Rishi Sunak to announce cut-off date for furlough scheme
It is expected this week that the Chancellor will announce a date for when no more applications will be accepted for the furlough scheme.
The furlough scheme has allowed employers to keep staff on their books who cannot work throughout the coronavirus restrictions or who would lose their jobs for any other reason due to the coronavirus pandemic.
Rishi Sunak will also release details of the contributions the government will need from employers for the extension of the job retention scheme from August and the rules allowing furloughed employees to work part-time.
Read more on The Telegraph
Britain’s budget deficit could reach 5 per cent of national income by 2024
The UK’s annual budget deficit could be as high as £134bn by 2024-2025, the highest figure since 2011, according to calculations made using Office for Budget Responsibility (OBR) forecasts.
The OBR and the Bank of England have predicted a rapid recovery from the current recession, but this was tempered by less optimistic forecasts gleaned from a survey of independent economists.
For business, the question will be what the government will do about the deficit. While it is relieving for many to hear a “no return to austerity” message, it raises the prospect of higher taxes.
Read more on the FT
The tough decision facing CEOs
Rolls-Royce has announced plans to cut one fifth of its staff. CEO Warren East says the restructuring is about preparing the company for the longer term the chief according to The FT.
The aero-engine maker has been hit hard by the struggles of the wider aviation industry amid the coronavirus pandemic and the 9,000 redundancies are expected to save the company £700m.
In a crisis of hard decisions, it highlights yet another facing business leaders. How feasible is it to keep staff - and take on the risk of employing them - when they might not have a job to come back to?
The furlough scheme was designed to prevent a mass wave of redundancies; it has enabled workers to retain wages that without would have been lost in the market-sapping storm brought on by the coronavirus. That is overwhelmingly a good thing, but as East himself recognises it cannot go on forever.
Eventually bosses will have to decide who they have more responsibility to, the shareholders that fund them or the staff that run them?
Businesses banned from paying dividends
Businesses will not be allowed to pay out bonuses or dividends if they receive government-backed support.
The Treasury has pushed for the measure in order to protect tax-payers' money from executives and shareholders as the government-backed loans’ limit of £50m is raised to £200m.
The larger loans should not be used to pay dividends, cash bonuses, or pay rises to senior employees. Companies must ensure pay rises must not have a negative impact on their ability to repay nor should they undertake share buybacks.
The restrictions will last for the duration of the loan, and those using the Bank of England’s COVID corporate finance facility will be bound by the same rules from now on.
Michael Izza, chief executive of the Institute of Chartered Accountants in England and Wales, told The Times: “The restrictions may dampen enthusiasm, but I think it is fair that businesses which benefit from loans should be expected to demonstrate corporate and social responsibility.”
Free support for CEOs during coronavirus pandemic
A cross-sector team of business leaders has formed to provide free mentoring to CEOs of UK businesses affected by the coronavirus pandemic.
The All Together network will pair 100 volunteer CEOs from businesses including Innocent Drinks, Graze, White Stuff and Gaucho, with executives at firms with annual turnovers of between £2m and £100, to provide peer to peer support, insight and advice for firms trying to navigate the coronavirus pandemic and beyond.
The initiative, which is spearheaded by former Innocent Drinks MD Jamie Mitchell can also provide immediate “triage” advice for firms needing urgent support, help with strategy and planning, as well as coaching for business leaders grappling with the pressures of leading during the crisis.
“All Together is not about the specifics of the laws on furloughing – it’s more about how do you take tough decisions,” says Mitchell. “Being a CEO is lonely at the best of times, so having someone external who you can talk things through with is important.”
To find out more about All Together, the team of volunteer advisers, to request mentoring help or if you feel you can volunteer as an adviser, visit http://www.alltogether.company/.
Furlough scheme extended until October
Chancellor Rishi Sunak has extended the government’s employee retention scheme until October.
For now the government will continue to pay 80 per cent of an employee’s salary up to £2,500 until the end of July, although Sunak insists that from August firms will have to “start sharing” the cost. There has been speculation about a possible gradual winding down of the percentage the government would cover.
August will also see the scheme become more flexible, enabling firms to bring furloughed staff back on a part-time basis.
How the pandemic could change rent
While the company is facing problems of its own, it says it is in a secure position to see out the ‘concern assessment period’, and has also set-up a £80m rent relief fund for its most vulnerable tenants.
The landlord is not alone in seeing a change in how rent is conducted.
Colliers International, a property consultancy, said that more than 40 per cent of high street landlords are likely to consider factors such as footfall and turnover when deciding on rent post-pandemic, The Times reported yesterday.
Other countries including the United States, France and Italy link rent to turnover and favour shorter leases compared to Britain’s tradition of longer leases with upward-only rent reviews.
Landlords, almost 80 per cent of whom own retail properties, said they expect a permanent change to the terms on which shops are occupied.
Workplace guidance released
The government has released official guidance detailing the practical steps employers should take to protect their staff while at work.
The eight industry specific documents have been developed in consultation with 250 businesses, trade unions and industry leaders. The devolved governments of Wales, Scotland and Northern Ireland were also involved in the process.
Bankers brace for a wave of defaults
Banks are bracing for a wave of defaults next year as the new government bounce back scheme (BBLS) makes it easier for businesses to access emergency funds.
Bankers' worries are that the scheme relies too heavily on businesses recovering successfully and able to repay loans out of future profits. Even though the scheme is backed by the government 100 per cent, there are still financial risks.
“The taxpayer is now underwriting millions of pounds of unqualified loans,” Richard Churchill, a partner at Blick Rothenberg, told the FT.
Furlough scheme to be phased out
The government is expected to slowly pull back the furlough scheme until September. According to the Telegraph, there will be an initial reduction in the proportion of furloughed staff's salaries that the government will cover, to 60 per cent, and the workers may also be allowed to work part time, with the government “topping-up” their wages.
Responses to the scheme have been mixed. Sir Lloyd Dorfman, the founder of Travelex, said: “This furloughing is unsustainable for an extended period of time.”
But, Edwin Morgan, director of policy, IoD said: “Enabling people to return to work gradually can help businesses get back on their feet. With demand still flagging across the economy, and social distancing proving a challenge for many firms, the government needs to be agile with its support.”
“Sharpest annual contraction since 1706”
A Bank of England scenario is predicting the UK economy to shrink by as much as 14 per cent throughout 2020.
If social distancing measures are gradually phased out between June and September, bank analysts predict a three per cent shrink during the first quarter, followed by a 25 per cent fall in the three months to June, reports the BBC.
The two consecutive months of contraction would equate to a recession. However, 2021 will see the UK economy bounce back by as much as 15 per cent.
Be cautious, urges the BBC’s economics editor Faisal Islam, “this is not a typical forcast. Many other scenarios are possible.”
Is testing staff really feasible?
The FT reports that accountancy firm BDO is considering plans to regularly test its 5,500 staff as a means of returning to the office post coronavirus lockdown. While still in early stage considerations, the fortnightly measures could be introduced alongside other guidelines including a one-way system and a reduction of desk density.
It’s not the only firm exploring similar solutions. Ocado has procured testing supplies for its own staff, BP is testing off-shore workers on its oil rigs and execs at the CBI have confirmed that the body is also exploring options for staff testing.
It offers a glimpse of the new normal facing workers and companies after the country emerges from the coronavirus pandemic. It also highlights the tricky ethical decisions boards will have to make over the coming weeks and months.
Some business leaders have expressed concerns about the solution, including putting pressure on NHS testing capabilities, sensitivities regarding employee health and personal information, as well as potential liabilities for any misdiagnosis.
The government has not yet issued guidance on whether firms should test staff.
Apprenticeship levy could be used for staff training
Firms may be able to redirect apprenticeship levy funds towards digital training, under changes currently being considered by the government.
There is expected to be a large fall in the number of apprenticeships undertaken in March due to the coronavirus crisis, and business groups have been lobbying education secretary Gavin Williamson to allow firms to spend unused money to fund training for current and furloughed staff.
Director-general of the Institute of Directors, Jonathan Geldart, has proposed that levy-payers be allowed to spend funds on a “wider range” of training courses, reports The Times.
Details on possible workplace-rules
A draft strategy document, seen by the BBC, sheds light on some of the measures that workplaces may have to introduce if staff are to safely return to offices once lockdown restrictions are eased.
The measures include ensuring shifts are staggered, a reduction of hot-desking practices to minimise the amount of equipment used by individuals and additional hygiene procedures which could include physical screens.
Workers may not be required to adhere to the two-metre social distancing rule, but it should be implemented if possible and homeworking should be maximised.
It is unclear as of yet whether workers could be required to wear personal protective equipment - the document simply promises “more details” - but there are concerns over whether companies will be able to procure enough. Employers are also worried that they could be sued if they fail to provide adequate protection to staff.
The government is set to review current restrictions on Thursday.
Bounce Back loan scheme opens
From today firms will be able to apply for loans of up to £50,000.
The Bounce Back loan scheme is designed to offer smaller amounts than the Coronavirus Business Interruption Loan Scheme after business groups complained that companies and sole-traders were struggling to gain access to funds. Loans are 100 per cent guaranteed by the government and have an interest rate of 2.5 per cent.
While it is primarily aimed at small to medium sized firms, any business can apply.
Legal clarity sought over business interruption insurance
The FCA plans to turn to the courts in order to clarify the terms of business interruption insurance.
There has been dispute between struggling firms and their insurers, which say that in many cases coronavirus losses are not covered within their policies. The FCA wants a court to rule on whether standard policy wording should apply in this case, the FT reports.
There are concerns that unless clarity is reached, many small firms could collapse.
No VAT for e-publications
The government has brought forward plans to exempt the payment of VAT on digital publications.
In his March budget, Rishi Sunak announced that from December 2020, firms would no longer need to pay the duty on digital publications, including e-books, journals, digital magazines and newspapers. The measures will now come into force today, seven months ahead of schedule, so that the public will have easier access to material during the coronavirus lockdown.
Over the next three months the government also will invest up to £35m in national and local newspapers to promote its coronavirus health campaign in a bid to provide additional support to the struggling industry, reports City A.M.
Businesses will face greater pressure over social responsibility
COVID-19 has changed the way we work and live; it could also change the type of scrutiny companies face from their shareholders, Attracta Mooney writes in the FT.
The actions of companies like Frasers Group and Wetherspoons during the early stages of the coronavirus crisis - where bosses were accused of putting profits ahead of worker safety by demanding sites remained open - are said to have “snapped investors to attention”.
Whereas pre-crisis shareholder activism focused primarily on the environmental and governance side of ESG (Environmental Social Governance), executives are now likely to face greater pressure to ensure that they treat their employees fairly.
The social focus could extend beyond employee and supplier rights but also clamp down on tax avoidance, says Colin Baines, investment engagement manager at Friends Provident Foundation, which works to encourage fairer investments.
“Aggressive tax avoidance is a real blind spot in ESG,” Baines adds.
Coronavirus could accelerate the end of cash
Cash withdrawals have fallen 60 per cent during the coronavirus pandemic, spurred by the shutdown of cafes and bars and an increasingly hygiene conscious consumer favouring card use and online grocery shopping.
The ATM network Link, which released the data, say that while there are still 11 million cash withdrawals a week, the jump to digital payments could accelerate the already declining use of notes.
In a consumer survey conducted by the network, 75 per cent of consumers were using less cash, while 54 said they were avoiding it all together. A further 76 per cent said they planned to switch to other forms of payment over the next six months.
The decline has left experts worried that the 20 per cent of the population still heavily reliant on cash could be left behind.
100 per cent government-backed loans to launch in May
The government has revealed today that it is offering small businesses 100 per cent government-backed Bounce Back loans.
Small businesses can take out loans between £2,000 and £50,000 on an interest-free basis for 12 months, with no repayments made during that time, and can be accessed within days.
The scheme will be available from May 20. If businesses have already accessed support via CBILS, they can transfer the loan onto the bounce back scheme, but they will not be able to take out loans on both schemes.
For more information go here.
COVID-19's cost on banking
British banks plan to set aside a collective £5bn to cover coronavirus losses.
HSBC, Barclays, RBS, Standard Chartered and Lloyds, which are all due to deliver first quarter results this week, have been hit after the COVID-19 pandemic left borrowers struggling to pay.
HSBC is expected to put aside £1.4bn, Lloyds £1.1bn, while Barclays plans to allocate £923m to cover loan charges.
Jason Napier, a banks analyst at UBS told The Guardian that while it is ultimately hard to predict the final cost of the crisis on banking balance sheets, UK banks are in a much better position to weather a global downturn compared to the 2008 banking crisis.
Calls to protect vets
The UK’s leading veterinary firms have called on the government to do more to protect the industry.
CVS Group, IVC Evidensia and vetPartners, which own nearly 40 per cent of all practices, among others are calling on the government to grant the industry business rate relief. While retailers, pet shops and a range of other businesses are eligible for rates relief, veterinary practices are specifically excluded.
Industry groups say that despite being legally obliged to continue providing emergency care, current government guidelines stop vets from providing their full range of services; this is leaving businesses stretched.
A survey published by the Royal College of Veterinary Surgeons suggests that weekly practice turnover has fallen by 75 per cent at across a quarter of firms.
“The government is not doing enough to support the veterinary sector despite its vital function within the UK’s agricultural, food and export industries,” says Stuart Caton, group chief commercial officer & vice president at IVC Evidensia.
“Without business rates relief some practices, which already operate on thin margins, will not survive; the knock-on effects will be far reaching.”
Global executives pessimistic about world economy
Optimism is in short supply among global CEOs amid the coronavirus pandemic, according to a new sentiment tracker.
The Global Business Barometer, launched by the Economist Business Intelligence Unit (it's sponsored, but it's worth a look), surveyed the sentiment of 2,700 executives on the long-term prospects of the global economy.
The resulting barometer reading of -39.2 (with -50 being the lowest) indicates that on the whole bosses are rather pessimistic. Leaders in Europe and Asia Pacific were the most negative, measuring -40.4, while bosses in North America measured -37.8.
However, the barometer suggests that when executives have more understanding they get more optimistic. When asked to give a three-month outlook for their own company, sentiment levels were -17.8.
Respondents were also more sanguine about the world’s prospects of bouncing back: up to 40 per cent believe that they will be back up and running within a year. A further 46 per cent believe it could take as long as two years. Only 10 per cent believe it will take longer than three years.
The barometer also sheds light on how executives are planning to respond to the pandemic, with “taking market share” and “improving operational agility” being commonly-held objectives.
List of relaxed rules
During the coronavirus pandemic the government has temporarily relaxed some rules in order to provide extra assistance to struggling firms.
These include an ability to apply for a three-month extension to the Companies House reporting deadline, changes to enable workers to carry annual leave for up to two years and a relaxation in the legal requirements around delivery driver rest time.
The Department for Business, Energy and Industrial strategy has published a complete and updated list of all rule changes.
Unilever prepares for a lasting change
Unilever CEO Alan Jope says the FTSE 100 firm is preparing for a “lasting change” in consumer behaviour.
In the first quarter of the year, the Anglo-Dutch FMCG giant has seen increased sales in hygiene and in-home products, while there has been less demand for its food service and ice cream as many consumers around the world remain confined to their homes during the coronavirus lockdown.
At $12.4bn, Q1 turnover is up a meagre 0.2 per cent on last year, reports the Telegraph.
What does COVID-19 mean for call centres?
The coronavirus pandemic has thrown the outsourcing industry into turmoil. Companies are heavily reliant on “butts on seats”, but are having to operate with skeleton teams in order to comply with social distancing measures.
Outsourcing firms are turning to automation to meet demand. This move will be permanent, Indian tech investor and former outsourcing executive Mohandas Pai tells the FT.
But what does that mean for workers in outsourcing hubs like India and the Philippines, which are heavily reliant on the industry, or for the western businesses for which they play a vital back end function?
Read more here.
Airlines refuse refunds amid bankruptcy worries
Which? has found that 20 of the UK’s largest airlines are illegally avoiding paying out refunds to customers who have had to cancel their holidays.
Ryanair told customers that they would have to wait until the coronavirus crisis had passed, others have instead offered vouchers, while some have allegedly refused to pay within the 14 day refund period, reports The Guardian. The total amount owed for abandoned trips is estimated to be around £7bn.
The International Air Transport Association, an industry body for airlines, and ABTA, for travel firms, have asked for a four-month grace from the 14 day refund period in order to save the travel industry from bankruptcy.
Shareholders excluded from annual meetings
Two thirds of FTSE 100 companies are holding annual meetings behind closed doors this year, reports The Times.
While coronavirus restrictions have made the physical presence of shareholders almost impossible, meetings can still include them via video link. The list of companies holding private annual meetings includes Barclays, Lloyds and Glaxosmithkline, according to the shareholder lobby group, Share Action.
Simon Rawson, Share Action’s director of corporate engagement said: “This is not a moment to hide away. Management teams are making vitally important decisions that will affect the long-term success of companies, as well as the lives of their workers and customers.”
Richard Branson asks for a commercial loan (not a bailout)
Richard Branson is offering to mortgage his Necker Island in the Carribean to secure a £500m commercial loan from the UK government in order to save his Virgin Atlantic airline.
His plea, detailed in an open letter to staff, comes after news broke that Virgin Australia had gone into administration.
Despite his wealth the billionaire has said that he does not have the “cash in a bank account ready to withdraw,” reports the BBC. However, Branson insists that the government will be paid back.
Earlier this month companies including Rolls-Royce, Heathrow airport sent letters to the government explaining the importance of Virgin Atlantic to the UK’s manufacturing supply chain.
Support finder tool launched
The government has launched an online tool that will enable business owners and self-employed workers to find out whether they are eligible for support during the coronavirus outbreak.
The Support Finder tool will ask owners to complete an online questionnaire, which should take only a few minutes to fill out. They will then be presented with a list of applicable financial support.
The tool's introduction comes on the same day that over 140,000 firms applied for support within hours of the government's furlough scheme opening for applications.
From £650m to nothing
Oil price wasn’t the only digit to drop to near zero as a result of the coronavirus outbreak. Highstreet clothing giant Primark has seen its monthly sales drop from £650m to £0 while its stores remain closed during the COVID-19 lockdown.
The clothing brand, which over recent years has outperformed high street rivals, doesn’t use e-commerce, selling only gift cards online, and all its stores across Europe and the US have been closed since March 22.
Despite the sales drop, the brand’s owner Associated British Foods (ABF) says that it has paid suppliers for stock and set up a fund to ensure that workers within its supply chain continue to receive a wage.
ABF CEO George Weston said to investors that without the government’s furlough scheme “most” of the brand’s 68,000 staff would have been made redundant. The firm has agreed and drawn a loan of £1.09bn and has cash of £801m.
First quarter revenues across the ABF group which also consists of grocery, agriculture, sugar and ingredients divisions, were £7.6bn, two per cent ahead of last year, but the firm expects “trading in the second period to be radically different.”
Campaign launched to redeploy workers
A campaign has been launched to encourage businesses to keep employees in work during the coronavirus outbreak.
A collaboration between business leaders, lobby groups and MPs, the Keep Britain Working campaign will invite firms to redeploy workers from depressed sectors to in-demand roles, help redundant staff find new employment as well as share ideas and best practice as to how Britain can bounce back from the coronavirus-induced economic damage.
The movement has already received support from Alan Sugar, Timpson CEO James Timpson, Severn Trent's Liv Garfield and JCB’s Anthony Bamford.
“None of us have ever seen anything like this. The shock waves now are much larger and faster than they were in the recession of 2009,” says co-founder and CEO of Reed Recruitment James Reed.
“Businesses must work together not only to survive these challenges but to ensure that when we emerge, we are well placed to rebuild the economy and support people back into work.”
Job retention scheme opens
The Coronavirus Job Retention Scheme is now “up and running” which means firms can now claim funds to cover the wages of staff unable to work during the coronavirus outbreak.
The government says that applications can be made via an online portal and funds will be “expected to land in bank accounts within six days”.
Under the furlough scheme, firms can apply for cash grants, capped at £2,500 to cover up to 80 per cent of an employee’s wage.
On Friday chancellor Rishi Sunak announced an extension of the scheme until the end of June and potentially beyond “if necessary”, after widespread worries from the business community that firms would have to start introducing redundancies if they could not guarantee furloughed staff pay beyond May, reports the BBC.
Protection announced for all medium-to-large companies
All businesses with a turnover greater than £45m will now be able to apply for government-backed support during the coronavirus epidemic.
Originally businesses would not be eligible for the Coronavirus Large Business Interruption Scheme if their turnover exceeded £500m, but the treasury has widened the support ahead of Monday’s launch.
Firms with revenues of £45m will be able to apply for £25m, while those turning over more than £250m can access £50m in loans that are 80 per cent guaranteed by the government.
"I want to ensure that no viable business slips through our safety net of support as we help protect jobs and the economy. That is why we are expanding this generous scheme for larger firms,” said chancellor Rishi Sunak in a government release.
Businesses face “secondary epidemic”
Society faces a “secondary epidemic” of stress-related absenteeism towards the end of 2020 as a result of the coronavirus lockdown, warns an academic writing for the World Economic Forum.
Early evidence from other locked-down nations suggests that workers may need greater psychological support once they return to work, as sustained isolation could result in increases in burnout, greater anxiety over personal health and loved ones as well as other post-traumatic effects.
Educating people about any potential psychological impacts and introducing schemes to provide greater support are some of the measures Vrije University Brussels' Elke Van Hoof recommends as ways to mitigate the impact.
Furlough scheme extended to help new starters
The cut-off date that enables employees to be furloughed under the Job Retention Scheme has been extended, the government has announced.
It means that staff on payroll by March 19, the day prior to the scheme’s launch, will now be covered. Previously only those on the PAYE system before February 28 qualified.
Employers will need to notify HMRC that individuals were on the books using the Real Time Information System. Firms should be able to apply for the scheme from next week, if it opens as expected.
Crawley could be the UK’s most affected
Crawley could be Britain’s worst hit town by coronavirus-induced job losses.
A report by the Centre for Cities think tank warns that as many as 53,000 of the West Sussex town’s 94,000 jobs could be at risk, reports the Guardian.
In the shadow of Gatwick airport, the local economy is heavily reliant on the aviation industry which has been crippled by COVID-19 travel restrictions.
How to protect employee mental health during coronavirus lockdown
With lockdown leaving many employees more isolated than ever before, mental health is increasingly on “everyone’s agenda” writes the FT.
Studies already show that workers are doing less exercise and struggling to sleep, while some admit they’re drinking more in order to cope with the boredom and anxiety caused by the coronavirus lockdown.
Virtual choirs, cross-departmental buddying programmes and parent help groups are just some of the range of measures companies are introducing in order to protect the wellbeing of their staff during this “culture shift”. However, experts warn that looking after staff, both full-time and furloughed, could get harder as the crisis goes on.
The government is expected to announce a three-week extension to the lockdown period this afternoon, reports the BBC.
SME bailout scheme kept “under review”
Chancellor Rishi Sunak has hinted that he will keep the government’s emergency loan scheme “under review”, reports the FT.
The plan currently provides loans of up to £5m interest free, with 80 per cent guaranteed by the government against the outstanding balance. However the plan has been criticised by business groups who say banks have been slow or demand complex requirements to issue funds. A British Chamber of Commerce poll found that only two per cent of firms had accessed help through the scheme.
Former and current MPs including The Evening Standard’s George Osborne and Labour's Ed Miliband have suggested the UK should adopt a scheme similar to those in Germany and Switzerland where the government guarantees 100 per cent of the loan.
Companies must prioritise public good over profits
Coronavirus is likely to complicate the relationship between business and government.
Just as in Second-World-War-era USA, when the manufacture of cars was banned and firms' efforts were redirected to building tanks, the government is going to ask more of companies in a bid to help combat the coronavirus outbreak. There is no guarantee that these demands are going to be reasonable writes the FT’s Robert Armstrong.
But there are two principles that bosses should follow to help steer their company through. The first is act fast. The second is look to the horizon. In a crisis, writes Armstrong, the long term is the only thing that matters.
“The goal must be to contribute what you can, and emerge from the crisis with a sterling public reputation, employee trust and a strong financial foundation.”
Update: Government support for entrepreneurs
The government is expected to unveil its plans to support early stage businesses affected by the coronavirus outbreak.
The rescue package, which was ironed out by Treasury offcials over Easter, will focus on “unlocking private equity” and could see the government team up with private investors through the British Business Bank, reports The Telegraph.
There have been concerns over the future of “a generation of innovative businesses”, lots of whom are reliant on investors who have cut spending during the outbreak. Many start-ups also don’t qualify for the government’s emergency loan scheme.
Space tech for the NHS
The UK Space Agency has launched an initiative to help fund the development of technology and services that could help the NHS.
In collaboration with the European Space Agency and NHS England, it has made £2.6m available for projects that can help the health service deal with the challenges presented by the coronavirus outbreak.
Firms with projects that help with internal logistics (e.g. drone deliveries), managing disease outbreaks, population health and wellbeing, preparedness for future epidemics or tech that could help a “recovering health system function” and handle post-crisis backlogs are all invited to apply for the funding.
Lockdown to be extended
Optimists will have cheered the news that the government is reviewing the three-week lockdown on British life and commerce. They are likely to be disappointed.
The review, taking place this Easter weekend, is almost certain to conclude that the lockdown will continue, and with the daily death toll at record levels, it will surely also continue to enjoy popular support.
If there's any indication of when the restrictions are likely to ease, it comes from Wuhan, where the virus first emerged. The Chinese city is only now starting to emerge from the house arrest it entered in late January (albeit tentatively - widespread testing, building shutdowns and a virus-status passport system remain, as do the hazmat-clad officials on every street corner).
If we follow their pattern, which is far from certain, we could therefore expect at least another couple of months of this.
Calls for executive pay to be cut
High levels of executive pay have long been controversial, but today there are calls for cuts from the government and the Investment Association (IA).
The government is urging companies to look at executives’ pay in order to reduce costs, amid dividends being cancelled or deferred, commercial rent not paid, and thousands of businesses accessing state support, reports The Telegraph.
Some of the country’s biggest businesses including WPP, Primark-owner Associated British Foods, building firm Taylor Wimpey and others have started to cut pay packages.
The IA which manages £7.7tn of members’ assets said in a letter to FTSE350 companies that shareholders will support them: “If a company cancels dividend payments or makes significant changes to their workforce’s pay, IA members support boards and remuneration committees that demonstrate how this should be reflected in their approach to executive pay”.
Less than 1 per cent of coronavirus business loan enquiries have resulted in payouts
Only 2,022 loans have been granted out of 300,000 enquiries under the coronavirus business interruption loan scheme, according to data from UK Finance, a rate of only 0.65 per cent.
There are around 6 million small and medium-sized firms in the UK, and the monthly payroll is thought to be approximately £41bn, according to economic consultancy, Fideres.
Some obstacles for businesses owners, such as banks asking for personal property to be used to take out loans, have since been removed, reports City AM. While enquiries are not applications, and so could include multiple enquiries from the same business, the numbers are so small that it is clear there are still barriers in the system.
Read more here
Coronavirus: Economic effects on UK life, by the numbers
Not to scare you any more than we already have, but the UK economy is heading for a recession which is expected to be one of the most severe since 1900, shows data reported by the FT.
The newspaper has compiled information on the economy which includes economic activity, electricity consumption, travel, unemployment, universal credit, recruitment, consumer spending, retail, household expenditure, property market activity, and the UK economy as a whole.
Here are some of the findings of that data:
-- While there the accuracy of economic activity surveys is reduced, existing surveys suggest activity is crashing faster during than the financial crisis.
-- Electricity consumption decreased by 10 per cent in the last week of March compared with the same period last year, although it’s important to point out it was also colder in March 2019.
-- Journeys to workplaces were 55 per cent lower at the end of March compared with the previous five weeks, and daily traffic dropped significantly.
-- In the last two weeks of March, nearly 1 million people applied for universal credit. Previous official published data showed on average there were 55,000 claims weekly.
-- There were 20 per cent fewer vacancies at the end of March with sales and hospitality roles drying up by 40 per cent.
-- Car sales plunged by 44 per cent last month, a bigger drop than during the financial crisis, according to data from the Society of Motor Manufacturers and Traders.
-- Zoopla, a property website, reported a 40 per cent decrease in demand at the end of March.
-- The fall in GDP in 2020 comes third to 1919 and 1921.
Read more here
Waitrose’s sick-leave U-turn
We have a mixed bag on the corporate citizenship front today. First up is Waitrose, which has reversed its controversial policy on coronavirus paid leave but only after an employee went to the press. The supermarket’s workers now have paid leave from day one, according to a spokesperson.
Initially, Waitrose had asked store workers to work back the hours they took off for the coronavirus, whether that was due to self-isolation or caring for a vulnerable person.
Under the rules of the company’s time bank, employees would take the time off as paid leave but would then have to work those hours back without extra pay. One staff member was quoted, "It means someone on a 35-hour contract would have to work an extra 70 hours if they had two weeks in isolation. They would be technically unpaid as the company would say they've already paid them for it."
Frontline employees pointed out that those with desk jobs were getting full pay while working at home, leaving them feeling unfairly treated.
Read more here
Primark to support wages of overseas garment workers
Millions of Bangladeshi workers have been sent home without pay or have lost their jobs as a result of garment orders cancelled by western retailers.
As a response, Primark has announced that it will help pay the wages of workers linked to orders that were due for shipment in Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka and Vietnam.
The wage compensation will be adjusted depending on government support packages, which some suppliers have complained about.
Read more here
Easyjet founder threatens board of directors
Easyjet’s co-founder and biggest investor has warned the company not to go ahead with an £4.5bn Airbus order made before the coronavirus outbreak.
With its fleet grounded and a £170m dividend to pay, the airline has already spent £300m of the £1bn emergency funding it raised from creditors and government loans. Stelios Haji-Ioanno is lobbying furiously to reduce further spend (though presumably not in dividend payouts) by suspending payments to Airbus.
“I hope none of the £300m went to Airbus otherwise I will sue the directors for breach of the fiduciary duties,” said Stelios Haji-Ioanno to The Telegraph.
The row broke out between Haji-Ioanno and the chairman, John Barton, when the latter refused to hold a shareholder vote to remove non-executive director Andreas Bierwirth over the Airbus order.
Billionaire Haji-Ioanno said: "Every time they delay the vote again in the future I will call for the removal of one more director. Let’s get on with it and give all shareholders a vote without any further procrastination."
A tip for tackling video call anxiety
Video conferencing has proved a vital substitute for face-to-face communication during the lockdown. But for many of us, it poses challenges, from bandwidth battles to body image issues.
For example, in 2014, research from Steelcase found that 72 per cent of employees were distracted by their own appearance during a video call.
One way to combat Skype self-consciousness is through mirror meditation, says Barnard psychology professor Tara Well, speaking to Quartz.
As a way of accepting your appearance and being kinder to yourself, she suggests staring at yourself in the mirror for 10 minutes, all while maintaining an open, generous attitude. The benefits can apparently go far beyond video calls.
LinkedIn also has a series of posts on what you can do to make video-calling a more comfortable experience here.
Worst recession since WWII
Not that we want to add to the general gloom, but according to the Centre for Economics and Business Research (CEBR) UK output is down by 31 per cent due to the lockdown, which is costing the economy £2.4bn per day.
The CEBR’s research, carried out by economists Daryn Park and Owen Good, looked at nearly 100 sectors of the economy in detail, on the basis of the standard industrial classification, and assigned each a score, reports the Sunday Times.
The UK’s accommodation and food services sector’s output has fallen 79 per cent, the finance and insurance sector has dropped 18 per cent, while information and communication has seen one of the smallest drops of seven per cent, reports CityAM.
Read more here
Start-ups to be given government loans
Start-ups may soon receive government funding to support them during the coronavirus lockdown. The FT reports that convertible loans are one option, which could see equity stakes owned by the state, or the loans could be repaid once the crisis is over.
To ensure that well-supported start-ups come forward, venture capitalists would have to match the government funding.
InnovateUK, a government body, could also provide additional funding to start-ups, and tax credits are being considered.
It is expected the funding will be far more modest than chancellor Rishi Sunak’s economic and job support schemes’ designed to support companies and their workers.
Read more here
One in 20 Britons could already be infected
The COVID-19 crisis has made business a day-by-day experience for a lot of leaders. Planning ahead is next to impossible when you don't know when some kind of normality will return.
There are only three conditions that would allow this to happen: 1) if there's widespread and effective vaccination; 2) if there's a strict, rapid and acccurate testing regimen allowing selective isolation in the population; and 3) if enough people get the virus to allow herd immunity to develop.
Progress on the first two points is slow and uncertain. On the third, however, there are some indications of how widespread coronavirus has already become.
According to an Imperial College study, the proportion of the UK population already infected with COVID-19 is between 1.2 and 5.4 per cent.
FT calculations taking into account London's higher prevalence of COVID-19 suggest an infection rate in the capital of between 3.3 and 12.5 per cent.
Given the lack of testing, however, it is very hard to know yet how rapidly that number is growing, but the more data is revealed, the faster we'll get an idea of when herd immunity might kick in.
Half of companies planning to furlough workers
Nearly half of UK companies plan to furlough workers during the coronavirus pandemic.
According to a Chamber of Commerce study, 44 per cent of firms say that they will furlough staff so they can access the government’s job retention scheme; some as many as 75 per cent of their workforce.
In a separate CIPD study over half of respondent employers said that they were furloughing staff, with a quarter anticipating having to cut jobs permanently, reports the FT.
The government has stated that it expects nearly three million people to be furloughed - 10 per cent of the UK’s private sector workforce.
Minimum wage increase comes into effect
The planned increase to the National Living Wage came into force yesterday.
Under the package, workers over aged over 25 will now be paid at least £8.72 an hour - a 6.2 per cent increase and three times the rate rate of inflation.
Workers aged between 21 and 24 must be paid £8.20 an hour, a 6.5 per cent increase to the National Minimum Wage. The full details are outlined in a government release.
The increase was announced by then chancellor Sajid Javid before the coronavirus pandemic had taken hold.
Last week The Guardian reported that the Institute of Fiscal Studies had recommended delaying the introduction until the end of the COVID-19 outbreak, saying that it was counter-intuitive to the government’s job retention scheme and would put additional pressure on firms already struggling during the crisis.
The new increase is set to stay, with the Guardian again reporting that Treasury sources believed it will be "politically toxic" to reverse the legislation at a time when so many faced the prospect of financial hardship.
However The Living Wage Commision, the non-departmental government body which recommended the increase, has said that the country may need to temporarily apply the brake on longer-term ambitions to further increase pay.
One in three workers not working
Around 11 million people have stopped working across Britain due to the coronavirus, says a survey by the Bank of America. That’s one in three of us.
It is thought that most of this group is still technically employed however, as the government’s furlough scheme seems to be doing the job. Bank of America found that concern over unemployment proper - i.e. not working and looking for work - was barely more than it was last year, while The Telegraph reports that unemployment is estimated to rise to 2.3 million, below levels in 2011 (2.7 million) and 1993 (3 million).
Nonetheless worklessness, even temporary, could create a 34 per cent hit to quarterly GDP if it continues, according to Bank of America, and the more damage done to spending, the greater the knock-on effects on jobs later in the year.
Banks cancel dividends and bonuses
Barclays, RBS, HSBC, Standard Chartered and Lloyds have said they will cancel their outstanding dividends for 2019 and will not return money to shareholders this year either, following a request from the Bank of England, reports The Telegraph.
The Prudential Regulation Authority (PRA) said it also expects banks not to pay out bonuses to senior staff, and is "confident" bank boards will take appropriate action on pay in the coming months.
With a total of around £15bn due to have been paid out across dividends, buybacks and bonueses, "the extra headroom should help banks support the economy through 2020," the PRA said. Shareholders will likely be angered by the move as it had been expected dividends would be delayed rather than cancelled.
Grant Thornton asks staff to take home almost half their usual salary
Accountancy firm Grant Thornton has asked its 4,500 staff to agree to a 40 per cent pay cut with reduced hours until the end of May or a voluntary sabbatical until June on 30 per cent of their standard salary, in an effort to reduce costs during the coronavirus crisis.
Grant Thornton said that the move would help it to support staff and clients while navigating “clearly exceptional times,” The Times reports.
Staff have until Friday to volunteer for either of the options. The firm will consider the government’s furlough scheme if an insufficient number of people volunteer.
Insurers tighten coronavirus support
The insurance industry is to tighten terms of business coverage to exclude coronavirus-related problems in an attempt to reduce insurers’ exposure to future costs.
A city insurance broker told the FT that the trend was widespread in the industry, and that new exclusions had partly been prompted by requests for information by rating agencies and regulators in regards to the insurance industry’s exposure to the health crisis.
Insurers said the pandemic will cost them as much as a large-scale natural catastrophe, but that pandemics had been excluded from business cover for years, with little interest in policies that cover this kind of event.
Association of British Insurers director-general Huw Evans said that providing more coverage for future outbreaks would require significant partnership between the insurance sector and the state.
One in five small and medium-sized British businesses may close
One in five small and medium-sized British businesses might have to close down permanently because of the COVID-19 pandemic, a survey by Be the Business warns.
The survey, conducted in partnership with Opinium and based on 500 businesses, suggests that 7 per cent of small businesses have stopped trading, and 12 per cent of respondents were likely to close within a month. Two in five expected to close temporarily because of the crisis, and almost a quarter of respondents said redundancies had been or are planned to be made, reported The Times.
Amazon workers walk out
Over 100 employees at a New York Amazon warehouse have gone on strike, claiming the company is not doing enough to protect them during the coronavirus outbreak.
The strikers say that despite there being multiple confirmed cases of COVID-19 at the JFK8 facility, the internet giant has failed to thoroughly clean the site or provide them with enough hand sanitiser and protective masks.
Amazon - which has introduced a company-wide three foot distancing policy - disputes the claim, insisting that its cleaning processes have intensified and it has purchased cleaning supplies, reports the Guardian.
The coronavirus epidemic represents a huge opportunity for Amazon and the firm has been working hard to serve its customers, but Jeff Bezos has been accused of putting profit ahead of his staff.
Whatever the reality, some workers clearly don’t feel like the leadership has their best interests at heart, and that's good for no business.
The end of M&As?
The global volume of mergers and acquisitions has fallen sharply as executives shift their focus to shoring up their existing firms during the coronavirus outbreak.
Last week’s deal activity total of $12.5bn was the lowest since April 2009, the FT reports, and overall the value of first quarter deals fell by 28 per cent to $698bn compared to last year.
European deals during the first quarter of the year totaled $263bn - an increase of 51 per cent on the same period last year - but the majority of this activity took place before pandemic panic really took hold.
However analysts told the FT they expect this downturn to be temporary because, unlike the 2008 financial crash, the financial system is "not at the heart of the problem".
City investors consider relaxing shareholder protections
Businesses are under extraordinary pressure to raise cash, despite government interventions such as the Coronavirus Job Retention Scheme and £350bn of loan guarantees.
Discussions have included relaxing pre-emption rights, which give existing shareholders first refusal on new share issues.
Current guidelines from The Pre-emption Group, which was set up in 2005, allow companies to raise up to 10 per cent of share capital without having to go to existing shareholders first. However, some companies have issued up to 20 per cent using a cash box structure which allows them to bypass the guidelines.
Raising money after a sharp fall in the market shows that companies have “already exhausted all the easy avenues for borrowing money,” an AJ Bell stock broker told the FT. Companies that have already done so including food and drinks group SSP and Hotel Chocolat.
Businesses may wish to act quickly, the FT suggests, as it’s unclear how long fund managers will retain the appetite for rights issues.
Employee surveillance: Another feature of the times?
As remote working becomes the new normal, so too has remote monitoring. According to The Telegraph, employers are increasingly tracking employees’ work on laptops and other business devices.
Popular monitoring tools include CurrentWare, Sneek and Time Doctor, which has seen more demand in the last week than it had in the last three months.
Employers are allowed to monitor their employees’ activity for reasons such as unsafe working or regulatory practices, but workers are also entitled to privacy. Therefore, employers should notify staff if they are being tracked, Tom Neil, senior advisor at Acas, told The Times.
Policies should clearly set out what is and what is not allowed, including personal calls and emails, and what is considered reasonable use. Employees should also be told if they are being monitored and how.
An update on AGMs
The government says it “will introduce legislation to ensure those companies required by law to hold Annual General Meetings will be able to do so safely”.
There has been uncertainty for many firms due to restrictions on movement and large gatherings introduced in the midst of the coronavirus pandemic.
As of yet there is little detail as to how the government plans shape up, but it involves granting companies greater flexibility as to where they hold their AGM, making it easier for them them to host it online or simply just postpone it beyond the specified period of within six months of the conclusion of the financial year.
Government plans to amend insolvency law
Business secretary Alok Sharma plans to amend insolvency law to help struggling firms stay afloat.
Wrongful trading provisions will be suspended for three months from March 1 2020, meaning bosses can “keep their firms going without the threat of personal liability.”
According to the government release, companies will also be able to continue buying energy and broadband while attempting a rescue. Legislation will be introduced to Parliament at “the earliest opportunity”.
Preparing for a post-coronavirus world
Advancing automation will be the primary concern for many bosses once the world recovers from the coronavirus outbreak.
EY surveyed 2,900 bosses and found that 41 per cent of them said that they were accelerating automation within their firm in order to prepare for a post-coronavirus world.
Many were already planning transformations before COVID-19 halted their efforts, but will approach the process with new vigor once “normality returns”, reports the Guardian. According to the same survey, 43 per cent of bosses believed that [return to normal] would be by the end of Q3 this year.
Innovation during the coronavirus pandemic
Despite the extreme levels of disruption, there are many positives businesses will be able to find from the coronavirus outbreak. One could be a vast reduction in the time it takes to launch new products.
Engineers from the formula one team Mercedes, working alongside clinicians and engineers from University College London have designed and delivered a breathing aid; 40 devices are now being trialled across three London hospitals, reports the BBC.
Mercedes is not the first firm to have turned its resources towards manufacturing medical equipment during the COVID-19 pandemic, but what is remarkable here is the speed with which the device has been brought to market.
By reverse engineering an off-patent Continuous Positive Airway Device, the team was able to redesign (in order to be produced quickly at scale), manufacture and receive regulatory approval within a week.
Of course, the team avoided the usual time-costly hurdles posed by intellectual property rights and regulatory scrutiny - both normally essential and desirable stages in the process - but it shows what can be done at speed when the will is there.
Banks back down
Some UK banks have reassessed their terms for businesses accessing the state-backed credit scheme.
Barclays, HSBC and Lloyds Banking Group among others were reprimanded by the government for insisting that business owners personally guarantee state-backed loans, a move which some bank bosses pointed out was standard practice.
Now “any director who secures up to £250,000 via the coronavirus business interruption loan scheme will not have to sign a guarantee” reports The Times. However under the scheme government rules state that lenders still need to take some security on loans over £250,000.
Food delivery firms are struggling
You would have thought that food delivery businesses would be at the top of the list of companies doing well out of the coronavirus lockdown.
But that doesn’t appear to be the case, reports the FT, which claims UberEats, Just Eat and Deliveroo have all seen a drop in home-delivery orders.
A combination of virus-induced consumer nerves, an uptake in home cooking as well as the loss of “anchor” brands - with the temporary closure of chains like McDonald's and Wagamama - mean some companies have seen orders fall by as many as two-thirds. In London that drop-off has been particularly pronounced as lunchtime office deliveries have all but disappeared.
The downturn has the potential to leave them exposed, especially Deliveroo which is still waiting for the CMA to vet its funding round with Amazon.
COVID-19 is challenging companies in ways they’ve never been tested before; even those that looked set to thrive. Last week high-end supermarket delivery chain Ocado temporarily suspended orders after being unable to cope with the excess demand.
The chancellor announces plan to help self-employed people
Rishi Sunak has unveiled his update to provide financial support to self-employed people struggling during the coronavirus outbreak.
The Self-Employed Income Support Scheme will pay self-employed people a monthly grant of 80 per cent of their income based on the average of their monthly profits over the last three years. It will be capped at £2,500.
Sunak says that the government has taken steps to “make the scheme deliverable and fair”.
Therefore it is open to people with trading profits of up to £50,000, and to minimise fraud it will only be open to people already in self-employment, i.e. who have a tax-return for 2019. Sunak suggests it will cover 95 per cent of all self-employed people “who make the majority of their earnings from self-employment” in the UK.
The government will also allow anyone who missed the filing deadline in January four weeks to do so. Sunak says that he hopes to have the scheme fully up and running by June, but will be able to apply for Universal credit.
Where will the government’s aid money come from?
“This is no ordinary downtown”, writes the BBC economics editor Faisal Islam, yet the government still needs to raise billions of pounds to fund Rishi Sunak’s bumper aid package (see above).
With the traditional customers for government bonds no longer as willing and with a potentially vastly reduced tax income, where does the government find the cash needed to fulfill its multi-billion promises?
The Bank of England, says Islam. But it will be a move that goes against the grain of traditional central bank intervention.
Why you should start a virtual pub
In order to help staff feel less isolated during the coronavirus outbreak, London-based ad agency AML Group has opened an online pub.
Hosted on the Teams video platform, all staff are invited after work to share a drink and catch up with colleagues. Clients are also invited to join the virtual boozer which hosts comedy and live music nights.
“It’s fun, but it’s serious,” says Ian Henderson, AML Group’s CEO. “Working in an agency is about being social, sharing ideas, making new connections. The virtual pub does exactly that, and provides a release at a stressful time.”
While the idea of a virtual pub may be inappropriate for some businesses, ensuring that staff have regular opportunities to catch up and wind down together is more important than ever. Not only as a way to destress and remain social during isolation, but also because some of the best ideas can often come from off-the-cuff conversations.
Whether it be a communal virtual coffee break, a morning virtual briefing or social activities after work, it’s vital to maintain a sense of community and close collaboration among staff.
Sunak to offer self-employed update
The chancellor Rishi Sunak is set to reveal his plans to support self-employed people who are unable to work during the coronavirus outbreak.
The BBC reports that the plans are likely to match the 80 per cent salary guarantee the government has given to PAYE employees, although it is thought the Treasury is still looking for ways to prevent fraud, and avoid paying people who do not need help.
Watch this space for updates throughout the day.
Life-line thrown for businesses struggling with rents
With many businesses forced to close due to the coronavirus and many more struggling with cash flow, the issue of commercial rent has come into the spotlight.
Many quarterly rents are due this week, but the Coronavirus Bill, which is currently passing through the Lords, includes protection for businesses against eviction if they are unable to pay their rent over the following three months.
The state of negotiations between landlords and business tenants is unclear, though there have been responses from both sides in recent days.
Jonathan Downey, founder of London Union, the operator of Street Feast food, described the three-month respite as “a ceasefire to agree the peace,” speaking on the frantic negotiations between landlords and tenants before today. “This will make an enormous difference to many business owners, saving countless jobs and livelihoods,” he told The Times.
Burger King said today that it will not pay its rent this month in order to pay employees, a move that many other companies will be considering. The chief executive of the fast food chain, Alasdair Murdoch, said that most landlords had been reasonable.
"We could add three months onto the end of the lease for those people who are unable to pay in the short term at the end of these [current] three months," he told the Today programme.
Even before the government announcement, some landlords including Argent and Network Rail had offered rent-free periods, but the response has been far from universal.
“If we go for two quarters with no rent, the real estate sector is going to need a bailout. While retailers have been the worst hit, all commercial tenants, and their landlords in turn, would be squeezed,” said Robbie Duncan, an analyst at Numis.
Ed Cooke, chief executive of Revo, which represents retail landlords, told The Times that valuations would be affected as would the ability to pay interest on debt. Pension funds also would suffer.
Chris Grigg, chief executive of British Land said: “We are in a strong financial position but there may be other landlords who will struggle. If people aren’t paying rent, there are going to be landlords who are going to struggle.”
Deliveroo to deliver M&S pasta and rice
Marks & Spencer will use Deliveroo to supply groceries within the next two weeks.
Customers unable to make it to stores will be able to have essential goods, including pasta, milk, ready meals and other household items delivered from 120 M&S franchise stores free of charge, reports the Retail Gazette.
The delivery challenger is also launching its own brand of affordable “Essentials by Deliveroo” including pasta, rice and beans in order to help people living in isolation stay supplied.
Businesses given extra time to file accounts
Firms now have an extra three months to file their accounts after the government struck an agreement with Companies House to extend the penalty deadline for late filing.
The Financial Reporting Council had already agreed a two-month extension for struggling firms, but now bosses will now be able to apply for additional time in order to prioritise steering their business through the coronavirus epidemic.
“It is important that our support is not limited to financial assistance,” says business secretary Alok Sharma. The government is also believed to be considering ways to minimise disruption to annual shareholder meetings.
Companies do not have to report gender pay gaps during the coronavirus outbreak
Firms will no longer be fined for failing to report their gender pay gap amid the coronavirus crisis.
Backed by the women and equalities secretary Liz Truss, the Government and Equalities Office and the Equality and Human Rights Commision will suspend enforcement against public and private sector firms who don’t disclose their pay gaps before March 30 and April 4 respectively. Only around 3,000 firms are believed to have done so.
“We recognise that employers across the country are facing unprecedented uncertainty and pressure at this time. Because of this we feel it's only right to suspend enforcement of gender pay gap reporting this year,” says Truss.
Given today’s climate, it's not surprising that firms may take their eye off the ball temporarily. Equality is important to the long-term health of a business's culture and talent pipeline, but it’s more important that we still have businesses left to make equal.
However this pandemic will go on for a long time, as volatility simmers down and we settle into our new normal, it's vital that leaders don't forget their values. Bosses will need to ensure that they have contingency plans in place for how they plan to continue their D&I efforts.
Evidence shows that the more diverse a business, the better it is likely to perform - in today’s radically uncertain climate, we’ll need diversity more than ever before.
Which businesses can stay open?
Britons have been told to “stay at home” for at least three weeks. While it’s not quite the total clampdown that other countries have seen, it’s by far the most stringent restriction on home and business life seen in peacetime Britain.
But in some cases it’s still unclear what bosses should do.
Although leaders are urged to encourage their staff to work from home when possible, at present official government advice remains that it is not necessary to close a business or workplace unless government policy changes - or a firm is among those dubbed as non-essential - including hotels, restaurants, electronics retailers - that have been advised to close.
That in itself is up for interpretation in some cases. Mike Ashley’s Frasers Group, which issued a profit warning last week, initially said that its Sports Direct and Evans Cycle stores would remain open, claiming that sports equipment is vital for the wellbeing of people cooped up at home.
Frasers has since U-turned after much criticism, with bosses now claiming stores will close until the government “gives the go-ahead”.
In contrast, Greggs’ boss Roger Whiteside announced that all of its 2,000 plus bakery chains will close around the country by the end of Tuesday, despite the fact that restaurants serving takeaway food are able to remain open. The move is motivated by a desire to protect staff, and encourage social distancing.
Of course these confusions will iron themselves out as the lockdown goes on, but there will no doubt be more ambiguity over the coming days. Those that can afford to seem to be siding with their staff, while others are trying to stay open simply to survive.
NHSx is asking companies to use tech to battle COVID-19
Any ‘innovators’ who work with the elderly, vulnerable or self-isolating in the community during COVID-19 and have a solution can apply for £25,000 grant to test or develop it.
The competition, run by the NHS's digital transformation unit NHSx, has criteria including: solution feasibility, company credibility, impact and digital maturity.
Companies will need to complete an expression of interest form and interview. They will then be selected for the grant to test their solution, with the final stage considering further development in order to best benefit people affected by COVID-19.
The competition focuses on delivering and managing care both in care homes and individual homes; finding healthy and qualified carers; optimising staff in care and voluntary sectors, which includes the recruitment, training and certifying of doctors, nurses and carers; volunteering; and data gaps.
Mental health support will focus on new services and delivering them, peer-to-peer communities, self-management of mental health and employee wellbeing.
Applications close on 31 March.
For more information and to apply, see https://techforce19.uk/#Challenges
Some glimmers of hope
Not every business is staring into an existential abyss. All this working from home is proving a boost to some brands, as our sister title Campaign reports.
Pot Noodle, Charlie Bigham and everyone’s favourite pasty-maker Ginsters have all experienced a boost to customer sentiment, according to research from Proquo AI, analysing comments made online by 30,000 consumers in the UK and US.
The ever-present temptation of daytime TV, meanwhile, has benefitted ITV, with ratings for Lorraine (up 23 per cent year-on-year), This Morning (up 70 per cent) and Loose Women (up 76 per cent) soaring.
While of course welcome news for the aforementioned businesses, it may come as a disappointment for those who believed social isolation would turn our souls to a life of philosophical contemplation, art and the pursuit of higher knowledge.
Chancellor considering ways to aid self-employed workers
The UK government is looking at ways to widen its support for self-employed workers, but it will not be easy.
Chancellor Rishi Sunak announced widespread and historic measures to pay 80 per cent of the wages of any UK worker unable to work due to the coronavirus outbreak. But his plans have been criticised by some for not doing enough to protect the earnings of self-employed people - around 15 per cent of the UK labour force - who under the plan can only access universal credit at an equivalent rate of £95 per week.
Speaking to Sky News over the weekend, communities secretary Robert Jenrick explained that while the chancellor's plans were under review, using tax payers’ money to refund self-employed workers remains “logistically, operationally difficult” compared to those on PAYE.
What counts as a self-employed person’s ‘salary’, for example? The amount they earned last month, last year or the amount they expected to earn before June? How would you avoid fraud?
How the government plans to respond to such questions is as of yet unclear.
As it stands, means testing for universal credit applications would indicate that those with savings or who cohabit with a higher-earning person might not be eligible.
Middle managers are more important than ever (just don’t overburden them)
“Forget all those surveys that identified resilience, flexibility and agility as critical skills in a fast-changing world. This is the real test,” writes the FT’s management guru Andrew Hill in his latest column.
While the C-suite will be furiously firefighting or creating coronavirus contingency plans, the burden of day-to-day leadership will fall to middle-managers like never before, Hill highlights.
Use them - by giving them the digital tools and empathetic freedom to do their job - but don’t abuse them, warns Hill. “Managers need to be aware of digital overload."
Read the full column here (paywall).
Government to pay private sector wages
That's a headline we never expected to write. Yet on Friday afternoon Boris Johnson and Rishi Sunak announced that billions of pounds will be paid directly to businesses in order to forestall mass unemployment.
Here are the key points:
-- Wages will be covered up to 80 per cent for all workers kept on by their employers who would have been laid off because of the coronavirus, up to a monthly total of £2,500.
-- Applications can be backdated to the beginning of March and will last for three months, although the scheme may be extended if necessary.
-- The first payments are expected to be made in a matter of weeks.
The scheme follows the government announcement that bars, restaurants, pubs, cafes and gyms should close on Friday 20 March. Boris Johnson said that people and businesses should not suffer because of government actions.
Other measures put in place to support businesses include:
-- VAT payments by companies deferred until the end of June
-- Interest-free cash grants to small businesses
-- Interest-free period of loans for smaller businesses extended from six months to 12 months
-- Self-assessment income tax payments for July 2020 deferred for six months
-- All these measures are in addition to the £350bn package previously announced by the chancellor.
This could go on for A YEAR
The latest advice received by the government indicates measures such as social distancing, school closures and travel restrictions are likely to be required for 12 months.
The Scientific Advisory Group for Emergencies (SAGE) suggests that the most plausible way of holding off the pandemic is to alternate between tightening and relaxing extreme measures such as school closures and general social isolation.
This would result in smaller peaks of infection that would be manageable by the NHS. What exactly businesses can do to plan through such a disrupted year remains to be seen.
Check back shortly for an update from the PM and chancellor on measures to support employment.
More support for businesses
Further measures are to be put in place to support workers and businesses throughout the coronavirus outbreak, in addition to the £350bn package announced on Tuesday.
It is widely rumoured that Chancellor Rishi Sunak is to put a break on income tax and national insurance contributions.
The move is to encourage businesses to continue paying their staff while having to send less money to the government. The Telegraph has said that the government is effectively picking up the wage bill.
The UK is following the lead of other countries such as Denmark, according to the BBC, where 75 per cent of wage bills will be covered for three months for private companies, if they retain their staff.
In a further attempt to support the economy, The Bank of England has lowered interest rates to 0.1 per cent the lowest since it was established in 1694, 325 years ago.
The Bank said the measures it had taken so far were not going to be enough, and believed "a further package of measures was warranted," reports the BBC.
Who count as “key workers”?
Following its announcement that schools will be closed to all students, except those of “key” workers needed to help keep the country running during the coronavirus outbreak, the government has released the official list of which jobs make the grade.
Unsurprisingly health care workers, those in the emergency services and food delivery drivers are all included; as are utilities workers, local and national government staff and those working in rail, road, air and water freight.
People working in education, providing “key public services” which include journalists, religious staff and mortuary workers, as well as public and national security are also on the list.
Competition law relaxed
The government will temporarily relax elements of competition law to make it easier for retailers to cooperate in order to keep shelves stocked.
Firms will now be able pool staff and distribution centres, as well as share data on each other's stock levels. The 5p plastic bag charge on online delivery orders has also been removed.
Only behaviours that enable retailers to “work together for the sole purpose of feeding the nation” will be allowed during these “unprecedented circumstances". Any other activity will still have to abide by the 1998 Competition Act.
“By relaxing elements of competition laws temporarily, our retailers can work together on their contingency plans and share the resources they need with each other during these unprecedented circumstances,” says environment secretary George Eustice.
easyJet proposes cutting staff food allowance
The airline industry is among the most severely affected by the pandemic, and there are concerns about the survival of virtually all carriers.
So when easyJet proposes a drastic change to its workers’ terms and conditions, including pay freezes, three months of unpaid leave and the end to free food during shifts, the company can perhaps be forgiven.
Indeed, it is a sign of the times that the unions are not rejecting the deal out of hand.
A lot of employers will be facing a similar situation: how to balance the need to remain solvent when normal operations have collapsed, with the desire to retain as many employees as possible as an act of corporate citizenship and so that the business can recover once (if...) this is all over.
In the final analysis, while a three-month unpaid ‘sabbatical’ may be a tough ask, it’s probably better than redundancy.
Ocado struggles with demand surge, Next reassures, Burberry faces 80 per cent sales drop
The dribble of somewhat depressing trading updates continues. Fashion retailer Next announced it had experienced a 46 per cent drop in in-store sales this week, coupled with a 25 per cent reduction in online orders.
However, CEO Simon Wolfson insists the firm can absorb a 25 per cent drop in sales for the year without breaching banking covenants, which may be relaxed in any case. He also reassures the market that Next has sufficient financial health to mitigate the downturn by cutting dividends, deferring investments and selling property, which could provide more than £800m of cushion in the coming year.
Luxury business Burberry is facing a sterner test, with like-for-like sales down up to 80 per cent in the tail-end of its financial year. The company says it is trying to renegotiate rents and cut discretionary spending to limit costs, though one imagines this will be at best a temporary measure if matters don’t improve.
Life isn’t exactly straightforward for the businesses that are ostensibly ‘winning’ from the outbreak either. Ocado hasn’t lifted its guidance for the financial year (it expects 10-15 per cent revenue growth), despite an enormous upsurge in orders that has forced the online grocer to close its website to new customers.
Even new orders have been delayed until the weekend, as Ocado works on increasing its website capacity to match the “several hundred per cent” rise in demand.
The science behind stockpiling
There are four main reasons why customers panic buy, according to a human behavioural expert.
“Bulk buying is caused by various psychological and environmental cues which throw rational-thinking out of the window”, says Nyenrode Business University’s Ali Fenwick. These are:
1) Survival mode
“Driven by the fact that when we’re in an uncertain or threatening situation we suppress or distort rational decision-making. We are essentially buying to ‘survive’”, says Fenwick.
Although the government promises there will be no disruption to food supply, we don’t know this for sure as most of us have not been in a similar situation before.
2) The Scarcity Effect
“When products become scarce, people perceive them as more valuable. We are more willing to go out and buy, and even pay more, for scarce products. Scarcity drives buying behaviours, even for products we might not actually want - which explains why we can’t find toilet paper anywhere.”
3) Herd behaviour
“The fact that other people are bulk buying creates an immediate urge to do the same. In uncertain situations we tend to follow what other people do or say - especially if they’re an immediate family member or friend.”
4) Sense of control
The global pandemic is causing a lot of uncertainty which has resulted in many countries closing their borders and imposing self-isolation. These external constraints create an internal need to exert personal control as a way to feel safe.
“Buying things provides us with a sense of control over our surroundings,” says Fenwick.
Corporate citizenship takes on a new light
In a time of fear and uncertainty, people generally turn to the government for support. But businesses are also doing their bit. Various stories are coming to light about firms providing support for the vulnerable.
Louis Vuitton has turned its production to hand sanitiser to support hospitals, as have gin distilleries, including London’s 58 Gin, which the BBC reported will launch hand atomisers in about three weeks' time after making a batch for a charity, and Lincoln Gin, which is donating sanitiser to vulnerable people. Independant brewer BrewDog is also turning its Aberdeenshire distillery into a sanitiser plant.
Chelsea Football Club meanwhile is providing NHS workers with free hotel accommodation at the Millennium Hotel at Stamford Bridge, and on a smaller scale Nairn County FC, a Highland League football club, is providing support to its local community by shopping for the self-isolated and walking their dogs. The Scottish club will also be using its social media to promote local businesses that are affected by the coronavirus pandemic.
In the food and groceries sector, Pret is giving away free drinks for NHS staff and 50 per cent off food, while Morrisons is guaranteeing pay for its workers including those who are off sick.
Government closes schools
On Wednesday evening Boris Johnson announced that schools will close indefinitely from Friday March 20 to all pupils, except those of "key workers" including healthcare workers, delivery drivers and emergency services.
B2B transactions plunge
Supply chain payment firm Tradeshift has reported a 62 per cent week-on-week drop in transactions on its global platform. The data, for the week beginning March 8, shows a 58 per cent decline in cross border activity, and a 66 per cent domestically.
Tradeshift, which handles transactions for over 1.5 million businesses across 190 countries, observed the same pattern three weeks earlier in China, where the coronavirus outbreak began.
Many businesses are experiencing acute cash flow problems, which Tradeshift CEO Christian Lanng says (perhaps unsurprisingly) are exacerbated by late payments.
“Large organisations I’m talking to recognise the importance of keeping supply chains solvent right now. Governments have been proactive in introducing measures to try to ease the pressure. But we can’t afford to leave any stone unturned. There is $1.5 trillion in liquidity sitting trapped and doing nothing in accounts receivable as a result of archaic payment practices,” Lanng says.
Facebook offers $100M support to small businesses
The social media company is to offer cash grants and ad credits to 30,000 small businesses in 30 different countries.
The money is to support businesses from the disruption caused by the coronavirus outbreak.
More details are yet to be released, but Facebook has said the money can help with supporting your workforce, rent costs, operational costs and connecting with new customers.
The application process is yet to open, but in the meantime, Facebook is pushing those interested to sign up for updates on the program and to visit their small businesses resource hub.
Sainsbury’s announces elderley shopper measures
Sainsbury’s has become the latest supermarket to take steps to help elderly shoppers during the Covid-19 outbreak.
The chain plans to give older and potentially vulnerable customers priority for online shopping deliveries.
In a similar vein to Iceland and Lidl stores in Northern Ireland, Sainbury’s is introducing a dedicated shopping hour for vulnerable shoppers on Thursday March 19. Although the trial is as of yet a one off, departing CEO Mike Coupe hasn’t ruled out extending it.
It also reduced limits on its most popular products, including toilet roll, long-life milk and soap, from five to two. From Wednesday shoppers will only be able to purchase a maximum of three of any product in its stores.
Rules for delivery drivers hours relaxed
In a bid to keep supermarket shelves stocked, transport secretary Grant Schapps has announced plans to relax the restrictions on EU driving hours.
The temporary relaxation will apply to vehicles involved in the delivery of food, non-food (personal care, cleaning products and home paper) as well as pharmaceuticals to supermarket depots, stores and the wider supply chain. It will not extend to customer deliveries.
We’re helping supermarkets respond to #COVID-19. I’ve authorised a temporary relaxation of the drivers’ hours rules to help deliver vital goods to stores across the UK; with the understanding that driver welfare must not be compromised.— Rt Hon Grant Shapps MP (@grantshapps) March 17, 2020
The changes which will be in place from Thursday March 16 until midnight on April 16, involve upping the daily driving limit from nine to 11 hours, cutting required rest time between shifts from 11 to nine hours and increasing the weekly driving hours from 56 to 60 hours.
Desperate times do really call for desperate measures - supermarkets have been struggling to keep shelves supplied, so anything that potentially improves that will be welcome. But what does this mean for the wellbeing of embattled delivery drivers, who may not feel in this climate that they can push back?
There are some limited protections in the transport department’s plan, and “practical implementation of the temporary relaxation should be through agreement between employers and employees and/or driver representatives.”
Government unveils £330bn coronavirus war chest
The chancellor Rishi Sunak has announced that £330bn in guaranteeed loans that will be made available to back businesses affected by the outbreak.
For smaller firms, this will amount to borrowing of £5m, interest-free for the first six months, plus cash grants of up to £10,000 (£25,000 in the case of small hospitality companies) and an extension to the already-announced business rates holiday.
Boris Johnson and Sunak also stated that they have come to an agreement with insurance firms that the latter will pay out to venues, after the government advised people to avoid going out.
Should you postpone your AGM?
Possibly, is the guidance coming from the Chartered Governance Institute, if you’re not able to implement remote meeting features such as live streaming, proxy voting and online shareholder Q&As.
While Downing Street is advising us to avoid gatherings and to work from home where possible, AGMs pose a particular problem, due to legal and regulatory obligations designed to ensure good governance.
“As a general rule, [companies] cannot go very far wrong if they try to maximise the opportunity for shareholders to take part in the meeting,” says Peter Swabey, policy and research director at The Chartered Governance Institute, though it may be necessary to postpone or adjourn the AGM if the situation worsens.
He adds: “A dedicated area on the company website should be established to provide shareholders with the most up-to-date information.”
Amazon to hire 100,000 more workers
In a reminder that not everyone is suffering equally from the COVID-19 outbreak, Amazon has announced plans to hire 100,000 extra staff to cope with additional demand - an increase to its global workforce of around 12 per cent.
Amid the auguries of doom, you can expect the occasional announcement of this variety. Video conferencing companies, tissue paper manufacturers and video game developers will all be enjoying the silver lining of the global lockdown.
In Amazon's case, every pound, dollar or euro not spent on the high street because of quarantine measures (or stuffed in a mattress, for that matter) represents an opportunity. The challenge will be being able to meet the additional demand during a time of unprecedented disruption to supply chains and logistics.
Adland predicts spending blackout
The advertising industry is anticipating at least a 20 per cent contraction as a result of the coronavirus pandemic, according to a poll by our sister title Campaign.
Just over a third of the 831 professionals in advertising, marketing and communications who responded to the survey said they anticipated a greater than 20 per cent drop in the advertising market over the next six months.
A further 16 per cent of respondents expected the contraction to be ‘around 20 per cent’, while only 8 per cent expected the market to be flat or better.
Ad spending is traditionally seen as a canary in the coalmine for the wider economy, as - wisely or otherwise - businesses tend to cut marketing budgets first when times are hard. Shares in the big three marcomms multinationals - WPP, Omnicom and Publicis - have fallen by 52.8 per cent, 27.2 per cent and 48.2 per cent over the last month.
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