Covid-19 and the benefits to the private sector

There is no doubt that big change generates big potential. During the crash of 2007/2008, individuals capitalised by betting against the market, a process known as “shorting”. The fact that individuals can make such wealth whilst the majority of people are so adversely effected by changes in the market is a hard one to swallow. But wealth buys serious advantages.

Covid is a catastrophe. In the face of the global pandemic we are seeing a recession much like of 07/08 private sector companies are benefiting from the struggle. First of all, track and trace (a scheme squelching through a quagmire of controversy) was awarded to a firm that has close links with the Conservative Party. The job was not put out for tender but was instead rushed through by the standing government. The Guardian rightly highlighted this topic in their “Covid-19 investigations” piece: “Firms given &1bn of state contracts without tender in Covid-19 crisis” (15/05/2020).

“Official data analysed by the Guardian shows state bodies have awarded at least 177 contracts worth £1.1bn to commercial firms in response to the Covid-19 pandemic.

Of those, 115 contracts – with a total value of just over £1bn – were awarded under the fast-track rules bypassing competitive tenders. They include two contracts worth more than £200m, both awarded by Whitehall departments.”

War is lucrative and so is any catastrophe. Among the companies given tender were Deloitte, Ernst & Young and PricewaterhouseCoopers. Deloitte has been under the intense scrutiny of publication Private Eye for some time. Deloitte has overseen the procurement of 50m unusable masks despite Deloitte’s role throughout the Covid-19 crisis being: “supplier monitoring, analysis and due diligence”. Due diligence is definitely not a strength for this organisation considering the firm was “fined for failing to spot fraud” and it has also been found guilty of ‘”serious and serial failures”‘ in its work at IT company Autonomy.

Another problem that has been highlighted regarding the government’s fast-tracking of contracts to private parties is the grabbing of information. The grabbing of information happens when companies take user data from mobile phones and devices and sells that information to 3rd party interests. Last year data mining was more lucrative that the oil industry. The money to be made from advertisers trying to peddle products and services straight onto our feeds and through our apps is staggering and Covid-19 has given data-mining free reign over information that we once wanted to keep private.

Private firms have always been circling the public sector like vultures waiting for an accident or a hiccup. What is so troubling is that the chumminess of Conservative MPs with so many higher-ups in the private sector has blurred. David Cameron’s contemporary, Dido Harding (previously chair of TalkTalk) has been ushered in to run the track and trace initiative. Her husband is Tory MP and Tory Minister John Penrose. In a Huffpost exclusive, Dido Harding’s suitability for the role is questioned.

“Critics point to her record at TalkTalk where the company suffered a major data breach and was given a record £400,000 fine for failing to protect customers details from a hack attack.”

“Shadow health minister Alex Norris said: “Nurses on the frontline using food banks or families denied the opportunity to see grandparents because of local lockdowns will be appalled at revelations this Tory peer has pocketed thousands of pounds worth of taxpayers cash.”

The Huffpost emphasises the close link between Tories and the interests of their friends and donors. People not fit for purpose are afforded the helm of projects and yet, despite questionable results (i.e. Dido Harding’s recent failure on Track and Trace which sent some people up to a hundred miles from their homes to get treatment). Surely such an important task should be handed to a group already working within the public sector who better know the health services available?

Another lackluster speech by Boris Johnson

Boris Johnson’s speech yesterday was hardly the breath of fresh air that most people thought it would, and should, have been. Construction and manufacturing businesses were told that they could continue doing business (not that the construction business ever stopped) but that these businesses must suddenly implement measures to ensure that the two metre social distancing measures.

This is the “shape of the plan” as Boris Johnson tries “reopening society”. The Plan has fallen under heavy criticism as people from all professions have pointed out a waterfall of issues. For instance, that reception, years 1 and 6 would try to be back in school before the summer break period. Many teachers and school staff believe that this would be a huge mistake given that children would find it hard to distance themselves from one another and any social distancing tactics that teachers might try to practice around children would only end up scaring them. I imagine it would be hard to teach a child whilst wearing a face mask and gloves though, hopefully, measures will not be so drastic.

Manufacturing businesses, on the other hand, have to make the decision as to whether or not they can reopen and if or how they can put in place safeguards for their employees. It is only early days and the Prime Minister made clear that more information would follow later today (Monday) but given the smoky information that has come out of Downing Street since Covid-19 touched down on UK shores, clarity might be hard to find.

Another confusing statement came from Boris Johnson that he has “consulted across the political spectrum” and that his plan is in-line with other UK leaders. Before Boris Johnson’s speech, and in answer to the Sunday newspapers headlines, Nicola Sturgeon took to Twitter with the following statement:

There is very little trust among those reading the papers that Boris Johnson is in-sync with other leaders and his actions are instead speculated as those being taken by someone who wants the economy up and running and is taking timid and untimely steps toward achieving that aim. The primary problem is that, much like Boris Johnson’s vague comments stepping into the Covid-19 emergency – when he was still calling for Britain to “stay open for business” – he is still expressing that same vague quality about getting back to business.

The UK needs clarity. The UK needs leadership. Unfortunately, Boris Johnson’s career in journalism might give him the gift of spin, but he has very little substance.

Covid-19 & the market

Economists, businesses and social commentators have spoken at great length about how the Covid-19 crisis has shocked the market. Flying between meetings might be a thing of the past for many companies as business goes on as normal by utilising videoconferencing software. Home delivery services are on the increase, whether it is small businesses trying to cope with the lack of footfall or larger companies providing home deliveries for those not wanting to break quarantine. Netflix and other streaming services have seen an increase of users.

The market is changing. The way we operate is changing. These are changes that will linger for long after Covid-19 has become a thing of the past. But, as is a theme above, Covid-19 has done one thing especially well and that is boosting the information and technology and digital services sector.

I work in the aviation sector, arguably the hardest hit by the Covid-19 pandemic. Over the last week:

  • British Airways has cut 12,000 jobs
  • Virgin Atlantic has cut 3,000 jobs
  • Boeing has reduced production by 50%
  • Airbus has reduced production by 35%
  • GE has cut 10,000 aerospace jobs
  • Rolls-Royce set to cut 8,000 aviation jobs

People will travel for business and for pleasure but getting back to the levels seen before the Covid-19 crisis will be a rough, but is it right for companies to reduce their numbers? And how is the move supported by government given those companies listed above have such high profit margins? The BBC today (6th May) released a piece of news regarding Qatar Airways:

“In February, Qatar Airways increased its stake in British Airways owner IAG to 25% as part of its strategy to invest in other carriers.

This boost in confidence in IAG also comes not long after we have found out that the Spanish government has provided IAG with a substantial €1 billion-euro bailout package. This has, however, been directed toward IAG’s low-cost airlines – Vueling and Iberia. The amount has been agreed, but not yet been processed.

IAG has seen year-on-year profits before the Covid-19 pandemic (as illustrated below) leading to staff threatening strike action in regards to pay. Which raises the question; why was British Airways was so keen on making 12,000 staff redundant?

It is often argued that companies need to make reductions because they need to survive and to stay afloat. A slashing of jobs means that the company can go on. But Covid-19 removes us from what are considered standard levels of business practice and instead shoves us back into the realm of fiscal tightening not seen since the financial crash.

It is precisely because of this debacle that we need companies to put their staff first and continue to keep them in employment. We limped out of the last financial catastrophe with a huge divide between those that have money and have the facilities to store it in offshore accounts or who bet against the market, a practice known as “shorting”. The majority of us don’t have these capabilities and are therefore more likely to suffer as a result in companies clamming up with the money that their employees helped them create.

The money going into hands of employees means that more funds will be diverted to other areas of the economy that have seen a drop because of Covid-19 such as the retail sector, restaurants, pubs, renovations and home improvement that would bring back the fleet of self-employed people who suffered a shock after Rishi Sunak’s emergency Covid-19 budget. People will also be able to pay their mortgages and their rent instead of facing the ridiculous one month deferral period in which landlords are not allowed to kick out tenants.

Unprecedented times call for unprecedented measures. This is one of those times when big businesses need to not stem the flow of money, but approach their workers with a calm and collected resolve to spread money and help stimulate the economy. And maybe even win back some trust and faith from their employees because, when the time came, the companies did the right thing.

Lack of preparedness for Covid-19

Much of the UK breathed a sigh of relief when Rishi Sunak claimed payouts for business and that employees would be given 80% of their wage whilst on furlough. However, despite being the Chancellor of the party “for business”, they offered not much shy of a middle finger to the self-employed.

The problems are myriad and systemic and, despite Boris Johnson standing outside No.10 and clapping for the NHS, have been created by the very government now trying its best to make a show of appreciation to the public services and other key workers.

According to the latest Private Eye (1520), the UK came 2nd in the Global Health Security Index which ranked countries according to their ‘”capability to prevent and mitigate epidemics and pandemics.”‘ So what went wrong? Why is it that a country that came 2nd in such an index had such a sluggish response to the Covid-19 emergency?

For the most part, it was Boris Johnson attempting to keep the country open for business. Secondly, the NHS was ill-equipped to deal with such issues due to outsourcing. This was the process by which different sections of the NHS’s prime functions were disbanded between private companies. Thirdly, and this is still under debate, the government’s stance against the European Union may have stood in the way.

Communications regarding the government stance have also been slow in coming largely due to the fact that the Central Office for Information (the office responsible for communicating to the country at times of war and emergency, was slashed and eventually dissolved completely in 2011 as a result of austerity measures. It was an easy choice because it was seen as an invention and tool of the “nanny state”.

Instead, communications come through third party agencies and were therefore slow to be put together. Boris Johnson has also had to rely on the BBC coverage of daily briefings, that very same organisation that he is trying to break up and throw to the wolves.

As climate change alters our landscape, we are expected to suffer at the hands of new and old diseases. Malaria, new strains of Coronavirus, you name it. That raises the question of just what are we going to do the next time around if another pandemic were to happen?

Hopefully, we won’t have Boris Johnson or his supporting cabinet who seem to think that lying would make for good policy when it comes to talking about PPE, death tolls and testing kits. We should also reverse any privatisation of NHS services and we should look more at publicly-funded emergency systems whether it is a designated communications network or pre-fab buildings ready to be up and running in a few days time. What is for certain – we need to stop focusing on media spin and how politicians look as opposed to what they are actually doing.