Lockdown – Reflections at the end of week 47

This has been a week in which the British preoccupation with the weather and the record, but expected, annual downturn in the economy in 2020 have both been trumped by Matt Hancock. The pink tie has become a familiar sight on our TV screens over the last 12 months, but, buoyed by the ongoing rapid rollout of the Covid vaccination programme, this week’s appearances have been distinctly different. Any embarrassment which might have arisen out of his having told us about his holiday plans a couple of weeks ago was shrugged aside as he announced major reforms to the NHS. Some might say that reforms are overdue as time and events have exposed the structural weaknesses inherent in the major restructuring which took place in 2012. The ultra cynical might be tempted to think that the delivery of vaccinations in huge numbers has freed up opportunity to think about legacy. The reality is more likely to be two pronged. The first prong is that many of the worries expressed by those involved in the service about the 2012 reforms have turned out to have been well founded. The second is that the NHS faces crises other than Covid as the knock on effects of the priority afforded to Covid have caused major delays in healthcare provision in other areas and the population continues to age. Faced with this type of pressure, governments have tended to centralise control, not least because it gives a more direct hand on the purse strings. Expect to see a lot more of the pink tie in the months to come.

Amongst the generally more positive direction of travel, the government hasn’t managed to avoid all of the potholes this week. The press has had a very jolly time poking away at the holiday story this week. It’s not entirely clear as to whether Grant Shapps’s comments about not booking holidays reflect an official view, and the speed with which the news media were able to throw the Health Secretary’s Cornwall plans into the debate won’t have been comfortable. The travel and tourism industry isn’t amused, and the pressure for government help for that sector will grow. However, to be fair to the government, we have also seen a lot of sales pressure coming from sectors of the travel industry with Tui, for example, having announced that it expects bookings for 2021 to be at 80% of their usual level. We also saw a number of people who returned early from holidays last year to beat self quarantine rules which were announced whilst they were away complaining that the government should compensate them. So there’s the rub - an industry which has to encourage bookings to survive against public health policy lubricated by a section of the public that wants to be free to book up but wishes to pass the risks inherent in exercising that freedom back to the government. Hmmm.

We have also seen more of the effects of Brexit coming through. There are discussions ongoing to create a freer market between the UK and the EU in relation to financial services. Noises coming from the UK side of those negotiations are suggesting that the EU will let the UK into the club as long as the UK agrees to operate to standards emanating from Brussels, with the EU being able to change those rules without UK approval. This is familiar territory, having been part of the main negotiations during the transition period. The financial services can was kicked down the road in January and it is not surprising that the arguments are being re-run now. In the meantime, there seems to be evidence of some drift of financial services from London, with more shares currently being traded in Amsterdam than in London. Financial services has been a significant sector of the UK economy for decades - some would say that the UK has been too reliant on it to the detriment of investment in other sectors - so it will be interesting to see who ends up holding the aces on this one.

Fishing is also back in the news. Requirements placed on exporters of seafood as a result of Brexit have, it seems, made exports virtually impossible. The government announced an assistance fund this week for those affected, but it would appear that its rules are such that hardly anyone will meet the qualifying criteria. Applicants have to demonstrate that they have exported product and made a loss, which is a tough hurdle for those who have made losses because they can’t export. I imagine that it will be tweaked, but we can see in it the pressures and difficulties of policymaking on the hoof. In the meantime, fishermen who voted for Brexit on the understanding that it would give them their territorial waters back must be feeling like the turkeys who voted for Christmas.

And then there’s the Trump show, which runs and runs. Whilst we already know the likely conclusion as senators will largely vote along party lines, the footage released this week doesn’t get any more comfortable. Watch this space, and let’s hope that, regardless of the result, wisdom prevails.

Last chance to build that snowman for a while - have a good weekend.

Ian Waine
Senior Partner