Not every crisis is an opportunity

The immense havoc caused by the spread of coronavirus is becoming clearer with every passing day. Entire industries (e.g. airlines and leisure) are now under existential threat. What’s worse, for every behemoth that makes the news, there are hundreds of smaller businesses who are at risk of going under without so much as a ripple in their wake. We are experiencing a moment of extreme disruption, both to our business and personal lives. 

Communicating into this maelstrom is a delicate and difficult task. Get it right and you can help secure your future. Get it wrong, however, and you can place that future at risk.

Here are a few of our best practices for communicating during this crisis environment:

1. Review and edit your existing message roll out

Most businesses plan content and campaigns for weeks and months in advance – with a broad mix of distribution (e.g. print, broadcast, radio, online). As the response to the virus lengthens, businesses will need to review their existing campaigns to ensure they’re in keeping with the spirit of the occasion. To pick one example, any cheeky April Fool’s content can probably now be placed in the bin.

The mix of message placement will also need to be considered. With more people working from home a move to upweight digital and broadcast buys makes sense.

2. Don’t shoehorn your way into the news coverage unless you have relevant information.

The temptation to ‘newsjack’ is always strong during a newsy period but it should be avoided at all costs when lives are at stake, unless your business has relevant information to share. How your food delivery business is moving to contact free delivery is useful information; using coronavirus as a hook to sell more condoms probably isn’t.

There is also value in being understated. For example, when LVMH announced they were going to convert their fragrance production lines to the manufacture of sanitiser gel they did it in a matter-of-fact way, not in a way that was searching for approbation.

3. It’s tough out there, so be consistent, clear, and complete in your information

Times of crisis are a time for radical transparency. There is no point sugaring the pill or avoiding the uncomfortable truth: you will be found out. If there is bad news share it, along with a plan to make things right (if you have one).

The coronavirus also appears set to be with us for a long time (some experts say 18 months). Businesses therefore need to have a good think about how they plan on pitching their products and services in the face of a long and unprecedented shutdown of a modern economy. And if their businesses don’t look to be able to weather the storm, they need to explain to the government and their customers why (and what) help is needed.

4. Internal communication is as important as external communication

Your employees are what deliver your business so deliver information to them as often (and as early) as you can. This means starting your internal communication efforts before you build out your communication to the outside world. The last thing you want in a fearful time is for your employees to find out news about their place of work in the press.

5. Remember the real victims

Remember that, no matter how badly you or your business is suffering, there is simply more at stake. Lives are at risk and people are more scared over their personal well being than your bottom line.

This goes for athletes and celebrities, too. This isn’t a time for either a laugh or a pity party – use the occasion to instead sympathise with your fan base and encourage them to do all of the things public health officials are recommending they do.

In summary

We are in unprecedented times and businesses and brands are going to be tested in a way they have not since at least the Second World War. Clear, consistent, and appropriate communications will be a must, with employees and customers front of mind.

Budget 2020: Political commentary

On Wednesday, 39-year old rookie Chancellor Rishi Sunak stood outside Number 11 holding the Treasury’s famous red case aloft. And despite becoming Britain’s second youngest chancellor only three weeks before, he unveiled an ambitious spending programme to ‘level-up’ Britain, while simultaneously warding off the economic effects of coronavirus. These twin objectives spurred Sunak to spend more than any other budget this century.

This is how Sunak’s maiden budget will shape the political landscape:

Key takeaways

1. This is the biggest budget expenditure since 1992, and it’s unlikely to be a one-off post-election giveaway. The government’s intention is to spark an extended period of productivity that repays borrowing and starts a post-Brexit boom. But with the full effects of Coronavirus and a hostile trading environment yet to be felt, spending will need to be replicated in November’s budget and beyond.

2. The government has created a £12 billion Coronavirus fund. The NHS and social care services will receive £5 billion to tackle the virus; universal credit will now cover self-employed workers struck down by illness; business rates have been scrapped for twelve months and local authorities will be handed £2.2 billion to support local businesses.

3. Climate activists are generally underwhelmed. The government shelved plans to end a nine year freeze on fuel duty and committed huge funds to smart motorways and road improvements. However, the budget wasn’t without climate friendly measures – £1bn was allocated to R&D for renewable energy.

4. There is little for the Labour Party to attack in this budget. After all, a party led by self-proclaimed socialists cannot credibly criticise a government committed to public sector spending. The next leader, who will be announced in April, will need to quickly identify where this government could be vulnerable.

5. An underreported, but certainly notable measure, is the Government’s plan to press ahead with a digital tax. The likes of Facebook, Google, Apple, Amazon and Netflix are facing a 2% charge on revenues made online in the UK. The government thinks these companies have failed to pay their fair share, in what will be welcome news for struggling high street retailers.

The Conservative Party

Sunak’s first budget has more in common with Gordon Brown’s approach to fiscal policy making than his own party predecessors: George Osborne and Phillip Hammond. Because of this, commentators have proclaimed the birth of a new Conservative Party – but this isn’t entirely correct.

After all, when facing electoral defeat in 1992, John Major’s pre-election budget committed to huge tax giveaways and public spending – ultimately securing a fourth consecutive parliamentary majority. The foreign secretary who served in that government, Malcom Rifkind, later explained how the Conservatives “sole purpose through the centuries has been to win and retain political power”. Boris Johnson and Rishi Sunak have tapped into this pragmatic trait – their first budget is attuned to public appetite for greater government spending.

Number Ten enjoys considerable power, support, and influence in parliament. But reaction to the budget did highlight some discontent within Tory party ranks. Theresa May and Sajid Javid stressed the need for more fiscal discipline, and argued that without a rise in tax, current spending commitments would be unsustainable. There is a lot of red ink in the government’s future projections.

May’s appeal to fiscal prudence in her Common’s speech only served as a stark reminder for why she misjudged public attitudes in 2017. Recent polling has confirmed that fiscal conservatism no longer resonates with most voting demographics. MP’s wedded to this type of ideology will remain in the backbench shadows for the foreseeable future – but they could prove to be a powerful, dormant force if the government’s gamble on productivity fails to pay dividends.

The post-budget political landscape is one where both major parties are committed to more day-to-day public spending. Labour can no longer self-identify as the anti-austerity party, so where do they go from here?

Labour

In contrast to the Conservatives, Labour leaders (not named Tony Blair) rarely play pragmatic politics. But the next party leader will need to at least show some policy discipline and identify weaknesses in the government’s agenda. A sensible place to start would be with those expressing grievances – largely climate activists and the social care industry.

Climate activists have criticised the budget for failing to deliver on promises to be the “greenest ever”. Their frustration is largely due to measures they view as incentivising motorists – £2.5 billion for pothole repairs, £27 billion for general road improvements and another freeze on fuel duty.

The government was always unlikely to end the nine-year fuel duty freeze because it disproportionately impacts voters in the North. Number Ten are aware that the 2019 General Election was a transactional one – voters have trusted Boris Johnson to get more than just Brexit done. Common sense practicality supersedes hard-line environmental measures.

Yet the government have set themselves ambitious climate targets that could prove to be banana skins. By hosting the COP26 climate conference in November, efforts to meet the targets will be under severe scrutiny. This is an area where Labour are well-placed to attack. They are a party that function on having an ideological cause and the “Green New Deal” could feasibly replace the socialism of the Corbyn era. This is a promising area for the Labour Party, yet the next leader will need to address how a greener policy agenda can win over voters the party have alienated in the Midlands and Northern England.

Meanwhile, due to the need for emergency Coronavirus funds, wider reform of the social care sector was shelved in this budget. In recent months Conservative commentators have even advocated Labour’s policy of free social care for over 65’s, highlighting how important this issue is to the general public (and the Conservative Party’s older electorate). Scrutiny of this sector will only increase as a result of the Coronavirus, and by promising to address concerns further down the line Sunak has provided plenty of time to Labour’s new leader to take ownership of the issue.

Future trading relationships

Rishi Sunak also announced that the government will be pressing ahead with a digital tax, meaning America’s tech giants will face a 2% charge on revenues generated in the UK.

This is a proposal that could have major consequences for Britain’s post-Brexit trading relationships. When it was raised at Davos by the former Chancellor Sajid Javid, his US counterpart threatened to impose huge tariffs on Britain’s car manufacturing industry. Along with the decision to press ahead with Huawei’s involvement in the UK’s 5G network, Number Ten are defying previous accusations levelled by Labour that the UK is cosying up to the Trump administration.

While a major row could erupt with the US, the digital tax will resonate with the EU, as countries like France are set to introduce a 3% levy. Could this be a cause that strengthens the post-Brexit relationship?

Conclusion

David Cameron ushered in the 2010’s with a “live within our means” mantra that ultimately defined a decade of fiscal prudence. Rishi Sunak has started the 2020’s with a “getting it done” budget, delivering on the rhetoric of the past eight months. Whether it comes to define a decade of productivity fuelled by massive day-to-day public spending remains to be seen. But despite having a major public health pandemic to contend with, Number Ten and Eleven have refused to blink.

Budget Snap Verdict

Pity Rishi Sunak.

Thrust into the role of Chancellor of the Exchequer following the surprise departure of Sajid Javid, the bright but inexperienced Sunak is facing a tsunami of uncertainty when Britain is in need of calm water ahead of its exit from the European Union. 

The twin economic shocks of coronavirus and the market panic sparked by the opening rounds of an oil price war between Saudi Arabia and Russia have rendered an already difficult task – delivering a maiden budget – almost impossible. The inaugural budget of the majority Johnson era was supposed to focus entirely on “levelling up” and delivering for the new Tory heartlands of the North of England, not getting the country prepared for disasters that weren’t on the horizon when they won big in December 2019. 

Even worse, no one in HM Treasury (or the Department of Health and Social Care) knows what the short, medium or long term impacts of the coronavirus will be. Sunak has been forced into firing some of Britain’s fiscal cannon into the dark, with only a sketch outline of his target. And while the £30 billion worth of measures proposed by Sunak in his budget – the easing of statuatory sick pay requirements, more support for those on benefits, tax and other relief for businesses, increased funding for public services – appear sound, significant, and well-targeted, the virus could overwhelm them if infection rates soar.

The trouble is, any further action on coronavirus will eat into the fiscal reserves that were waiting to be summoned should Britain crash out of the European Union with no deal at the end of the year. And while the government remains convinced it will secure its preferred Canada-style deal, the OBR estimates say that even this best-case scenario will provoke a 4% hit to the national GDP over time. If Britain does need a boost come December to manage Brexit, Sunak will now have a lot less firepower at his disposal.

And the same now holds true on the monetary front, thanks to the Bank of England’s snap decision to cut interest rates from 0.75% to 0.25% ahead of the budget. The BoE will also be extending its lending facilities to banks to support businesses. And while flooring interest rates worked to counteract the worst of the 2008-09 global recession, their efficacy in blunting the supply shock forecasted by the spread of coronavirus is less certain. If there was a rate cut in the cards the government would have wanted it deployed in the event of a rough Brexit, not to halt the spread of the economic impacts of a novel virus. 

Then again, why you’ve already stretched your own spending rules, as the Chancellor has with this budget, stretching them more in the future becomes easier, not harder, to do. If Brexit produces a crunch come year end the answer will surely come in the form of more red ink, something the opposition parties will have a hard time arguing against.  In other words, meet big-spending Rishi Sunak, the former hedgie turned fiscal firefighter. And meet the new Conservative Party, not the same as the old Conservative Party.