car argument”; thousands of people die in road fatalities every year, yet we still allow automobiles and motorists on our roads.

I never have understood this line of reasoning. There may be thousands of car crashes, but it could be a lot worse if we did not have speeding restrictions, seatbelts and safety features in cars, such as airbags.

In other words, motoring deaths would be much higher, were it not for preventative measures from the State – just as that same State is taking as many preventative measures as possible to stop the Coronavirus death tally becoming even greater.

The third argument to end the lockdown (the economy) I understand the most. Millions of people across our country not only face worries about their health and that of their families, but also ever-increasing financial anxiety – even with the Government’s multi-billion business package and furlough scheme.

Surely, is it not better to stay at home a bit longer to knock this disease on the head once and for all, so that rather than having a so-called “phased un-lockdown”, we can get back to normal as soon as possible?

How much better it would be to give all our businesses the confidence that when we think this disease is over, it really is over? Which is better, to have a partial re-opening and risk a second wave, reverting to a second lockdown, or bearing the pain now, in order to be really free once again. The longer we stay in lockdown, the closer we are to a vaccine, and testing will be in the many of hundreds of thousands a day.

New Zealand, which appears to have eliminated Covid-19 completely, has had the toughest of lockdowns, a fair whack of testing and tracing and has closed its borders to stop people bringing the virus from overseas. The impressive Prime Minister, Jacinda Adern, said that she recently extended the lockdown stating that “the extra short-term cost, will give much greater long-term health and economic returns”.

I am not advocating that the lockdown continues for many months to come: I just think that it is better to be cautious for a few weeks more, be clear that we are over it, and are not risking a second wave now, or during the winter.

The one thing that really worries me is that if we listen to all those who want to get back to normal now, we may do so too early, and have to return to full lockdown again. That really will be structurally damaging for business and society. In fact, I suspect the country might have a collective nervous breakdown.

Voting Online does not mean the end of Parliament as we know it

I love my Conservative MP colleagues (almost all of them), but I really cannot fathom why there is so much outrage at the introduction of online voting.

Not only do I find it quite exciting (yes, it is true I have been at home for almost seven weeks and have cabin fever, so welcome even the smallest of pleasures), but it is an extraordinary feat of technological ingenuity that the architecture of online votes has been built in the space of a few weeks, in the midst of the Coronavirus epidemic.

The web technology behind this is remarkable, with even a Division Bell sounding on our computers when there is a vote.

And yet, for some reason, this online hybrid Commons is seen as ‘a slippery slope’, ‘a weakening of scrutiny of the Executive’ and ‘an end to Parliament as we know it’.

This is in contrast, of course, to voting for five amendments from 10pm on a Monday evening which can take 90 minutes or more, and of which most of us are not even sure what the amendments are about!

I accept completely the arguments about the usefulness of the voting lobby in getting access to Ministers and asking colleagues to sign petitions and the like. Apart from possibly the Commons tea room, there are few substitutes.

However, at least this online system ensures that we do not only have ‘a Parliament of the fittest’, so that MPs and Peers who are ill, self-isolating or shielded can take part fully in proceedings.

We should be thanking the Commons officials and techno wizards who made this possible and examine whether online democracy could be expanded from Parliament to the people. But that is an argument for another day, lest I upset my more traditional MP friends even further…

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Andy Street: Our West Midlands recovery plan – and why no one-size-fits-all Whitehall scheme would work

Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.

Across the West Midlands, the human impact of the coronavirus has been deep and painful. It has left people mourning relatives, friends and neighbours, while separating us from our loved ones. The number of cases and deaths here has been second only to London.

The last few days have offered some reasons for positivity, from the Prime Minister’s assertion that we have “passed the peak” of the outbreak, to the huge increase in testing. As I write, here in the West Midlands the NHS Nightingale Hospital at the NEC is yet to take a single patient, more than a week after opening – a sure sign that our region’s brilliant hospitals are creating the capacity to deal with COVID-19.

Planning has played a vital role in achieving these milestones. Now, as our NHS continues to battle the outbreak, we face the daunting task of developing plans to bring the economy out of hibernation. This is a tremendously difficult subject to face while so many lives are still being lost, but it is vital that we do so.

The Office for Budget Responsibility has predicted a 35 per cent hit to national GDP, with the possibility that the effect on economic growth could be felt for many years. In the West Midlands, 79 per cent of businesses in the area have seen a drop in their income.

When coronavirus hit, the West Midlands was in a strong economic position. We had record employment figures and the fastest growth anywhere outside London. However, our economic mix leaves us vulnerable. Research highlights our dependence on manufacturing and high levels of business tourism, as well as a significant economic contribution from universities, all of which are affected.

Government measures to put large parts of the economy into hibernation – furloughing staff, business rates deferrals, grants and loans – were a vital first step to protect our businesses. Last week’s £600million pledge to support small firms in shared spaces, market traders, charity shops and others was a welcome addition.

Now, as we draw up future economic plans, it is vital that we learn the lessons of past downturns. To deal with the 2008 recession, the West Midlands set up taskforces with business, councils, trade unions and politicians putting aside partisan interests. This is already happening again.

In the West Midlands, we are working together to create a plan which will be specific to our needs. Recovery needs to be informed by a detailed local knowledge. There is no ‘one size fits all’ model that can be rolled out from Whitehall.

For instance, the recovery of the West Midlands automotive and construction sectors is crucial. Our cluster of automotive firms directly employs around 46,500 people.

The West Midlands Combined Authority (WMCA), Local Enterprise Partnerships and our seven member boroughs of Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton are drawing up plans that will set out a road map to recovery. At times like these, public authorities can play a key role in boosting confidence, through their flexible handling of services like education and transport. Business has shown it can do this too – just look at the way our supermarkets have evolved to meet the challenges they face.

However, the West Midlands requires targeted efforts to help reboot our most important sectors and support local people as the economy recovers – gear changes that will drive growth.

An Automotive Response Programme would allow vehicle manufacturing and retail to resume in a safe way, while pressing ahead with the infrastructure and Gigafactory required to make the region a global leader in electric transport.

The region’s SMEs must be supported through the Government’s £1.3 billion fund for new firms, backed by local business accelerators offering advice and training. A new Clean Growth Innovation Challenge would identify ideas to stimulate the green economy.

Big capital projects – such as stations for HS2 and a central hub for our creative economy – would stimulate growth, along with major transport projects like the expansion of the Metro across the region. I have urged the Prime Minister to bring forward £4.2 billion of national transport funding, planned for 2022, while the WMCA is pressing ahead with major projects, including cleaning up former industrial sites in Coventry and Sandwell ready for housing development.

This ground-breaking Brownfield First policy can be fast-tracked to build 200,000 new homes in the next 10 years on more former industrial sites. Our universities will also be critical to recovery, collaborating with business to boost productivity through research and development.

Finally, as we compete with the likes of Berlin, Boston and Barcelona, we will need to showcase our region to the world, building international reputation and utilising the Commonwealth Games in 2022.

Our region’s plans also look at the short, medium and long-term challenges we face. In the short term, for instance, companies will need help with social distancing measures.

In the medium term, we will need to address how the crisis has impacted on people. From the youth job market to rural communities and the consequences of enforced isolation, it will only be when lockdown is coming to an end that we really understand how it has impacted on individuals.

We will need employment and re-training schemes for those who lost their jobs, and support for charities, social enterprises, the arts, culture, sport and council services too.

We are a long way from our long-term aims, when there will be fewer restrictions with the virus in retreat. This will be the stage at which global economic trends that have emerged from the crisis will become apparent – in terms of things like technology and home working.

Those days are far off, and we have a long road ahead to get through this crisis. The most important task at hand remains to respect the lockdown restrictions, drive down the infection rate and save lives. This is how we will defeat the virus. Up and down the country, we have seen cities, towns and communities draw on local spirit to play their part.

This virus was a challenge we did not expect, which came from the other side of the world. Our answer must begin at home with local leadership backed by Government support.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Andy Street: Our West Midlands recovery plan – and why no one-size-fits-all Whitehall scheme would work

Andy Street is Mayor of the West Midlands, and is a former Managing Director of John Lewis.

Across the West Midlands, the human impact of the coronavirus has been deep and painful. It has left people mourning relatives, friends and neighbours, while separating us from our loved ones. The number of cases and deaths here has been second only to London.

The last few days have offered some reasons for positivity, from the Prime Minister’s assertion that we have “passed the peak” of the outbreak, to the huge increase in testing. As I write, here in the West Midlands the NHS Nightingale Hospital at the NEC is yet to take a single patient, more than a week after opening – a sure sign that our region’s brilliant hospitals are creating the capacity to deal with COVID-19.

Planning has played a vital role in achieving these milestones. Now, as our NHS continues to battle the outbreak, we face the daunting task of developing plans to bring the economy out of hibernation. This is a tremendously difficult subject to face while so many lives are still being lost, but it is vital that we do so.

The Office for Budget Responsibility has predicted a 35 per cent hit to national GDP, with the possibility that the effect on economic growth could be felt for many years. In the West Midlands, 79 per cent of businesses in the area have seen a drop in their income.

When coronavirus hit, the West Midlands was in a strong economic position. We had record employment figures and the fastest growth anywhere outside London. However, our economic mix leaves us vulnerable. Research highlights our dependence on manufacturing and high levels of business tourism, as well as a significant economic contribution from universities, all of which are affected.

Government measures to put large parts of the economy into hibernation – furloughing staff, business rates deferrals, grants and loans – were a vital first step to protect our businesses. Last week’s £600million pledge to support small firms in shared spaces, market traders, charity shops and others was a welcome addition.

Now, as we draw up future economic plans, it is vital that we learn the lessons of past downturns. To deal with the 2008 recession, the West Midlands set up taskforces with business, councils, trade unions and politicians putting aside partisan interests. This is already happening again.

In the West Midlands, we are working together to create a plan which will be specific to our needs. Recovery needs to be informed by a detailed local knowledge. There is no ‘one size fits all’ model that can be rolled out from Whitehall.

For instance, the recovery of the West Midlands automotive and construction sectors is crucial. Our cluster of automotive firms directly employs around 46,500 people.

The West Midlands Combined Authority (WMCA), Local Enterprise Partnerships and our seven member boroughs of Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton are drawing up plans that will set out a road map to recovery. At times like these, public authorities can play a key role in boosting confidence, through their flexible handling of services like education and transport. Business has shown it can do this too – just look at the way our supermarkets have evolved to meet the challenges they face.

However, the West Midlands requires targeted efforts to help reboot our most important sectors and support local people as the economy recovers – gear changes that will drive growth.

An Automotive Response Programme would allow vehicle manufacturing and retail to resume in a safe way, while pressing ahead with the infrastructure and Gigafactory required to make the region a global leader in electric transport.

The region’s SMEs must be supported through the Government’s £1.3 billion fund for new firms, backed by local business accelerators offering advice and training. A new Clean Growth Innovation Challenge would identify ideas to stimulate the green economy.

Big capital projects – such as stations for HS2 and a central hub for our creative economy – would stimulate growth, along with major transport projects like the expansion of the Metro across the region. I have urged the Prime Minister to bring forward £4.2 billion of national transport funding, planned for 2022, while the WMCA is pressing ahead with major projects, including cleaning up former industrial sites in Coventry and Sandwell ready for housing development.

This ground-breaking Brownfield First policy can be fast-tracked to build 200,000 new homes in the next 10 years on more former industrial sites. Our universities will also be critical to recovery, collaborating with business to boost productivity through research and development.

Finally, as we compete with the likes of Berlin, Boston and Barcelona, we will need to showcase our region to the world, building international reputation and utilising the Commonwealth Games in 2022.

Our region’s plans also look at the short, medium and long-term challenges we face. In the short term, for instance, companies will need help with social distancing measures.

In the medium term, we will need to address how the crisis has impacted on people. From the youth job market to rural communities and the consequences of enforced isolation, it will only be when lockdown is coming to an end that we really understand how it has impacted on individuals.

We will need employment and re-training schemes for those who lost their jobs, and support for charities, social enterprises, the arts, culture, sport and council services too.

We are a long way from our long-term aims, when there will be fewer restrictions with the virus in retreat. This will be the stage at which global economic trends that have emerged from the crisis will become apparent – in terms of things like technology and home working.

Those days are far off, and we have a long road ahead to get through this crisis. The most important task at hand remains to respect the lockdown restrictions, drive down the infection rate and save lives. This is how we will defeat the virus. Up and down the country, we have seen cities, towns and communities draw on local spirit to play their part.

This virus was a challenge we did not expect, which came from the other side of the world. Our answer must begin at home with local leadership backed by Government support.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com